<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
-------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________
Commission file number 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)
(414) 765 - 7801
----------------
(Registrant's telephone number, including area code)
None
----
(Former name, former address and former fiscal year,
if changed since last report)
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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding at
Class October 31, 1995
----- ----------------
Common Stock, $1.00 Par Value 93,974,248
<PAGE>
PART 1 - FINANCIAL INFORMATION
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
($000's except share data)
September 30 December 31 September 30
Assets 1995 1994 1994
- ------ ------------ ------------ ------------
Cash and cash equivalents:
Cash and due from banks $619,395 $685,919 $600,896
Federal funds sold and
security resale agreements 25,579 205,248 164,961
Money market funds 100,806 76,724 54,219
------------ ------------ ------------
Total cash and cash equivalents 745,780 967,891 820,076
Trading securities 14,637 20,361 4,629
Other short-term investments 42,987 43,519 43,371
Investment securities held to maturity,
market value $535,701 ($419,521 December
31, and $409,498 September 30, 1994) 529,039 429,456 410,340
Investment securities available for sale at
market value 1,979,665 1,865,147 2,035,786
------------ ------------ ------------
Total investment securities 2,508,704 2,294,603 2,446,126
Loans 9,143,651 8,792,492 8,910,135
Less: Allowance for loan losses 164,287 153,961 152,470
------------ ------------ ------------
Net loans 8,979,364 8,638,531 8,757,665
Premises and equipment, net 298,366 286,435 291,365
Accrued interest and other assets 368,831 361,609 310,260
------------ ------------ ------------
Total Assets $12,958,669 $12,612,949 $12,673,492
============ ============ ============
Liabilities and Shareholders' Equity
- ------------------------------------
Deposits:
Noninterest bearing $2,056,547 $2,199,016 $2,101,750
Interest bearing 7,752,240 7,300,064 7,522,848
------------ ------------ ------------
Total deposits 9,808,787 9,499,080 9,624,598
Funds purchased and security
repurchase agreements 711,000 944,843 977,194
Other short-term borrowings 420,860 166,299 215,455
Long-term borrowings 494,908 653,777 519,602
Accrued expenses and other liabilities 303,843 287,654 282,684
------------ ------------ ------------
Total liabilities 11,739,398 11,551,653 11,619,533
Shareholders' equity:
Series A convertible preferred stock,
$1.00 par value; 348,944 shares issued 349 349 349
Common stock, $1.00 par value; 99,494,335
shares issued 99,494 99,494 99,494
Additional paid-in capital 187,843 194,697 199,269
Retained earnings 1,039,536 945,469 901,525
Less: Treasury common stock, at cost;
5,523,307 shares (6,964,920 December 31,
and 6,108,518 September 30, 1994) 116,918 143,438 126,588
Deferred compensation 1,258 1,203 1,329
Net unrealized gains (losses) on securities
available for sale, net of related taxes 10,225 (34,072) (18,761)
------------ ------------ ------------
Total shareholders' equity 1,219,271 1,061,296 1,053,959
------------ ------------ ------------
Total Liabilities and
Shareholders' Equity $12,958,669 $12,612,949 $12,673,492
============ ============ ============
See notes to financial statements.
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
($000's except per share data)
Three Months Ended September 30,
--------------------------------
1995 1994
Interest income: ------------- -------------
Loans $199,234 $175,351
Investment securities:
Taxable 28,905 28,689
Exempt from Federal income taxes 4,657 4,051
Trading securities 81 35
Short-term investments 2,710 2,354
------------- -------------
Total interest income 235,587 210,480
Interest expense:
Deposits 87,501 65,296
Short-term borrowings 11,318 10,981
Long-term borrowings 13,884 8,038
------------- -------------
Total interest expense 112,703 84,315
------------- -------------
Net interest income 122,884 126,165
Provision for loan losses 4,070 3,655
------------- -------------
Net interest income after
provision for loan losses 118,814 122,510
Other income:
Data processing services 55,079 40,045
Trust services 15,973 14,881
Other customer services 27,834 29,470
Net securities gains 1,291 210
Other 8,751 6,757
------------- -------------
Total other income 108,928 91,363
Other expense:
Salaries and employee benefits 88,751 79,941
Net occupancy 9,079 9,294
Equipment 16,941 13,775
Payments to regulatory agencies 105 5,842
Processing charges 5,178 5,020
Supplies and printing 3,963 4,014
Professional services 4,986 2,872
Other 21,876 21,777
------------- -------------
Total other expense 150,879 142,535
------------- -------------
Income before income taxes
and extraordinary items 76,863 71,338
Provision for income taxes 28,284 26,446
------------- -------------
Income before extraordinary items 48,579 44,892
Extraordinary items, net of tax ($1,087) - 1,123
------------- -------------
Net income $48,579 $46,015
============= =============
Net income per common share:
Primary:
Income before extraordinary items $0.49 $0.45
Extraordinary items - 0.01
------------- -------------
Net income $0.49 $0.46
============= =============
Fully Diluted:
Income before extraordinary items $0.48 $0.44
Extraordinary items - 0.01
------------- -------------
Net income $0.48 $0.45
============= =============
Dividends paid per common share $0.165 $0.150
Weighted average common shares outstanding:
Primary 99,318 100,192
Fully diluted 103,246 104,037
See notes to financial statements
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
($000's except per share data)
Nine Months Ended September 30,
--------------------------------
1995 1994
Interest income: ------------- -------------
Loans $580,303 $501,090
Investment securities:
Taxable 85,241 81,795
Exempt from Federal income taxes 12,858 12,549
Trading securities 371 121
Short-term investments 9,289 5,428
------------- -------------
Total interest income 688,062 600,983
Interest expense:
Deposits 243,043 188,602
Short-term borrowings 38,842 27,972
Long-term borrowings 40,066 19,998
------------- -------------
Total interest expense 321,951 236,572
------------- -------------
Net interest income 366,111 364,411
Provision for loan losses 12,058 20,608
------------- -------------
Net interest income after
provision for loan losses 354,053 343,803
Other income:
Data processing services 155,265 116,256
Trust services 47,238 45,015
Other customer services 81,510 89,519
Net securities gains (losses) 1,258 (6,443)
Other 23,603 23,714
------------- -------------
Total other income 308,874 268,061
Other expense:
Salaries and employee benefits 253,563 246,493
Net occupancy 26,805 28,688
Equipment 47,945 44,794
Payments to regulatory agencies 11,147 17,672
Processing charges 14,032 14,443
Supplies and printing 11,357 10,636
Professional services 13,350 8,663
Merger / Restructuring - 76,562
Other 64,852 72,200
------------- -------------
Total other expense 443,051 520,151
------------- -------------
Income before income taxes
and extraordinary items 219,876 91,713
Provision for income taxes 78,925 45,369
------------- -------------
Income before extraordinary items 140,951 46,344
Extraordinary items, net of tax ($1,087) - 1,123
------------- -------------
Net income $140,951 $47,467
============= =============
Net income per common share:
Primary:
Income before extraordinary items $1.43 $0.46
Extraordinary items - 0.01
------------- -------------
Net income $1.43 $0.47
============= =============
Fully Diluted:
Income before extraordinary items $1.38 $0.46
Extraordinary items - 0.01
------------- -------------
Net income $1.38 $0.47
============= =============
Dividends paid per common share $0.480 $0.440
Weighted average common shares outstanding:
Primary 98,710 99,871
Fully diluted 102,906 104,721
See notes to financial statements
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
($000's)
Nine Months Ended September 30,
--------------------------------
1995 1994
------------- -------------
Net Cash Provided by Operating Activities $152,326 $217,164
Cash Flows From Investing Activities:
Net decrease in securities with maturities of
three months or less 1,270 7,696
Proceeds from sales of securities available
for sale 115,292 569,264
Proceeds from maturities of longer term
securities 464,425 655,982
Purchases of longer term securities (511,227) (1,144,368)
Net increase in loans (285,541) (406,575)
Purchases of assets to be leased (91,968) (65,868)
Principal payments on lease receivables 104,570 85,043
Fixed asset purchases, net (27,158) (17,190)
Cash of banks acquired, net 15,188 -
Other 10,257 2,560
------------- -------------
Net cash used in investing activities (204,892) (313,456)
------------- -------------
Cash Flows From Financing Activities:
Net increase (decrease) in deposits 78,270 (547,038)
Proceeds from issuance of commercial paper 1,062,111 1,316,256
Payments for maturity of commercial paper (1,074,965) (1,265,722)
Net increase (decrease) in other short-term
borrowings (271,721) 456,468
Proceeds from issuance of long-term debt 211,766 342,216
Payments of long-term debt (87,650) (85,042)
Dividends paid (46,896) (43,040)
Purchases of treasury stock (47,698) (50,390)
Other 7,238 8,026
------------- -------------
Net cash provided by (used in)
financing activities (169,545) 131,734
------------- -------------
Net increase (decrease) in cash and cash
equivalents (222,111) 35,442
Cash and cash equivalents, beginning of year 967,891 784,634
------------- -------------
Cash and cash equivalents, end of period $745,780 $820,076
============= =============
Supplemental cash flow information:
Cash paid during the period for:
Interest $299,608 $231,874
Income taxes 81,968 62,690
See notes to financial statements
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements
September 30, 1995 & 1994 (Unaudited)
1. The accompanying unaudited consolidated financial statements should be
read in conjunction with Marshall & Ilsley Corporation's ("Corporation")
1994 Annual Report on Form 10-K. The unaudited financial information
included in this report reflects all adjustments (consisting only of
normal recurring accruals) which are necessary for a fair statement of
the financial position and results of operations as of and for the three
and nine months ended September 30, 1995 and 1994. The results of
operations for the three months and nine months ended September 30, 1995
and 1994 are not necessarily indicative of results to be expected for the
entire year.
2. The Corporation has 5,000,000 shares of preferred stock authorized, of
which, the Board of Directors has designated 3,000,000 shares as Series
A convertible, with a $100 value per share for conversion and liquidation
purposes.
The Corporation has 160,000,000 shares of its $1.00 par value common
stock authorized.
3. The Corporation's loan portfolio consists of the following ($000's):
September 30 December 31 September 30
1995 1994 1994
------------ ------------ ------------
Commercial financial & agricultural $2,913,086 $2,676,724 $2,757,297
Real estate:
Construction 322,528 378,316 369,151
Residential Mortgage 2,299,806 2,240,287 2,237,621
Commercial Mortgage 2,176,295 2,062,022 2,085,258
------------ ------------ ------------
Total real estate 4,798,629 4,680,625 4,692,030
Personal 1,165,958 1,178,453 1,202,007
Lease financing 265,978 256,690 258,801
------------ ------------ ------------
$9,143,651 $8,792,492 $8,910,135
============ ============ ============
4. Effective January 1, 1994, the Corporation adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities". Accordingly, investment securities classified as
available for sale are carried at fair value with fair value adjustments,
net of their related income tax effects, reported as a component of
shareholders' equity.
Investment securities, by type, held by the Corporation are as follows
($000's):
September 30 December 31 September 30
1995 1994 1994
------------ ------------ ------------
Investment securities held to maturity:
U.S. treasury and
government agencies $155,189 $134,080 $111,571
State and political subdivisions 365,889 290,483 293,901
Other 7,961 4,893 4,868
------------ ------------ ------------
Investment securities
held to maturity 529,039 429,456 410,340
------------ ------------ ------------
Investment securities available for sale:
U.S. treasury and
government agencies 1,874,035 1,772,883 1,939,829
Other 105,630 92,264 95,957
------------ ------------ ------------
Investment securities
available for sale 1,979,665 1,865,147 2,035,786
------------ ------------ ------------
Total Investment Securities $2,508,704 $2,294,603 $2,446,126
============ ============ ============
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements - Continued
September 30, 1995 & 1994 (Unaudited)
5. Effective January 1, 1995, the Corporation adopted Statements of
Financial Accounting Standards No. 114, "Accounting by Creditors for
Impairment of a Loan" and No. 118, " Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures" (collectively
SFAS 114). SFAS 114 requires that certain impaired loans be measured
based on the present value of expected future cash flows discounted at
the loans effective interest rate. As a practical matter, impairment may
be measured based on the loan's observable market price or the fair value
of the collateral for loans which are collateral dependent. When the
measure of the impaired loan is less than the recorded investment in the
loan, the impairment is recorded through a valuation allowance.
Prior to 1995, the allowance for loan losses attributable to impaired
loans was based on undiscounted cash flows without considering interest
or the fair value of the collateral for collateral dependent loans. As a
result of these new standards, no additional allowance for loan losses
was required as of January 1, 1995.
At September 30, 1995 the Corporation's recorded investment in impaired
loans a the related valuation allowance are as follows ($ in thousands):
Recorded Valuation
Investment Allowance
------------ ------------
Total Impaired Loans and Leases
(Nonaccrual and Renegotiated) $53,941
Loans and Leases Excluded from
Evaluation under SFAS 114 (21,843)
------------
Impaired Loans Evaluated $32,098
============
Valuation Allowance Required 5,876 $2,071
No Valuation Allowance Required 26,222
------------ ------------
Impaired Loans Evaluated $32,098 $2,071
============ ============
The recorded investment in impaired loans for which no allowance is
required is net of previous direct writedowns and applications of cash
interest payments against the loan balance outstanding. The required
valuation allowance is included in the allowance for loan losses in the
consolidated balance sheet at September 30, 1995.
The average recorded investment in total impaired loans and leases for
the nine months ended September 30, 1995 was $51,829.
Interest payments received on impaired loans and leases are recorded as
interest income unless collection of the remaining recorded investment is
doubtful at which time payments received are recorded as reductions of
principal. For the nine months ended September 30, 1995 interest income
recognized on total impaired loans amounted to $2,509. The gross income
that would have been recognized had such loans and leases been performing
in accordance with their original terms would have been $6,130 for the
same period.
The activity in the allowance for loan losses for the nine months ended
September 30, 1995 and 1994 is presented below ($ in thousands):
1995 1994
------------ ------------
Balance at beginning of year $153,961 $133,600
Allowance of Banks Acquired 2,843 -
Provision for Loan Losses 12,058 20,608
Charge-offs (8,095) (7,823)
Recoveries 4,180 6,085
Other (660) -
------------ ------------
Balance at September 30, $164,287 $152,470
============ ============
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements - Concluded
September 30, 1995 & 1994 (Unaudited)
6. On July 1, 1995 the Corporation acquired Citizens Bancorp of Delavan,
Inc. ("Delavan") and on July 2, 1995 acquired Sharon State Bank
("Sharon"). Both acquisitions were tax-free reorganizations accounted for
as purchases. Approximately 1.1 million and 0.2 million of the
Corporation's treasury common shares with an aggregate estimated combined
market value of $30.7 million were exchanged for the outstanding common
shares of Delavan and Sharon, respectively. The results of operations for
Delavan and Sharon are included from their respective dates of
acquisition and are not material to the Corporation. Delavan and Sharon
were subsequently merged to become M&I Bank of Delavan with combined
assets of approximately $122 million.
7. In May 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 122, "Accounting for Mortgage
Servicing Rights"(SFAS 122) which is an amendment to SFAS No. 65,
"Accounting for Certain Mortgage Banking Activities". The Corporation
elected in the third quarter to adopt this statement as of January 1,
1995. The impact of adopting this statement is not material to the
Corporation, and therefore the results of operations for the first and
second quarters of 1995 have not been restated. SFAS No. 122 prohibits
retroactive application to prior years.
The primary difference between SFAS No. 122 and SFAS No.65 as they relate
to the Corporation is the accounting treatment afforded servicing rights
for mortgages originated and sold by the Corporation with servicing
retained. Under SFAS No. 122, mortgage banking enterprises are required
to recognize as separate assets rights to service mortgage loans for
others whether acquired through purchase, so-called Purchased Mortgage
Servicing Rights (PMSRs) or acquired through origination, Originated
Mortgage Servicing Rights (OMSRs). Previously SFAS No. 65 only permitted
the capitalization of the rights to service mortgage loans for others
when such rights were acquired through a purchase transaction (PMSRs) and
OMSRs were included with the cost of the related loan in determining the
gain or loss at the time the loan was sold.
SFAS No. 122 requires that all capitalized mortgage servicing rights be
evaluated for impairment based on the fair value of those rights.
Additionally this statement requires such rights be stratified based on
the predominant risk characteristics of the underlying loans for purposes
of evaluating impairment and that a valuation allowance be established
for each individual stratum when impairment is recognized. At September
30, 1995 no valuation allowance was required.
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEETS (Unaudited)
($000's)
Three Months Ended September 30,
--------------------------------
1995 1994
------------- -------------
Assets
- ------
Cash and due from banks $578,331 $603,810
Short-term investments 199,908 220,637
Trading securities 7,239 2,828
Investment securities:
Taxable 1,988,879 2,082,981
Tax-exempt 395,824 350,436
------------- -------------
Total investment securities 2,384,703 2,433,417
Loans:
Commercial 2,913,385 2,740,144
Real estate 4,898,780 4,628,935
Personal 1,160,447 1,210,507
Lease financing 262,268 257,555
------------- -------------
9,234,880 8,837,141
Less: Allowance for loan losses 163,593 150,643
------------- -------------
Total loans 9,071,287 8,686,498
Premises and equipment, net 297,001 287,212
Accrued interest and other assets 354,603 287,868
------------- -------------
Total Assets $12,893,072 $12,522,270
============= =============
Liabilities and Shareholders' Equity
- ------------------------------------
Deposits:
Noninterest bearing $1,981,112 $2,034,549
Interest bearing 7,773,722 7,650,352
------------- -------------
Total deposits 9,754,834 9,684,901
Funds purchased and security repurchase
agreements 698,077 852,973
Other short-term borrowings 105,343 145,600
Long-term borrowings 826,987 491,488
Accrued expenses and other liabilities 300,258 267,578
------------- -------------
Total liabilities 11,685,499 11,442,540
Shareholders' equity 1,207,573 1,079,730
------------- -------------
Total Liabilities and Shareholders' Equity $12,893,072 $12,522,270
============= =============
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEETS (Unaudited)
($000's)
Nine Months Ended September 30,
--------------------------------
1995 1994
------------- -------------
Assets
- ------
Cash and due from banks $574,560 $617,865
Short-term investments 215,686 186,770
Trading securities 10,584 3,516
Investment securities:
Taxable 1,961,170 2,142,275
Tax-exempt 353,791 356,618
------------- -------------
Total investment securities 2,314,961 2,498,893
Loans:
Commercial 2,813,544 2,691,077
Real estate 4,814,436 4,541,792
Personal 1,161,491 1,208,589
Lease financing 260,192 256,251
------------- -------------
9,049,663 8,697,709
Less: Allowance for loan losses 159,653 142,065
------------- -------------
Total loans 8,890,010 8,555,644
Premises and equipment, net 293,990 288,893
Accrued interest and other assets 346,375 291,371
------------- -------------
Total Assets $12,646,166 $12,442,952
============= =============
Liabilities and Shareholders' Equity
- ------------------------------------
Deposits:
Noninterest bearing $1,941,124 $2,037,499
Interest bearing 7,558,132 7,697,795
------------- -------------
Total deposits 9,499,256 9,735,294
Funds purchased and security repurchase
agreements 805,733 847,039
Other short-term borrowings 97,408 129,351
Long-term borrowings 794,741 379,273
Accrued expenses and other liabilities 291,770 241,415
------------- -------------
Total liabilities 11,488,908 11,332,372
Shareholders' equity 1,157,258 1,110,580
------------- -------------
Total Liabilities and Shareholders' Equity $12,646,166 $12,442,952
============= =============
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
______________________________________________
Net operating income for the third quarter of 1995 was $48.6 million compared
to $44.9 million for the same period one year ago. Fully diluted earnings per
share for the third quarter of 1995 amounted to $.48 compared to $.44 for the
same quarter last year. Based on net operating earnings, the Corporation's
return on average assets and return on average shareholders' equity were 1.49%
and 15.96% for the three months ended September 30, 1995 and 1.42% and 16.50%
for the three months ended September 30, 1994, respectively.
The growth in net operating income of $3.7 million is attributable to increased
fee revenue and lower operating expense growth (primarily lower FDIC insurance
costs) which was offset in part by the decline in net interest income.
During the third quarter of 1994, the Corporation realized a net extraordinary
after-tax gain of $1.1 million or $.01 per share which related to gains from the
required divestiture of certain deposit accounts and the loss associated with
the prepayment of certain long-term borrowings.
INCOME STATEMENT COMPONENTS AS A PERCENT OF AVERAGE TOTAL ASSETS
________________________________________________________________
The following table presents a summarized view of each of the major elements of
the consolidated income statement for the last five quarters. Each of the
elements is stated as a percent of the average total assets for the respective
quarter and, where appropriate, is converted to a fully taxable basis.
The results for 1994 exclude the Valley Bancorporation (Valley) merger related
net gains of $1.1 million and $11.0 million in the third and fourth quarters,
respectively.
1995 1994
__________________________________________
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
__________________________________________
Interest Income 7.33% 7.43% 7.29% 6.99% 6.74%
Interest Expense (3.47) (3.46) (3.28) (2.86) (2.67)
______ ______ ______ ______ ______
Net Interest Income 3.86 3.97 4.01 4.13 4.07
Provision for Loan Losses (0.13) (0.13) (0.13) (0.14) (0.12)
Net Securities Gains (Losses) 0.04 0.00 0.00 0.02 0.01
Other Income 3.31 3.26 3.18 2.96 2.89
Other Expense (4.65) (4.77) (4.64) (4.51) (4.52)
______ ______ ______ ______ ______
Income Before Income Taxes 2.43 2.33 2.42 2.46 2.33
Income Taxes (0.94) (0.86) (0.92) (0.94) (0.91)
______ ______ ______ ______ ______
Return on Average Assets 1.49% 1.47% 1.50% 1.52% 1.42%
====== ====== ====== ====== ======
<PAGE>
NET INTEREST INCOME
___________________
Net interest income for the third quarter of 1995 was $122.9 million compared
to $126.2 million for the same period one year ago, a decrease of $3.3 million
or 2.6%. The benefit of the increase in rates earned and the slight increase
in the average volume of earning assets, primarily loans, did not offset the
effects of the increase in the rates paid on interest bearing liabilities and
the negative impact of the change in liability mix.
Average earning assets increased $332.7 million or 2.9% in the third quarter of
1995 compared to the same period one year ago. Average loan growth of $397.7
million or 4.5% was slightly offset by a decline in average other earning assets
(primarily investment securities) of $65.0 million.
Total average interest bearing liabilities increased $263.7 million or 2.9% in
the third quarter of 1995 compared to the same period last year. The
composition of average interest bearing liabilities reflects the liability mix
change that has been discussed in the past. Interest bearing deposits increased
$123.4 million and short-term borrowings declined $195.2 million in the third
quarter of 1995 compared to the same period a year ago. The net decline in
these interest bearing liability categories and a $53.4 million decline in
noninterest bearing deposit accounts resulted, in part, in long-term borrowings
increasing $335.5 million from $491.5 for the third quarter of 1994 to $827.0
million for the current quarter.
As part of the 1994 acquisition of Valley, the Corporation completed certain
required branch divestitures along with a number of other branch sales. The
total amount of deposits sold in the last half of 1994 were approximately $300
million and total loan sales were approximately $200 million. The effect of
these divestitures were somewhat offset by the February 1, 1995 acquisition of
the Bank of Burlington and the July 1995 acquisitions of Citizens Bancorp of
Delavan, Inc. and Sharon State Bank which were all accounted for as purchases.
The Bank of Burlington had total loans of $113 million and total deposits of
$149 million at the date of acquisition and the Citizens Bancorp of Delavan and
Sharon State Bank acquisitions had combined loans of $72.5 million and combined
deposits of $82.6 million.
<PAGE>
The growth and composition of the Corporation's quarterly average loan portfolio
for the current quarter and previous four quarters are reflected below (amounts
in millions):
1995 1994
______________________________________________
Annual
Third Second First Fourth Third Growth
Quarter Quarter Quarter Quarter Quarter PCT
______________________________________________
Commercial Loans $2,913 $2,828 $2,697 $2,643 $2,740 6.3%
Real Estate Loans
Construction 329 354 367 385 344 (4.2)
Commercial
Mortgages 2,169 2,102 2,072 2,058 2,066 5.0
Residential
Mortgages 2,401 2,355 2,292 2,227 2,219 8.2
______________________________________________
Total Real Estate Loans 4,899 4,811 4,731 4,670 4,629 5.8
Personal Loans
Personal Loans 876 873 872 901 946 (7.4)
Student Loans 285 285 294 278 265 7.4
______________________________________________
Total Personal Loans 1,161 1,158 1,166 1,179 1,211 (4.1)
Lease Financing
Receivables 262 260 259 257 257 1.8
______________________________________________
Total Consolidated
Average Loans $9,235 $9,057 $8,853 $8,749 $8,837 4.5%
==============================================
During the third quarter of 1995, the Corporation began converting adjustable
rate mortgage loans (ARMs) into Federal National Mortgage Association (FNMA) ARM
pool securities to enhance liquidity. At September 30, 1995, $132 million of
ARM loans had been securitized and are classified as investment securities
available for sale. It is anticipated that by the end of 1995, approximately
$600 million of ARM loans will be securitized and reclassified. As part of this
process, the Corporation pays a fee of 7.5 basis points to guarantee the
securities which will have a negative impact on net interest income. Average
residential real estate loan growth would have been 9.3% and total loan growth
would have been 4.8% before securitization.
<PAGE>
The composition of the Corporation's quarterly average deposits for the current
quarter and prior year's quarters are as follows (amounts in millions):
1995 1994
_______________________________________________
Annual
Third Second First Fourth Third Growth
Quarter Quarter Quarter Quarter Quarter PCT
_______________________________________________
Noninterest
Bearing
Commercial $1,282 $1,248 $1,248 $1,363 $1,298 (1.2)%
Personal 409 410 400 413 432 (5.3)
Other 290 275 260 318 305 (4.9)
_______________________________________________
Total Noninterest
Bearing Deposits 1,981 1,933 1,908 2,094 2,035 (2.6)
Interest Bearing
Savings & NOW 1,961 1,973 2,084 2,290 2,484 (21.1)
Money Market 2,049 1,875 1,767 1,606 1,495 37.0
Other CDs & Time
Deposits 3,145 3,135 3,037 3,135 3,227 (2.5)
CDs Greater than
$100 619 541 485 350 444 39.3
_______________________________________________
Total Interest
Bearing Deposits 7,774 7,524 7,373 7,381 7,650 1.6
_______________________________________________
Total Consolidated
Average Deposits $9,755 $9,457 $9,281 $9,475 $9,685 0.7%
===============================================
The yield on average earning assets increased 63 basis points while the cost of
interest-bearing deposits increased 108 basis points in the third quarter of
1995 compared to the same period last year. During the third quarter of 1994,
the Corporation began offering a money market index account to attract new
deposits. For the third quarter of 1995, the average money market index account
amounted to approximately $1,087 million. Since inception, this new product
resulted in approximately $546 million of new deposit growth. The remaining
balances were the result of disintermediation from the Corporation's other
deposit accounts. The average rate paid on this index account amounted to 5.30%
compared to 3.25% for the tier equivalent nonindexed money market account for
the three months ended September 30, 1995. The activity for the third quarter
of 1994 was not significant. The increase in short-term borrowing costs of 123
basis points also negatively impacted net interest income. The average cost of
long-term borrowings increased 17 basis points. As previously stated, the
average volume of long-term borrowings increased $335.5 million. During the
second quarter of 1994, the Corporation's banking subsidiaries began offering
Bank Notes. The Bank Notes provide an additional funding source along with
those traditionally available to our banking affiliates. For the third quarter
of 1995 average Bank Notes amounted to $438.7 million compared to $197.5 for the
same period last year. These notes were issued for a two-year term and have
floating interest rates.
<PAGE>
The possible continuing lack of deposit and earning asset growth, and shift of
deposit mix into the higher cost categories, may continue to put pressure on the
interest margin.
At the present time, the Corporation is not involved in derivatives, other than
normal foreign exchange trading.
THIRD QUARTER
________________________________________________________
YIELD & COST ANALYSIS 1995 1994
($000's) _____________________________ __________________________
Average Average
Average Yield or Average Yield or
Balance Interest Cost Balance Interest Cost
__________________________________________________________
Loans $ 9,234,880 $199,742 8.58% $ 8,837,141 $175,864 7.90%
Investment
Securities:
Taxable 1,988,879 28,905 5.77 2,082,981 28,689 5.46
Tax Exempt 395,824 6,543 6.56 350,436 5,948 6.73
Other Short-term
Investments 207,147 2,798 5.36 223,465 2,397 4.26
__________________________________________________________
Total Interest
Earning Assets $11,826,730 $237,988 7.98% $11,494,023 $212,898 7.35%
==========================================================
Money Market Savings $ 2,049,408 $ 22,017 4.26% $ 1,495,494 $ 10,597 2.81%
Regular Savings
& NOW 1,961,015 10,647 2.15 2,484,315 11,708 1.87
Other CDs & Time
Deposits 3,144,958 45,344 5.72 3,226,718 38,006 4.67
CD's Greater than
$100 618,341 9,493 6.09 443,825 4,985 4.46
__________________________________________________________
Total Interest
Bearing Deposits 7,773,722 87,501 4.47 7,650,352 65,296 3.39
Short-term
Borrowings 803,420 11,318 5.59 998,573 10,981 4.36
Long-term
Borrowings 826,987 13,884 6.66 491,488 8,038 6.49
__________________________________________________________
Total Interest
Bearing Liabilities $ 9,404,129 $112,703 4.75% $ 9,140,413 $ 84,315 3.66%
==========================================================
Net Interest Margin
(FTE) as a Percent
of Average Earning
Assets $125,285 4.20% $128,583 4.44%
=============== ===============
<PAGE>
PROVISION FOR LOAN LOSSES AND CREDIT QUALITY
____________________________________________
The provision for loan losses amounted to $4.1 million in the third quarter of
1995 compared to a provision of $3.7 million in the third quarter of 1994. The
1995 provision level reflects the continued relatively stable trends in
nonperforming assets and favorable net charge-off activity in relation to the
allowance for loan losses.
At September 30, 1995, nonperforming assets were $69.6 million, a decrease of
$7.3 million when compared to the same period a year ago however it reflects an
increase of $1.5 million since the second quarter of 1995. Nonaccrual loans,
the largest component of nonperforming assets, decreased $3.3 million when
compared to the same period last year and increased $2.3 million since the
second quarter of 1995.
Total nonaccrual commercial loans and leases reflected an increase of $1.9
million for the third quarter of 1995 compared to the same period last year and
increased $.8 million since June 30, 1995. Total nonaccrual real estate loans
decreased $5.7 million in the third quarter of 1995 compared to the third
quarter of last year and increased $.8 million compared to the second quarter
of 1995. Since September 30, 1994, nonaccrual commercial real estate loans have
declined and have somewhat stabilized during the second and third quarters of
1995. Nonaccrual residential real estate loans and nonaccrual personal loans,
which increased $1.4 million and $.7 million since June 30, 1995, are at their
highest levels over the reported five quarters.
Net charge-offs in the third quarter of 1995 amounted to $.8 million or .03% of
average loans annualized. The third quarter 1995 net charge-offs were slightly
higher than the same period last year, however they were below that reported in
the second quarter of 1995.
The allowance for loan losses was $164.3 million or 1.80% of total loans at
September 30, 1995 compared to $160.6 million or 1.75% of total loans at June
30, 1995 and $152.5 million or 1.71% of total loans at September 30, 1994. The
coverage ratio of the allowance for loan losses to nonperforming loans remained
unchanged at 269% for the second and third quarters of 1995. At September 30,
1994, the coverage ratio was 227%. During the third quarter of 1995, $132
million of adjustable rate mortgages were securitized and transferred to our
investment portfolio. As part of this securitization, approximately $.7 million
of loan loss reserve balances were transferred to a specific investment reserve
to cover estimated losses based on the Corporation's experience with these types
of loans. The Corporation has agreed to guarantee the first 4% of the loan
pools securitized through FNMA against potential loss.
<PAGE>
The following tables present certain credit quality information and statistics
at September 30, 1995 as well as for the previous four quarters.
CONSOLIDATED CREDIT QUALITY INFORMATION
($000's)
1995 1994
___________________________ ________________
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
__________________________ _________________
NONPERFORMING ASSETS
Nonaccrual $50,643 $48,359 $44,210 $44,766 $53,987
Renegotiated 3,298 3,424 3,826 4,172 4,748
Past Due 90 Days or More 7,106 7,879 9,653 9,093 8,551
_____________________________________________
Total Nonperforming Loans 61,047 59,662 57,689 58,031 67,286
Other Real Estate Owned 8,587 8,510 11,209 12,114 9,697
_____________________________________________
Total Nonperforming Assets $69,634 $68,172 $68,898 $70,145 $76,983
=============================================
ALLOWANCE FOR LOAN LOSSES $164,287 $160,565 $157,689 $153,961 $152,470
=============================================
1995 1994
___________________________ ________________
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
__________________________ _________________
NONACCRUAL LOANS BY TYPE ($000's)
Commercial
Commercial, Financial &
Agricultural $14,449 $13,703 $11,134 $8,372 $11,944
Lease Financing
Receivables 2,323 2,246 2,086 1,601 2,883
_____________________________________________
Total Commercial 16,772 15,949 13,220 9,973 14,827
Real Estate
Construction and Land
Development 242 666 731 902 3,862
Commercial Mortgage 17,407 17,626 16,227 19,706 21,769
Residential Mortgage 13,010 11,590 11,378 11,453 10,725
_____________________________________________
Total Real Estate 30,659 29,882 28,336 32,061 36,356
Personal 3,212 2,528 2,654 2,732 2,804
_____________________________________________
Total Nonaccrual Loans $50,643 $48,359 $44,210 $44,766 $53,987
=============================================
<PAGE>
1995 1994
___________________________ ________________
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
__________________________ _________________
RECONCILIATION OF CONSOLIDATED ALLOWANCE FOR LOAN LOSSES ($000's)
Beginning Balance $160,565 $157,689 $153,961 $152,470 $149,371
Provision for Loan Losses 4,070 4,005 3,983 4,299 3,655
Allowance of Bank Acquired 1,096 --- 1,747 --- ---
Allowance Transfer for Loan
Securitizations (660) --- --- --- ---
Loans Charged-off
Commercial 502 354 809 1,192 653
Real Estate 466 161 1,328 1,501 383
Personal 1,250 1,402 1,328 1,636 877
Leases 104 258 133 409 80
____________________________________________
Total Charge-offs 2,322 2,175 3,598 4,738 1,993
Recoveries on Loans
Commercial 514 256 890 1,062 381
Real Estate 483 208 225 386 681
Personal 530 576 479 448 347
Leases 11 6 2 34 28
____________________________________________
Total Recoveries 1,538 1,046 1,596 1,930 1,437
____________________________________________
Net Loans Charged-off 784 1,129 2,002 2,808 556
____________________________________________
Ending Balance $164,287 $160,565 $157,689 $153,961 $152,470
============================================
CONSOLIDATED STATISTICS
Net Charge-offs
to Average Loans
Annualized 0.03% 0.05% 0.09% 0.13% 0.02%
Total Nonperforming Loans
to Total Loans 0.67 0.65 0.64 0.66 0.76
Total Nonperforming Assets
to Total Loans and Other
Real Estate Owned 0.76 0.74 0.77 0.80 0.86
Allowance for Loan Losses
to Total Loans 1.80 1.75 1.76 1.75 1.71
Allowance for Loan Losses
to Nonperforming Loans 269 269 273 265 227
<PAGE>
OTHER INCOME
____________
Total other income was $108.9 million for the third quarter of 1995, an increase
of $17.6 million or 19.2% when compared to $91.4 million earned in the third
quarter of 1994.
Fees from data processing services grew $15 million or 37.5% and amounted to
$55.1 million this quarter compared to $40 million for the same period last
year. The increase was primarily due to processing and software sales revenue.
Contract buyout fees declined $1 million in the third quarter of 1995 compared
to the third quarter of 1994. The acquisitions of Software Alliance in December
1994 and Mutual Services inc., a New England data center, on August 1, 1995,
contributed approximately 28% of the revenue growth. Fees from processing
services to utilities accounted for an additional 17% of the increase in
revenue.
Security gains realized in the third quarter of 1995 compared to the same period
last year resulted in an increase of $1.1 million. These gains were primarily
the result of the sale of equity securities carried in the available for sale
category.
Trust fees increased $1.1 million or 7.3%. This increase was primarily due to
revenue from outsourcing.
Fees from other customer services declined 5.6% or $1.6 million. A $.9 million
decrease in service charges on deposit accounts and a decline of $.4 million in
other commissions and fees accounted for a significant portion of the decline.
Other income increased $2.0 million this quarter compared to the same quarter
last year. The Corporation adopted the new accounting standard on mortgage
servicing rights in the third quarter of 1995 which resulted in a $1.7 million
increase in other income.
OTHER EXPENSE
_____________
Total other expense for the third quarter of 1995 increased $8.3 million or
5.9%, from the same period a year ago.
Salaries and benefits expense increased $8.8 million in the third quarter of
1995 compared to the same period last year. The increase is due primarily to
Data Services (DSI), the Corporation's data processing division. At September
30, 1995 DSI had approximately 2,560 full time equivalent employees (FTE), which
is an increase of 268 FTE's since September 30, 1994. A portion of the increase
is due to DSI's recent acquisitions. Our banking segment showed a decline in
salaries and benefits expense for the third quarter of 1995 compared to the same
period last year.
Equipment expense was $16.9 million for the third quarter of 1995 compared to
$13.8 million in the third quarter of 1994, an increase of $3.2 million or 23%.
The increase is primarily attributable to DSI and is due to the activities of
<PAGE>
the acquired New England data center, a secondary processing site which became
operational late in the fourth quarter of 1994, and CPU and other equipment
upgrades.
Payments to regulators declined $5.7 million in the third quarter of 1995
compared to the third quarter of 1994. The reduction in the Federal Deposit
Insurance Corporation (FDIC) premium rate from $.23 to $.04 per $1,000 of
insured deposits, retroactive to June 1, 1995, resulted in the expense decline.
Professional services expense amounted to $5.0 million for the third quarter of
1995 compared to $2.9 million for the same period last year. Approximately $1
million of the increase was due to costs incurred for technological assistance
in software development such as DSI's data warehouse project. Approximately $.5
million of the remaining increase represents costs incurred in connection with
the ARM loan securitization previously discussed.
The other miscellaneous expense category is affected by the capitalization of
costs, net of amortization, associated with software development and data
processing conversions. Including the professional services expense increase
of $.9 million, the amount of cost capitalized, net of amortization in the third
quarter of 1995, was $1.7 more than the amount recorded in the third quarter of
1994.
INCOME TAXES
____________
The income tax provision for the three months ended September 30, 1995 amounted
to $28.3 million compared to $26.4 million for the three months ended September
30, 1994. The effective tax rate remained relatively unchanged.
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
_____________________________________________
For the nine months ended September 30, 1995 the Corporation recorded net income
of $141 million compared to $47.5 million for the nine months ended September
30, 1994. Fully diluted net income per share amounted to $1.38 compared to $.47
for the prior year. Net income for the nine months ended September 30, 1994
would have been $122.4 million and fully diluted net income per share would have
amounted to $1.18 per share excluding the unusual charges and extraordinary
items recorded in conjunction with the Valley merger. The net operating income
improvement was due to higher net interest income, higher noninterest income
offset in part by a slight increase in other expenses.
<PAGE>
INCOME STATEMENT COMPONENTS AS A PERCENT OF AVERAGE TOTAL ASSETS
________________________________________________________________
The following table presents a summarized view of each of the major elements of
the income statement for the first nine months on a comparable basis presented
in the same format as the table for the quarterly results. The results exclude
the after-tax merger related charge of $76.1 taken in the second quarter of 1994
and the $1.1 million net extraordinary income reported in the third quarter of
1994.
ROA
1995 1994 Impact
__________________________
Interest Income 7.35% 6.53% 0.82%
Interest Expense (3.41) (2.54) (0.87)
______ ______ ______
Net Interest Income 3.94 3.99 (0.05)
Provision for Loan Losses (0.13) (0.13) ---
Net Securities Gains (Losses) 0.01 0.01 ---
Other Income 3.25 2.95 0.30
Other Expense (4.67) (4.66) (0.01)
______ ______ ______
Income Before Income Taxes 2.40 2.16 0.24
Income Taxes (0.91) (0.84) (0.07)
______ ______ ______
Return on Average Assets 1.49% 1.32% 0.17%
====== ====== ======
MERGER/RESTRUCTURING - UPDATE
_____________________________
The merger/restructuring charge of $76.6 million (pre-tax) recorded in June
1994, was the result of the acquisition of Valley and reflected the costs
associated with executive contracts and the reduction in workforce, the write-
off of duplicate computer and software costs, system conversion costs,
professional fees, and other net costs associated with the merger. As part of
the merger/restructuring process the Corporation in 1994 merged 15 bank charters
and four financial service affiliates into other M&I affiliates which were
providing similar services. The Corporation also closed 49 branch locations
which included 19 required branch divestitures. These activities resulted in
a reduction of approximately 1,000 employees. During 1995, seven additional
bank charters were merged. Since June 30, 1994 approximately 96% of the
liability has been utilized either through cash payments, contractual
commitments, or asset writedowns. At the present time, the Corporation
anticipates that the June 30, 1994 merger/restructuring charge will be adequate
to absorb all related costs.
<PAGE>
CAPITAL RESOURCES
_________________
At September 30, 1995 Shareholders' equity amounted to $1.22 billion or 9.4% of
total consolidated assets compared with $1.06 billion or 8.4% at December 31,
1994 and $1.05 billion or 8.3% at September 30, 1994.
During the third quarter of 1995 the net unrealized gain on securities available
for sale increased $3.1 million and has increased $44.3 million since December
31, 1994.
The Corporation continued to acquire common shares in accordance with the Stock
Repurchase Program approved by the Corporation's Board of Directors. During the
third quarter of 1995, .7 million shares were acquired at an aggregate cost of
$16.9 million. Cumulatively, 12 million shares have been acquired with an
aggregate cost of $264.8 million since inception of the program in April 1993.
The Corporation continues to have a strong capital base and its regulatory
capital ratios remain significantly above the defined minimum regulatory ratios
as shown in the following tables as of September 30, 1995.
<PAGE>
RISK-BASED CAPITAL RATIOS
($ in thousands)
Amount Ratio
__________ ______
Tier 1 capital $1,139,031 11.61%
Tier 1 capital
minimum requirement 392,323 4.00
__________ ______
Excess $ 746,708 7.61%
========== ======
Total capital $1,375,577 14.02%
Total capital
minimum requirement 784,645 8.00
__________ ______
Excess $ 590,932 6.02%
========== ======
Risk-adjusted assets $9,808,068
LEVERAGE RATIO
($ in thousands)
Amount Ratio
___________________ ____________
Tier 1 capital to
adjusted total assets $1,139,031 8.89%
Minimum leverage
requirement (1) 384,561 - 640,935 3.00 - 5.00
__________________ ____________
Excess $754,470 - 498,096 5.89 - 3.89%
================== ============
Adjusted average total assets $12,818,697
(1) The 3% Ratio Shown is effective for banking organizations which have
received the top bank rating from their principal federal banking
regulator. Organizations receiving lower ratings are required to meet
a higher minimum Leverage Ratio of between 4% and 5%.
<PAGE>
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
_________________________________________
A. Exhibits:
Exhibit 11 -Statements - Computation of Earnings Per Share
Exhibit 12 -Marshall & Ilsley Corporation Computation of Ratio of
Earnings to Fixed Charges
Exhibit 27 -Financial Data Schedule
B. Reports on Form 8-K:
None.
<PAGE>
SIGNATURES
Pursuant to the requirements 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
(Registrant)
/s/ P.R. Justiliano
______________________________________
P.R. Justiliano
Senior Vice President and
Corporate Controller
(Chief Accounting Officer)
/s/ J.E. Sandy
______________________________________
J.E. Sandy
Vice President
November 13, 1995
<PAGE>
MARSHALL & ILSLEY CORPORATION EXHIBIT 11
CALCULATION OF EARNINGS PER SHARE
($000's except per share data)
Three Months Ended September 30,
--------------------------------
PRIMARY 1995 1994
- ------- ------------- -------------
Earnings:
Income before extraordinary items $48,579 $44,892
Extraordinary items - 1,123
------------- -------------
Net income $48,579 $46,015
============= =============
Shares:
Weighted average number of common shares
outstanding 94,123 94,923
Additional shares relating to:
Convertible preferred stock 3,833 3,833
Stock options outstanding at end
of each period and exercised
during each period (a) 1,362 1,436
------------- -------------
Total average primary shares outstanding 99,318 100,192
============= =============
PRIMARY EARNINGS (LOSS) PER SHARE:
Income before extraordinary items $0.49 $0.45
Extraordinary items - 0.01
------------- -------------
Net income $0.49 $0.46
============= =============
FULLY DILUTED
- -------------
Earnings:
Income before extraordinary items $48,579 $44,892
Add: Interest on convertible notes,
net of income tax effect 465 465
------------- -------------
Earnings before extraordinary items,
as adjusted 49,044 45,357
Extraordinary items - 1,123
------------- -------------
Total earnings as adjusted $49,044 $46,480
============= =============
Shares:
Weighted average number of common shares
outstanding 94,123 94,923
Additional shares relating to:
Convertible preferred stock 3,833 3,833
Stock options outstanding at end
of each period and exercised
during each period (b) 1,446 1,436
Assumed conversion of convertible notes 3,844 3,845
------------- -------------
Total average fully diluted shares outstanding 103,246 104,037
============= =============
FULLY DILUTED EARNINGS (LOSS) PER SHARE:
Income before extraordinary items $0.48 $0.44
Extraordinary items - 0.01
------------- -------------
$0.48 $0.45
============= =============
Notes:
- ------
(a) Based on the treasury stock method using average market price.
(b) Based on the treasury stock method using period-end market price, if higher
than average market price for options outstanding at end of each period and
market price at date of exercise for options exercised during each period.
<PAGE>
MARSHALL & ILSLEY CORPORATION EXHIBIT 11
CALCULATION OF EARNINGS PER SHARE
($000's except per share data)
Nine Months Ended September 30,
--------------------------------
PRIMARY 1995 1994
- ------- ------------- -------------
Earnings:
Income before extraordinary items $140,951 $46,344
Extraordinary items - 1,123
------------- -------------
Net income $140,951 $47,467
============= =============
Shares:
Weighted average number of common shares
outstanding 93,686 95,485
Additional shares relating to:
Convertible preferred stock 3,833 2,847
Stock options outstanding at end
of each period and exercised
during each period (a) 1,191 1,539
------------- -------------
Total average primary shares outstanding 98,710 99,871
============= =============
PRIMARY EARNINGS PER SHARE:
Income before extraordinary items $1.43 $0.46
Extraordinary items - 0.01
------------- -------------
Net income $1.43 $0.47
============= =============
FULLY DILUTED
- -------------
Earnings:
Income before extraordinary items $140,951 $46,344
Add: Interest on convertible notes,
net of income tax effect 1,394 1,582
------------- -------------
Earnings before extraordinary items,
as adjusted 142,345 47,926
Extraordinary items - 1,123
------------- -------------
Net income $142,345 $49,049
============= =============
Shares:
Weighted average number of common shares
outstanding 93,686 95,485
Additional shares relating to:
Convertible preferred stock 3,833 2,847
Stock options outstanding at end
of each period and exercised
during each period (b) 1,543 1,559
Assumed conversion of convertible notes 3,844 4,830
------------- -------------
Total average fully diluted shares outstanding 102,906 104,721
============= =============
FULLY DILUTED EARNINGS PER SHARE:
Income before extraordinary items $1.38 $0.46
Extraordinary items - 0.01
------------- -------------
Net income $1.38 $0.47
============= =============
Notes:
- ------
(a) Based on the treasury stock method using average market price.
(b) Based on the treasury stock method using period-end market price, if higher
than average market price for options outstanding at end of each period and
market price at date of exercise for options exercised during each period.
<PAGE>
MARSHALL & ILSLEY CORPORATION Exhibit 12
Computation of Ratio of Earnings to Fixed Charges
($ in thousands)
<TABLE>
<CAPTION>
9 Months
Ended Years Ended December 31,
September 30 --------------------------------------------------------------
Earnings: 1995 1994 1993 1992 1991 1990
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Earnings before income taxes, extraordinary
items and cumulative effect of changes
in accounting principles $219,876 $167,803 $264,584 $231,792 $186,738 $143,192
Fixed charges, excluding interest on deposits 84,127 77,074 47,905 50,687 66,641 85,234
----------- ----------- ----------- ----------- ----------- -----------
Earnings including fixed charges but
excluding interest on deposits 304,003 244,877 312,489 282,479 253,379 228,426
Interest on deposits 243,043 255,861 272,100 334,443 448,757 466,537
----------- ----------- ----------- ----------- ----------- -----------
Earnings including fixed charges and
interest on deposits $547,046 $500,738 $584,589 $616,922 $702,136 $694,963
=========== =========== =========== =========== =========== ===========
Fixed Charges:
Interest Expense:
Short-term borrowings $38,842 $39,681 $18,010 $17,606 $32,065 $56,849
Long-term borrowings 40,066 30,537 23,088 26,439 27,770 22,524
One-third of rental expense for all operating
leases (the amount deemed representative
of the interest factor) 5,219 6,856 6,807 6,642 6,806 5,861
----------- ----------- ----------- ----------- ----------- -----------
Fixed charges excluding interest on deposits 84,127 77,074 47,905 50,687 66,641 85,234
Interest on deposits 243,043 255,861 272,100 334,443 448,757 466,537
----------- ----------- ----------- ----------- ----------- -----------
Fixed charges including interest on deposits $327,170 $332,935 $320,005 $385,130 $515,398 $551,771
=========== =========== =========== =========== =========== ===========
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits 3.61 x 3.18 x 6.52 x 5.57 x 3.80 x 2.68 x
Including interest on deposits 1.67 x 1.50 x 1.83 x 1.60 x 1.36 x 1.26 x
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 619,395
<INT-BEARING-DEPOSITS> 7,752,240
<FED-FUNDS-SOLD> 25,579
<TRADING-ASSETS> 14,637
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<LONG-TERM> 494,908
0
349
<COMMON> 99,494
<OTHER-SE> 1,119,428
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<INCOME-PRETAX> 219,876
<INCOME-PRE-EXTRAORDINARY> 219,876
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<EPS-PRIMARY> 1.43
<EPS-DILUTED> 1.38
<YIELD-ACTUAL> 4.30
<LOANS-NON> 50,643
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<ALLOWANCE-CLOSE> 164,287
<ALLOWANCE-DOMESTIC> 164,287
<ALLOWANCE-FOREIGN> 0
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</TABLE>
