<PAGE>
elinl
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 March 31, 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 April 30, 1995
----- ----------------
Common Stock, $1.00 Par Value 93,384,779
<PAGE>
PART 1 - FINANCIAL INFORMATION
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
($000's except share data)
March 31 December 31 March 31
Assets 1995 1994 1994
- ------ ------------ ------------ ------------
Cash and cash equivalents:
Cash and due from banks $570,748 $685,919 $586,395
Federal funds sold and
security resale agreements 208,250 205,248 151,699
Money market funds 115,765 76,724 70,843
------------ ------------ ------------
Total cash and cash equivalents 894,763 967,891 808,937
Trading securities 4,554 20,361 6,490
Other short-term investments 28,509 43,519 45,426
Investment securities held to maturity,
market value $417,615 ($419,521 December
31, and $328,264 March 31, 1994) 421,301 429,456 326,423
Investment securities available for sale at
market value 1,860,232 1,865,147 2,181,015
------------ ------------ ------------
Total investment securities 2,281,533 2,294,603 2,507,438
Loans 8,967,409 8,792,492 8,624,404
Less: Allowance for loan losses 157,689 153,961 137,174
------------ ------------ ------------
Net loans 8,809,720 8,638,531 8,487,230
Premises and equipment, net 294,786 286,435 298,744
Accrued interest and other assets 346,766 361,609 295,246
------------ ------------ ------------
Total Assets $12,660,631 $12,612,949 $12,449,511
============ ============ ============
Liabilities and Shareholders' Equity
- ------------------------------------
Deposits:
Noninterest bearing $1,966,315 $2,199,016 $2,059,855
Interest bearing 7,468,690 7,300,064 7,707,750
------------ ------------ ------------
Total deposits 9,435,005 9,499,080 9,767,605
Funds purchased and security
repurchase agreements 918,878 944,843 939,410
Other short-term borrowings 122,353 166,299 176,653
Long-term borrowings 765,375 653,777 227,770
Accrued expenses and other liabilities 290,731 287,654 223,240
------------ ------------ ------------
Total liabilities 11,532,342 11,551,653 11,334,678
Shareholders' equity:
Series A convertible preferred stock,
$1.00 par value; 348,944 shares issued
(348,944 December 31 and 185,314
March 31, 1994) 349 349 185
Common stock, $1.00 par value; 99,494,335
shares issued (99,494,335 December 31,
and 102,120,704 March 31, 1994) 99,494 99,494 102,121
Additional paid-in capital 189,743 194,697 237,683
Retained earnings 976,882 945,469 921,925
Less: Treasury common stock, at cost;
5,896,692 shares (6,964,920
December 31, and 6,550,461
March 31, 1994) 121,983 143,438 136,379
Deferred compensation 1,281 1,203 1,690
Net unrealized losses on securities
available for sale,
net of related taxes 14,915 34,072 9,012
------------ ------------ ------------
Total shareholders' equity 1,128,289 1,061,296 1,114,833
------------ ------------ ------------
Total Liabilities and
Shareholders' Equity $12,660,631 $12,612,949 $12,449,511
============ ============ ============
See notes to financial statements.
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
($000's except per share data)
Three Months Ended March 31,
-----------------------------
1995 1994
Interest income: ------------ ------------
Loans $185,663 $160,071
Investment securities:
Taxable 28,271 26,453
Exempt from Federal income taxes 4,066 4,114
Trading securities 125 44
Short-term investments 3,558 1,282
------------ ------------
Total interest income 221,683 191,964
Interest expense:
Deposits 73,498 61,596
Short-term borrowings 14,807 6,853
Long-term borrowings 12,434 5,980
------------ ------------
Total interest expense 100,739 74,429
------------ ------------
Net interest income 120,944 117,535
Provision for loan losses 3,983 3,952
------------ ------------
Net interest income after
provision for loan losses 116,961 113,583
Other income:
Data processing services 47,849 37,599
Trust services 15,207 15,570
Other customer services 27,598 30,100
Net securities gains 18 817
Other 7,031 8,998
------------ ------------
Total other income 97,703 93,084
Other expense:
Salaries and employee benefits 80,864 84,152
Net occupancy 8,939 10,103
Equipment 14,847 15,869
Payments to regulatory agencies 5,482 5,934
Processing charges 4,493 4,874
Supplies and printing 3,429 3,362
Professional services 3,651 2,062
Other 20,980 20,300
------------ ------------
Total other expense 142,685 146,656
------------ ------------
Income before income taxes 71,979 60,011
Provision for income taxes 25,844 21,498
------------ ------------
Net income $46,135 $38,513
============ ============
Net income per common share:
Primary $0.47 $0.39
Fully Diluted $0.46 $0.37
Dividends paid per common share $0.15 $0.14
Weighted average common shares outstanding:
Primary 98,492 99,682
Fully diluted 102,407 105,398
See notes to financial statements
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
($000's)
Three Months Ended March 31,
-----------------------------
1995 1994
------------ ------------
Net Cash Provided by Operating Activities $86,813 $113,381
Cash Flows From Investing Activities:
Net decrease in securities with maturities of
three months or less 15,270 4,750
Proceeds from sales of securities available
for sale 211 1,997
Proceeds from maturities of longer term
securities 167,214 384,265
Purchases of longer term securities (81,970) (339,781)
Net increase in loans (62,901) (95,238)
Purchases of assets to be leased (30,206) (15,747)
Principal payments on lease receivables 31,282 28,270
Fixed asset purchases, net (10,138) (10,438)
Cash of banks acquired, net 11,408 -
Other 4,078 (506)
------------ ------------
Net cash provided by (used in) investing
activities 44,248 (42,428)
------------ ------------
Cash Flows From Financing Activities:
Net decrease in deposits (212,959) (404,031)
Proceeds from issuance of commercial paper 201,403 267,746
Payments for maturity of commercial paper (218,090) (291,548)
Net increase (decrease) in other short-term
borrowings (57,370) 410,625
Proceeds from issuance of long-term debt 179,185 7,774
Payments of long-term debt (70,099) (7,643)
Dividends paid (14,710) (13,700)
Purchases of treasury stock (14,415) (19,886)
Other 2,866 4,013
------------ ------------
Net cash used in financing activities (204,189) (46,650)
------------ ------------
Net increase (decrease) in cash and cash
equivalents (73,128) 24,303
Cash and cash equivalents, beginning of year 967,891 784,634
------------ ------------
Cash and cash equivalents, end of period $894,763 $808,937
============ ============
Supplemental cash flow information:
Cash paid during the period for:
Interest $93,195 $72,092
Income taxes 11,616 9,300
See notes to financial statements
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements
March 31, 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 months ended
March 31, 1995 and 1994. The results of operations for the three months
ended March 31, 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):
March 31 December 31 March 31
1995 1994 1994
------------ ------------ ------------
Commercial financial & agricultural $2,761,004 $2,696,724 $2,684,538
Real estate:
Construction 358,390 378,316 319,958
Residential Mortgage 2,332,221 2,240,287 2,131,133
Commercial Mortgage 2,095,285 2,062,022 2,023,181
------------ ------------ ------------
Total real estate 4,785,896 4,680,625 4,474,272
Personal 1,158,305 1,178,453 1,214,295
Lease financing 262,204 256,690 251,299
------------ ------------ ------------
$8,967,409 $8,812,492 $8,624,404
============ ============ ============
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 securites 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):
March 31 December 31 March 31
1995 1994 1994
------------ ------------ ------------
Investment securities held to maturity:
U.S. treasury and
government agencies $134,207 $134,080 -
State and political subdivisions 282,234 290,483 $322,051
Other 4,860 4,893 4,372
------------ ------------ ------------
Investment securities
held to maturity 421,301 429,456 326,423
------------ ------------ ------------
Investment securities available for sale:
U.S. treasury and
government agencies 1,767,147 1,836,476 2,080,659
Other 93,085 81,640 100,356
------------ ------------ ------------
Investment securities
available for sale 1,860,232 1,918,116 2,181,015
------------ ------------ ------------
Total Investment Securities $2,281,533 $2,347,572 $2,507,438
============ ============ ============
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements - Continued
March 31, 1995 & 1994 (Unaudited)
5. On May 31, 1994, Valley Bancorporation merged with and into the Corporation
in a tax-free reorganization accounted for as a pooling of interests.
Accordingly, prior year financial statements have been restated to give
effect to this transaction. A reconciliation of net interest income and net
income of the Corporation as previously reported to the amounts reported
for the three months ended March 31, 1994 as restated for the pooling of
interests is as follows ($ in thousands):
Three
Months Ended
Mar.31, 1994
Net Interest Income: ------------
Corporation, as previously reported $74,296
Valley Bancorporation 43,239
------------
Combined Net Interest Income $117,535
============
Net Income:
Corporation, as previously reported $28,174
Valley Bancorporation 10,339
------------
Combined Net Income $38,513
============
On February 1, 1995, the Corporation acquired the Bank of Burlington
("Burlington") in a tax-free reorganization accounted for as a purchase.
Approximately 1.5 million of the Corporation's treasury common shares with
an aggregate estimated market value of $29.1 million were exchanged for the
outstanding common shares of Burlington. The results of operations for
Burlington are included from the date of acquisition and are not material
to the Corporation. The following table presents the preliminary fair
values of the assets acquired and liabilities assumed and net cash
received for the purchase of Burlington ($ in thousands).
Preliminary estimated fair value of assets acquired $179,927
============
Preliminary estimated fair value of liabilities assumed $150,689
============
Cash received in acquisition $11,560
============
Net cash received in acquisition $11,408
============
6. Effective January 1, 1995, the Corporation adopted Statements of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment of a
Loan" and No. 118, " Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosures" (collectively SFAS 114). SFAS 114
requires that certain impaired loans be measured based on the present
value of expected future cash flows discounted at the loans effective
interest rate. As a practical matter, impairment may be measured based on
the loan's observable market price or the fair value of the collateral for
loans which are collateral dependent. When the measure of the impaired
loan is less than the recorded investment in the loan, the impairment is
recorded through a valuation allowance.
Prior to 1995, the allowance for loan losses attributable to impaired loans
was based on undiscounted cash flows without considering interest or the
fair value of the collateral for collateral dependent loans. As a result of
these new standards, no additional allowance for loan losses was required
as of January 1, 1995.
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements - Concluded
March 31, 1995 & 1994 (Unaudited)
At March 31, 1995 the Corporation's recorded investment in impaired loans
and the related valuation allowance are as follows ($ in thousands):
Recorded Valuation
Investment Allowance
------------ ------------
Total Impaired Loans and Leases
(Nonaccrual and Renegotiated) $48,036
Loans and Leases Excluded from
Evaluation under SFAS 114 (19,944)
------------
Impaired Loans Evaluated $28,092
============
Valuation Allowance Required $3,474 $1,441
No Valuation Allowance Required 24,618
------------ ------------
Impaired Loans Evaluated $28,092 $1,441
============ ============
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 March 31, 1995.
The average recorded investment in total impaired loans and leases for the
three months ended March 31, 1995 was $49,129.
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 three months ended March 31, 1995 interest income
recognized on total impaired loans amounted to $346. The gross income that
would have been recognized had such loans and leases been performing in
accordance with their original terms would have been $1,234 for the same
period.
The activity in the allowance for loan losses for the three months ended
March 31, 1995 and 1994 is presented below ($ in thousands):
1995 1994
------------ ------------
Balance at beginning of year $153,961 $133,600
Allowance of Bank Acquired 1,747 -
Provision for Loan Losses 3,983 3,952
Charge-offs (3,598) (2,287)
Recoveries 1,596 1,909
------------ ------------
Balance at March 31, $157,689 $137,174
============ ============
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEETS (Unaudited)
($000's)
Three Months Ended March 31,
-----------------------------
1995 1994
------------ ------------
Assets
- ------
Cash and due from banks $579,909 $632,653
Short-term investments 238,508 155,182
Trading securities 10,731 3,919
Investment securities:
Taxable 1,975,106 2,213,208
Tax-exempt 322,093 360,802
------------ ------------
Total investment securities 2,297,199 2,574,010
Loans:
Commercial 2,696,722 2,616,248
Real estate 4,731,465 4,494,145
Personal 1,165,967 1,203,754
Lease financing 258,687 254,512
------------ ------------
8,852,841 8,568,659
Less: Allowance for loan losses 156,104 135,798
------------ ------------
Total loans 8,696,737 8,432,861
Premises and equipment, net 290,486 299,349
Accrued interest and other assets 343,648 272,263
------------ ------------
Total Assets $12,457,218 $12,370,237
============ ============
Liabilities and Shareholders' Equity
- ------------------------------------
Deposits:
Noninterest bearing $1,908,010 $2,041,067
Interest bearing 7,372,538 7,769,283
------------ ------------
Total deposits 9,280,548 9,810,350
Funds purchased and security repurchase
agreements 948,142 800,960
Other short-term borrowings 91,965 113,337
Long-term borrowings 742,231 294,111
Accrued expenses and other liabilities 287,664 215,713
------------ ------------
Total liabilities 11,350,550 11,234,471
Shareholders' equity 1,106,668 1,135,766
------------ ------------
Total Liabilities and Shareholders' Equity $12,457,218 $12,370,237
============ ============
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
__________________________________________
Net income for the first quarter of 1995 was $46.1 million compared to $38.5
million for the same period one year ago. Fully diluted earnings per share for
the first quarter of 1995 amounted to $.46 compared to $.37 for the same quarter
last year. The Corporation's return on average assets and return on average
shareholders' equity were 1.50% and 16.91% for the three months ended March 31,
1995 and 1.26% and 13.75% for the three months ended March 31, 1994,
respectively.
The increase in net income of $7.6 million or 19.8% is attributable to an
increase in net interest income, growth in fee revenue and lower operating
expenses due to cost savings achieved since the merger with Valley
Bancorporation (Valley) in May, 1994.
PROVISION FOR LOAN LOSSES AND CREDIT QUALITY
____________________________________________
The provision for loan losses amounted to $4.0 million in the first quarter of
1995 relatively unchanged from the first quarter of 1994. The 1995 provision
level reflects the continued current favorable trends in nonperforming assets
and net charge-offs in relation to the allowance for loan losses.
At March 31, 1995, nonperforming assets were $68.9 million, the lowest level
reported over the past five quarters. Nonaccrual loans, the largest component
of nonperforming assets, decreased $0.4 million when compared to the same period
last year and declined $0.6 million since the fourth quarter of 1994.
Total nonaccrual commercial loans and leases reflected an increase for the first
quarter of 1995 compared to the same period last year and increased $3.2 million
since December 31, 1994. Total nonaccrual real estate loans decreased $1.0
million in the first quarter of 1995 compared to the first quarter of last year
and $3.7 million compared to the fourth quarter of 1994. A decline in
nonaccrual commercial real estate loans was the primary reason for the decrease.
Nonaccrual residential real estate loans, which increased to $11.5 million at
December 31, 1994 from $9.5 million at March 31, 1994 remained relatively
unchanged at March 31, 1995. The change in nonaccrual personal loans was
insignificant.
Net charge-offs in the first quarter of 1995 amounted to $2.0 million or .09%
of average loans annualized. The first quarter 1995 net charge-offs were $1.6
million higher than the same period last year, however they were $0.8 million
less than the fourth quarter of 1994.
The allowance for loan losses was $157.7 million or 1.76% of total loans at
March 31, 1995 compared to $154.0 million or 1.75% of total loans at December
31, 1994 and $137.2 million or 1.59% of total loans at March 31, 1994. The
coverage ratio of the allowance for loan losses to nonperforming loans increased
from 265% at year-end 1994 to 273% at the end of the current quarter. At March
31, 1994, the coverage ratio was 242%. The increase in the allowance for loan
<PAGE>
losses and corresponding coverage ratios at December 31, 1994 and March 31, 1995
was positively impacted by the special loan loss provision of $8,950 recorded
in June, 1994 to conform Valley's loan valuation policies with those of the
Corporation.
The following tables present certain credit quality information and statistics
at March 31, 1995 as well as for the previous four quarters.
CONSOLIDATED CREDIT QUALITY INFORMATION
($000's)
1995 1994
_____________________________________________
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
_____________________________________________
NONPERFORMING ASSETS
Nonaccrual $ 44,210 $ 44,766 $ 53,987 $ 49,384 $ 44,571
Renegotiated 3,826 4,172 4,748 4,328 4,019
Past Due 90 Days or More 9,653 9,093 8,551 7,613 8,028
_____________________________________________
Total Nonperforming Loans $ 57,689 $ 58,031 $ 67,286 $ 61,325 $ 56,618
Other Real Estate Owned 11,209 12,114 9,697 8,494 12,813
_____________________________________________
Total Nonperforming Assets $ 68,898 $ 70,145 $ 76,983 $ 69,819 $ 69,431
==============================================
ALLOWANCE FOR LOAN LOSSES $157,689 $153,961 $152,470 $149,371 $137,174
==============================================
NONACCRUAL LOANS BY TYPE
Commercial
Commercial, Financial &
Agricultural $ 11,134 $ 8,372 $ 11,944 $ 11,410 $ 9,856
Lease Financing
Receivables 2,086 1,601 2,883 2,106 2,756
______________________________________________
Total Commercial 13,220 9,973 14,827 13,516 12,612
Real Estate
Construction and Land
Development 731 902 3,862 3,135 493
Commercial Mortgage 16,227 19,706 21,769 20,188 19,357
Residential Mortgage 11,378 11,453 10,725 10,062 9,492
_____________________________________________
Total Real Estate 28,336 32,061 36,356 33,385 29,342
Personal 2,654 2,732 2,804 2,483 2,617
_____________________________________________
Total Nonaccrual Loans $ 44,210 $ 44,766 $ 53,987 $ 49,384 $ 44,571
==============================================
<PAGE>
1995 1994
_____________________________________________
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
_____________________________________________
RECONCILIATION OF CONSOLIDATED ALLOWANCE FOR LOAN LOSSES
Beginning Balance $153,961 $152,470 $149,371 $137,174 $133,600
Provision for Loan Losses 3,983 4,299 3,655 13,001 3,952
Allowance of Bank Acquired 1,747 --- --- --- ---
Loans Charged-off
Commercial 809 1,192 653 974 482
Real Estate 1,328 1,501 383 1,191 903
Personal 1,328 1,636 877 1,089 773
Leases 133 409 80 289 129
______________________________________________
Total Charge-offs 3,598 4,738 1,993 3,543 2,287
Recoveries on Loans
Commercial 890 1,062 381 1,683 549
Real Estate 225 386 681 538 869
Personal 479 448 347 504 490
Leases 2 34 28 14 1
______________________________________________
Total Recoveries 1,596 1,930 1,437 2,739 1,909
______________________________________________
Net Loans Charged-off 2,002 2,808 556 804 378
______________________________________________
Ending Balance $157,689 $153,961 $152,470 $149,371 $137,174
==============================================
CONSOLIDATED STATISTICS
Net Charge-offs
to Average Loans
Annualized 0.09% 0.13% 0.02% 0.04% 0.02%
Total Nonperforming Loans
to Total Loans 0.64 0.66 0.76 0.70 0.66
Total Nonperforming Assets
to Total Loans and Other
Real Estate Owned 0.77 0.80 0.86 0.80 0.80
Allowance for Loan Losses
to Total Loans 1.76 1.75 1.71 1.71 1.59
Allowance for Loan Losses
to Nonperforming Loans 273 265 227 244 242
<PAGE>
As more fully discussed in Note 6 to the consolidated financial statements, the
Corporation adopted the new accounting standards on loan impairment effective
January 1, 1995. No additional allowance for loan losses was required as a
result of adopting these pronouncements.
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 after-tax merger related charges of $76.1
million in the second quarter and the merger related gains of $1.1 million and
$11.0 million in the third and fourth quarters, respectively.
1995 1994
__________________________________________
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
__________________________________________
Interest Income 7.29% 6.99% 6.74% 6.48% 6.38%
Interest Expense (3.28) (2.86) (2.67) (2.51) (2.44)
______ ______ ______ ______ ______
Net Interest Income 4.01 4.13 4.07 3.97 3.94
Provision for Loan Losses (0.13) (0.14) (0.12) (0.13) (0.13)
Net Securities Gains (Losses) 0.00 0.02 0.01 (0.01) 0.03
Other Income 3.18 2.96 2.89 2.94 3.02
Other Expense (4.64) (4.51) (4.52) (4.71) (4.81)
______ ______ ______ ______ ______
Income Before Income Taxes 2.42 2.46 2.33 2.06 2.05
Income Taxes (0.92) (0.94) (0.91) (0.80) (0.79)
______ ______ ______ ______ ______
Return on Assets 1.50% 1.52% 1.42% 1.26% 1.26%
====== ====== ====== ====== ======
NET INTEREST INCOME
___________________
Net interest income for the first quarter of 1995 was $120.9 million compared
to $117.5 million for the same period one year ago, an increase of $3.4 million
or 2.9%. The benefit of the increase in rates earned and a slight increase in
the average volume of earning assets, primarily loans, 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 $97.5 million or 0.9% in the first quarter of
1995 compared to the same period one year ago. Average loan growth of $284.2
million or 3.3% was offset, in part, by a decline in average total investment
securities of $276.8 million.
<PAGE>
Total average interest bearing liabilities increased $177.2 million or 2.0% in
the first quarter of 1995 compared to the same period last year. The
composition of average interest bearing liabilities reflects the liability mix
change that was seen throughout 1994. Interest bearing deposits declined $396.7
million and the lack of noninterest bearing deposit growth resulted in short-
term borrowings increasing $125.8 million in the first quarter of 1995 compared
to the same period a year ago. Long-term borrowings also increased $448.1
million from $294.1 for the first quarter of 1994 to $742.2 million for the
current quarter. Noninterest bearing deposit accounts declined $133.1 million.
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 was approximately $300 million and total loan
sales were approximately $200 million. The effect of these divestitures was
somewhat offset by the February 1, 1995 acquisition of the Bank of Burlington,
which was accounted for as a purchase. This bank had total loans of $113
million and total deposits of $149 million at the date of acquisition.
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
First Fourth Third Second First Growth
Quarter Quarter Quarter Quarter Quarter PCT
________________________________________________
Commercial Loans $2,697 $ 2,643 $ 2,740 $ 2,715 $2,616 3.1%
Real Estate Loans
Construction 367 385 343 321 331 10.9
Commercial
Mortgages 2,072 2,058 2,066 2,031 2,016 2.8
Residential
Mortgages 2,292 2,227 2,219 2,149 2,147 6.7
_________________________________________________
Total Real Estate Loans 4,731 4,670 4,628 4,501 4,494 5.3
Personal Loans
Personal Loans 872 901 946 952 948 (8.1)
Student Loans 294 278 265 259 256 15.3
_________________________________________________
Total Personal Loans 1,166 1,179 1,211 1,211 1,204 (3.1)
Lease Financing
Receivables 259 257 258 257 255 1.6
_________________________________________________
Total Consolidated
Average Loans $8,853 $ 8,749 $ 8,837 $ 8,684 $8,569 3.3%
===================================================
<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
First Fourth Third Second First Growth
Quarter Quarter Quarter Quarter Quarter PCT
________________________________________________
Noninterest
Bearing
Commercial $1,248 $ 1,363 $ 1,298 $ 1,271 $1,270 (1.7)%
Personal 400 413 432 444 426 (6.0)
Other 260 318 305 322 345 (24.8)
__________________________________________________
Total Noninterest
Bearing Deposits 1,908 2,094 2,035 2,037 2,041 (6.5)
Interest Bearing
Savings & NOW 2,084 2,290 2,484 2,477 2,455 (15.1)
Money Market 1,767 1,606 1,495 1,481 1,523 16.0
Other CDs & Time
Deposits 3,037 3,135 3,227 3,233 3,313 (8.3)
CDs Greater than
$100 485 350 444 481 478 1.4
_________________________________________________
Total Interest
Bearing Deposits 7,373 7,381 7,650 7,672 7,769 (5.1)
_________________________________________________
Total Consolidated
Average Deposits $9,281 $ 9,475 $ 9,685 $ 9,709 $9,810 (5.4%)
=================================================
The yield on average earning assets increased 99 basis points while the cost of
interest-bearing deposits increased 82 basis points in the first 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 first quarter of 1995, the average money market index account amounted
to approximately $610 million. This new product resulted in approximately $300
million of new deposit growth. The remaining balances were the result of
disintermediation from other M&I deposit accounts. The average rate paid on
this index account amounted to 5.4% compared to 3.7% for the tier equivalent
nonindexed money market account for the three months ended March 31, 1995. The
increase in short-term borrowing costs of 273 basis points also impacted net
interest income. The average cost of long-term borrowings decreased 146 basis
points due, in part, to the conversion of $16.4 million of 8.5% convertible debt
and refinancing of $53 million of Valley Senior debt (with an average cost of
approximately 9.9%) during the second and third quarters of 1994, respectively.
As previously stated, the average volume of long-term borrowings increased.
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 first
quarter of 1995 average Bank Notes amounted to $357.6 million. 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
margins.
At the present time, the Corporation is not involved in derivatives, other than
normal foreign exchange trading.
Yield & Cost Analysis 1995 1994
($000's) _________________________________________________________
Average Average
Average Yield or Average Yield or
Balance Interest Cost Balance Interest Cost
_________________________________________________________
Loans $ 8,852,841 $186,193 8.53% $ 8,568,659 $160,696 7.61%
Investment
Securities:
Taxable 1,975,106 28,271 5.80 2,213,208 26,453 4.85
Tax Exempt 322,093 5,798 7.30 360,802 6,075 6.83
Other Short-term
Investments 249,239 3,688 6.00 159,101 1,330 3.39
_________________________________________________________
Total Interest
Earning Assets $11,399,279 $223,950 7.97% $11,301,770 $194,554 6.98%
=========================================================
Money Market
Savings $ 1,766,662 $ 17,124 3.93% $ 1,523,127 $ 8,865 2.36%
Regular Savings
& NOW 2,083,717 11,322 2.20 2,454,542 11,817 1.95
Other CDs & Time
Deposits 3,036,848 38,491 5.14 3,313,169 36,280 4.44
CD's Greater than
$100 485,311 6,561 5.48 478,445 4,634 3.93
_________________________________________________________
Total Interest
Bearing Deposits 7,372,538 73,498 4.04 7,769,283 61,596 3.22
Short-term
Borrowings 1,040,107 14,807 5.77 914,297 6,853 3.04
Long-term
Borrowings 742,231 12,434 6.79 294,111 5,980 8.25
________________________________________________________
Total Interest
Bearing
Liabilities $ 9,154,876 $100,739 4.46% $ 8,977,691 $ 74,429 3.36%
========================================================
Net Interest Margin
(FTE) as a Percent
of Average Earning
Assets $123,211 4.38% $120,125 4.31%
======== ===== ======== =====
OTHER INCOME
____________
Total other income was $97.7 million for the first quarter of 1995, an increase
of $4.6 million or 5.0% when compared to $93.1 million earned in the first
quarter of 1994. Fees from data processing services grew $10.3 million or 27.3%
and amounted to $47.8 million this quarter compared to $37.6 million for the
same period last year. This increase was due primarily to processing and
software sales revenue. Lower security gains realized in the first quarter of
1995 compared to the same period last year resulted in a decline of $.8 million.
<PAGE>
Trust fees declined $.4 million or 2.3%. While total trust fees were lower for
the first quarter of 1995 when compared to the same quarter last year, it
increased when compared to the last three quarters of 1994. Fees from other
customer services declined 8.3% or $2.5 million. A $1.1 million decrease in
service charges on deposit accounts and a decline of $1.4 million in other
commissions and fees accounted for the change. Other income decreased $2.0
million or 27.0% this quarter compared to the same quarter last year. This
decline resulted primarily from the sales of the Corporation's insurance
agencies in the later part of 1994.
OTHER EXPENSE
_____________
Total other expense for the first quarter of 1995 declined $4.0 million or 2.7%,
from the same period a year ago. A majority of the expense categories reflected
a decrease or a modest increase when compared to the first quarter of 1994. As
noted in our 1994 Annual Report to shareholders, a restructuring/merger charge
related to the Valley merger was recorded in the second quarter of 1994. This
$76.6 million charge reflected the costs associated with a reduction in work
force, the write-off of duplicate computer and software costs, and other one-
time costs. The decline in salaries and benefits expense, occupancy, and
equipment expense reflects the cost savings achieved through the merger. The
decrease in payments to regulatory agencies was primarily due to lower deposit
insurance costs due to the sale of deposit accounts in 1994 and a decline in
insured deposit accounts overall. Supplies expense were not significantly
affected by the merger. Professional services expense amounted to $3.7 million
for the first quarter of 1995 compared to $2.1 million for the same period last
year. Approximately $.8 million of the increase was due to costs incurred for
technological assistance in software development. The other miscellaneous
expense category is affected by the capitalization of costs, net of
amortization, associated with software development and data processing
conversions. Despite the professional services expense increase of $.8 million,
the amount of cost capitalized, net of amortization in the first quarter of
1995, was less than the amount recorded in the first quarter of 1994 by
approximately $0.5 million.
As noted in prior discussions, M&I Data Services, the Corporation's data
processing division (DSI) has been a large contributor to the Corporation's
overall expense growth. As part of the Valley merger, Valley's data processing
and operations subsidiary, which performed data processing and operational
functions for their affiliated companies only, was merged into DSI. While DSI
continues to grow and expand, the merger efficiencies have resulted in DSI's
expense growth declining to 11.6% for the first quarter of 1995 when compared
to the same period one year ago. Excluding DSI's growth in total other
expenses, our other affiliates realized an overall expense decline of
approximately $9.8 million when comparing the first quarter of 1995 to the same
period last year.
INCOME TAXES
____________
The income tax provision for the three months ended March 31, 1995 amounted to
$25.8 million compared to $21.5 million for the three months ended March 31,
1994. The effective tax rate remained relatively unchanged.
<PAGE>
MERGER/RESTRUCTURING - UPDATE
_____________________________
As noted above, the merger/restructuring charge of $76.6 million 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 it is anticipated
that seven additional bank charters will be merged. Since June 30, 1994
approximately 89% 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.
CAPITAL RESOURCES
_________________
At March 31, 1995 Shareholders' equity amounted to $1.13 billion or 8.9% of
total consolidated assets compared with $1.06 billion or 8.4% at December 31,
1994 and $1.11 billion or 9.0% at March 31, 1995.
During the first quarter of 1995 the net unrealized loss on securities available
for sale decreased $19.2 million.
The Corporation continued to acquire common shares in accordance with the Stock
Repurchase Program approved by the Corporation's Board of Directors. During the
first quarter of 1995, 0.7 million shares were acquired at an aggregate cost of
$15.9 million. Cumulatively 10.6 million shares have been acquired with an
aggregate cost of $232.4 million since inception of the program in April 1993.
The corporation continues to have a strong capital base and its regulatory
capital ratios remain significantly above the defined minimum regulatory ratios
as shown in the following tables as of March 31, 1995.
<PAGE>
RISK-BASED CAPITAL RATIOS
($ in thousands)
Amount Ratio
__________ ______
Tier 1 capital $1,082,740 11.51%
Tier 1 capital
minimum requirement 376,124 4.00
__________ ______
Excess $ 706,616 7.51%
========== ======
Total capital $1,314,203 13.98%
Total capital
minimum requirement 752,248 8.00
__________ ______
Excess $ 561,955 5.98%
========== ======
Risk-adjusted assets $9,403,094
LEVERAGE RATIO
($ in millions)
Amount Ratio
___________________ ____________
Tier 1 capital to
adjusted total assets $ 1,082,740 8.72%
Minimum leverage
requirement (1) 372,667 - 621,112 3.00 - 5.00
___________________ ____________
Excess $ 710,073 - 461,628 5.72 - 3.72%
=================== ============
Adjusted average total assets $12,422,247
(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 10 - Employment Agreement dated March 15, 1992 and amended
April 3, 1995, between Marshall & Ilsley Corporation and
Mr. Donald W. Layden, Jr.
Exhibit 11 - Statement - 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
May 12, 1995
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT, entered into as of the 16th day of March,
1992, by and between MARSHALL & ILSLEY CORPORATION (the "Company"),
and Donald W. Layden, Jr. (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 automatically 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 the request of a third party who
<PAGE>
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
<PAGE>
(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
<PAGE>
(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 beneficial 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 Vice President 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 or
at any office or location less than thirty-five (35) miles from
such location, unless mutually agreed to in writing by the parties.
<PAGE>
(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 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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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
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
<PAGE>
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 Disability, Cause,
as a result of his death or by the Executive other than for
Good Reason;
(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
<PAGE>
(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) 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
<PAGE>
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:
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
<PAGE>
(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 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
<PAGE>
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 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)
<PAGE>
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 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,
<PAGE>
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 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 to 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
performance 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
<PAGE>
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.
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.
<PAGE>
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 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 compliance 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
<PAGE>
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 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.
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: ___________________________________
Title:
ATTEST:
_______________________________
Secretary
EXECUTIVE:
______________________________________
Address: ______________________________
______________________________
<PAGE>
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT is entered into as
of the 3rd day of April, 1995, by and between MARSHALL & ILSLEY
CORPORATION (the "Company") and DONALD W. LAYDEN, JR (the
"Executive") (herein collectively referred to as "the parties")
W I T N E S S E T H:
WHEREAS, the Company and the Executive have entered into
an Employment Agreement dated as of the 16th day of March, 1992
(the "Employment Agreement"); and
WHEREAS, the parties wish to amend the Employment
Agreement.
NOW, THEREFORE, in consideration of the respective
agreements of the parties contained herein, it is agreed as
follows:
1. The following Section 22 is hereby added to the
Employment Agreement.
"22. Limitation on Payments.
(a) Notwithstanding anything contained herein to the
contrary, prior to the payment of any amounts pursuant to
Section 6(a) hereof, an independent national accounting firm
designated by the Company (the "Accounting Firm") shall
compute whether there would be any "excess parachute payments"
payable to the Executive, within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code"),
taking into account the total "parachute payments," within the
meaning of Section 280G of the Code, payable to the Executive
by the Company or any successor thereto under this Agreement
and any other plan, agreement or otherwise. If there would be
any excess parachute payments, the Accounting Firm will
compute the net after-tax proceeds to the Executive, taking
into account the excise tax imposed by Section 4999 of the
Code, if (i) the payments hereunder were reduced, but not
below zero, such that the total parachute payments payable to
the Executive would not exceed three (3) times the "base
amount" as defined in Section 280G of the Code, less One
Dollar ($1.00), or (ii) the payments hereunder were not
reduced. If reducing the payments hereunder would result in
a greater after-tax amount to the Executive, such lesser
amount shall be paid to the Executive. If not reducing the
payments hereunder would result in a greater after-tax amount
to the Executive, such payments shall not be reduced. The
determination by the Accounting Firm shall be binding upon the
Company and the Executive subject to the application of
Section 22(b) hereof.
(b) As a result of the uncertainty in the application of
Sections 280G of the Code, it is possible that excess
parachute payments will be paid when such payment would result
in a lesser after-tax amount to the Executive; this is not the
intent hereof. In such cases, the payment of any excess
parachute payments will be void ab initio as regards any such
excess. Any excess will be treated as a loan by the Company
to the Executive. The Executive will return the excess to the
Company, within fifteen (15) business days of any
determination by the Accounting Firm that excess parachute
payments have been paid when not so intended, with interest at
an annual rate equal to the rate provided in Section 1274(d)
of the Code (or 120% of such rate if the Accounting Firm
determines that such rate is necessary to avoid an excise tax
under Section 4999 of the Code) from the date the Executive
received the excess until it is repaid to the Company.
(c) All fees, costs and expenses (including, but not
limited to, the cost of retaining experts) of the Accounting
Firm shall be borne by the Company and the Company shall pay
such fees, costs and expenses as they become due. In
performing the computations required hereunder, the Accounting
Firm shall assume that taxes will be paid for state and
federal purposes at the highest possible marginal tax rates
which could be applicable to the Executive in the year of
receipt of the payments, unless the Executive agrees
otherwise."
2. The Employment Agreement, as amended hereby, shall
remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Amendment
to Employment Agreement to be executed by its duly authorized
officer and the Executive has executed this Amendment as of the day
and year first above written.
MARSHALL & ILSLEY CORPORATION:
ATTEST:
By: /s/ G.D. Strelow
___________________________
G.D. Strelow, Senior Vice
President
/s/ M.A. Hatfield
_________________________
M.A. Hatfield, Secretary
EXECUTIVE:
/s/ Donald W. Layden, Jr.
______________________________
Donald W. Layden, Jr.
Address:
6324 Washington Circle
Wauwatosa, WI 53213
RJE-M&I Employment Agreement
ea-layden.rje
5/5/95
<PAGE>
MARSHALL & ILSLEY CORPORATION EXHIBIT 11
CALCULATION OF EARNINGS PER SHARE
($000's except per share data)
Three Months Ended March 31,
-----------------------------
PRIMARY 1995 1994
- ------- ------------ ------------
Earnings:
Net income $46,135 $38,513
============ ============
Shares:
Weighted average number of common shares
outstanding 93,542 96,063
Additional shares relating to:
Convertible preferred stock 3,833 1,963
Stock options outstanding at end
of each period and exercised
during each period (a) 1,117 1,656
------------ ------------
Total average primary shares outstanding 98,492 99,682
============ ============
PRIMARY EARNINGS PER SHARE $0.47 $0.39
============ ============
FULLY DILUTED
- -------------
Earnings:
Net income $46,135 $38,513
Add: Interest on convertible notes,
net of income tax effect 465 691
------------ ------------
Total earnings as adjusted $46,600 $39,204
============ ============
Shares:
Weighted average number of common shares
outstanding 93,542 96,063
Additional shares relating to:
Convertible preferred stock 3,833 1,963
Stock options outstanding at end
of each period and exercised
during each period (b) 1,188 1,658
Assumed conversion of convertible notes 3,844 5,714
------------ ------------
Total average fully diluted shares outstanding 102,407 105,398
============ ============
FULLY DILUTED EARNINGS PER SHARE $0.46 $0.37
============ ============
Notes:
- ------
(a) Based on the treasury stock method using average market price.
(b) Based on the treasury stock method using period-end market price, if higher
than average market price for options outstanding at end of each period and
market price at date of exercise for options exercised during each period.
<PAGE>
Exhibit 12
MARSHALL & ILSLEY CORPORATION
Computation of Ratio of Earnings to Fixed Charges
($ in thousands)
<TABLE>
<CAPTION>
3 Months
Ended Years Ended December 31,
March 31 -----------------------------------------------------------
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 $71,979 $167,803 $264,584 $231,792 $186,738 $143,192
Fixed charges, excluding interest on deposits 28,955 77,074 47,905 50,687 66,641 85,234
----------- ----------- ----------- ----------- ----------- -----------
Earnings including fixed charges but
excluding interest on deposits 100,934 244,877 312,489 282,479 253,379 228,426
Interest on deposits 73,498 255,861 272,100 334,443 448,757 466,537
----------- ----------- ----------- ----------- ----------- -----------
Earnings including fixed charges and
interest on deposits $174,432 $500,738 $584,589 $616,922 $702,136 $694,963
=========== =========== =========== =========== =========== ===========
Fixed Charges:
Interest Expense:
Short-term borrowings $14,807 $39,681 $18,010 $17,606 $32,065 $56,849
Long-term borrowings 12,434 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) 1,714 6,856 6,807 6,642 6,806 5,861
----------- ----------- ----------- ----------- ----------- -----------
Fixed charges excluding interest on deposits 28,955 77,074 47,905 50,687 66,641 85,234
Interest on deposits 73,498 255,861 272,100 334,443 448,757 466,537
----------- ----------- ----------- ----------- ----------- -----------
Fixed charges including interest on deposits $102,453 $332,935 $320,005 $385,130 $515,398 $551,771
=========== =========== =========== =========== =========== ===========
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits 3.49 x 3.18 x 6.52 x 5.57 x 3.80 x 2.68 x
Including interest on deposits 1.70 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> MAR-31-1995
<CASH> 570,748
<INT-BEARING-DEPOSITS> 7,468,690
<FED-FUNDS-SOLD> 208,250
<TRADING-ASSETS> 4,554
<INVESTMENTS-HELD-FOR-SALE> 1,860,232
<INVESTMENTS-CARRYING> 421,301
<INVESTMENTS-MARKET> 417,615
<LOANS> 8,967,409
<ALLOWANCE> 157,689
<TOTAL-ASSETS> 12,660,631
<DEPOSITS> 9,435,005
<SHORT-TERM> 1,041,231
<LIABILITIES-OTHER> 290,731
<LONG-TERM> 765,375
0
349
<COMMON> 99,494
<OTHER-SE> 1,028,446
<TOTAL-LIABILITIES-AND-EQUITY> 12,660,631
<INTEREST-LOAN> 185,663
<INTEREST-INVEST> 32,337
<INTEREST-OTHER> 3,683
<INTEREST-TOTAL> 221,683
<INTEREST-DEPOSIT> 73,498
<INTEREST-EXPENSE> 27,241
<INTEREST-INCOME-NET> 120,944
<LOAN-LOSSES> 3,983
<SECURITIES-GAINS> 18
<EXPENSE-OTHER> 142,685
<INCOME-PRETAX> 71,979
<INCOME-PRE-EXTRAORDINARY> 71,979
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 46,135
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.46
<YIELD-ACTUAL> 4.38
<LOANS-NON> 44,210
<LOANS-PAST> 9,653
<LOANS-TROUBLED> 3,826
<LOANS-PROBLEM> 57,689
<ALLOWANCE-OPEN> 153,961
<CHARGE-OFFS> 3,598
<RECOVERIES> 1,596
<ALLOWANCE-CLOSE> 157,689
<ALLOWANCE-DOMESTIC> 157,689
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
