<PAGE>
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 June 30, 1996
--------------------------------------------
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 July 31, 1996
----- --------------
Common Stock, $1.00 Par Value 91,741,543
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
($000's except share data)
June 30 December 31 June 30
Assets 1996 1995 1995
- ------ ---------------------------------------
Cash and cash equivalents:
Cash and due from banks $ 606,384 $ 745,911 $ 630,157
Federal funds sold and
security resale agreements 59,076 66,618 43,250
Money market funds 76,768 84,960 122,494
---------------------------------------
Total cash and cash equivalents 742,228 897,489 795,901
Trading securities 31,742 38,601 13,946
Other short-term investments 32,670 95,635 37,735
Investment securities held to maturity,
market value $613,339 ($453,240 December 31,
and $453,617 June 30, 1995) 620,159 450,457 451,079
Investment securities available for sale at
market value 2,731,938 2,458,600 1,845,273
---------------------------------------
Total investment securities 3,352,097 2,909,057 2,296,352
Loans 9,012,023 8,868,902 9,174,548
Less: Allowance for loan losses 163,866 161,430 160,565
---------------------------------------
Net loans 8,848,157 8,707,472 9,013,983
Premises and equipment, net 301,723 306,988 291,396
Accrued interest and other assets 374,230 387,855 349,659
---------------------------------------
Total Assets $ 13,682,847 $ 13,343,097 $ 12,798,972
=======================================
Liabilities and Shareholders' Equity
- ------------------------------------
Deposits:
Noninterest bearing $ 2,164,671 $ 2,363,194 $ 2,062,817
Interest bearing 8,035,514 7,917,583 7,564,044
---------------------------------------
Total deposits 10,200,185 10,280,777 9,626,861
Funds purchased and security
repurchase agreements 909,293 517,576 803,066
Other short-term borrowings 753,513 497,446 279,702
Long-term borrowings 253,375 422,550 642,413
Accrued expenses and other liabilities 298,392 367,131 279,890
---------------------------------------
Total liabilities 12,414,758 12,085,480 11,631,932
Shareholders' equity:
Series A convertible preferred stock,
$1.00 par value; 517,129 shares issued
(348,944 at December 31, and June 30,1995) 517 349 349
Common stock, $1.00 par value; 99,494,335
shares issued 99,494 99,494 99,494
Additional paid-in capital 201,930 190,287 188,136
Retained earnings 1,138,077 1,075,789 1,007,105
Less: Treasury common stock, at cost;
7,514,437 shares (5,968,631 December 31,
and 6,457,394 June 30, 1995) 171,382 128,459 134,037
Deferred compensation 1,024 1,090 1,132
Net unrealized gains on securities
available for sale, net of related taxes 477 21,247 7,125
---------------------------------------
Total shareholders' equity 1,268,089 1,257,617 1,167,040
---------------------------------------
Total Liabilities and
Shareholders' Equity $ 13,682,847 $ 13,343,097 $ 12,798,972
=======================================
See notes to financial statements.
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
($000's except per share data)
Three Months Ended June 30,
----------------------------
Interest income 1996 1995
- --------------- ----------------------------
Loans $ 184,923 $ 195,406
Investment securities:
Taxable 41,191 28,065
Exempt from Federal income taxes 7,180 4,135
Trading securities 270 165
Short-term investments 2,463 3,021
----------------------------
Total interest income 236,027 230,792
Interest expense
- ----------------
Deposits 87,513 82,044
Short-term borrowings 12,778 12,717
Long-term borrowings 11,803 13,748
----------------------------
Total interest expense 112,094 108,509
----------------------------
Net interest income 123,933 122,283
Provision for loan losses 3,548 4,005
----------------------------
Net interest income after
provision for loan losses 120,385 118,278
Other income
- ------------
Data processing services 65,976 52,337
Trust services 17,518 16,058
Other customer services 28,745 26,078
Net securities gains (losses) 134 (51)
Other 8,237 7,821
----------------------------
Total other income 120,610 102,243
Other expense
- -------------
Salaries and employee benefits 93,217 83,948
Net occupancy 9,664 8,787
Equipment 19,707 16,157
Payments to regulatory agencies 583 5,560
Processing charges 4,291 4,361
Supplies and printing 3,824 3,965
Professional services 4,497 4,713
Other 28,412 21,996
----------------------------
Total other expense 164,195 149,487
----------------------------
Income before income taxes 76,800 71,034
Provision for income taxes 26,432 24,797
----------------------------
Net income $ 50,368 $ 46,237
============================
Net income per common share
- ---------------------------
Primary $ 0.51 $ 0.47
Fully Diluted 0.50 0.46
Dividends paid per common share $ 0.185 $ 0.165
Weighted average common shares outstanding:
Primary 99,420 98,315
Fully diluted 101,391 102,276
See notes to financial statements
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
($000's except per share data)
Six Months Ended June 30,
----------------------------
Interest income 1996 1995
- --------------- ----------------------------
Loans $ 370,739 $ 381,069
Investment securities:
Taxable 79,764 56,336
Exempt from Federal income taxes 13,336 8,201
Trading securities 526 290
Short-term investments 5,091 6,579
----------------------------
Total interest income 469,456 452,475
Interest expense
- ----------------
Deposits 175,115 155,542
Short-term borrowings 22,803 27,524
Long-term borrowings 24,968 26,182
----------------------------
Total interest expense 222,886 209,248
----------------------------
Net interest income 246,570 243,227
Provision for loan losses 7,125 7,988
----------------------------
Net interest income after
provision for loan losses 239,445 235,239
Other income
- ------------
Data processing services 124,358 100,186
Trust services 34,320 31,265
Other customer services 57,645 53,676
Net securities gains (losses) 184 (33)
Other 16,816 14,852
----------------------------
Total other income 233,323 199,946
Other expense
- -------------
Salaries and employee benefits 184,845 164,812
Net occupancy 19,638 17,726
Equipment 39,109 31,004
Payments to regulatory agencies 1,123 11,042
Processing charges 9,233 8,854
Supplies and printing 8,434 7,394
Professional services 8,455 8,364
Other 52,548 42,976
----------------------------
Total other expense 323,385 292,172
----------------------------
Income before income taxes 149,383 143,013
Provision for income taxes 52,860 50,641
----------------------------
Net income $ 96,523 $ 92,372
============================
Net income per common share
- ---------------------------
Primary $ 0.98 $ 0.94
Fully Diluted 0.96 0.91
Dividends paid per common share $ 0.350 $ 0.315
Weighted average common shares outstanding:
Primary 98,807 98,402
Fully diluted 101,796 102,425
See notes to financial statements
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
($000's)
Six Months Ended June 30,
----------------------------
1996 1995
----------------------------
Net Cash Provided by Operating Activities $ 85,363 $ 99,369
Cash Flows From Investing Activities:
- -------------------------------------
Net decrease in securities with maturities
of three months or less 65,250 6,050
Proceeds from sales of securities
available for sale 217,116 103,827
Proceeds from maturities of longer
term securities 438,728 289,390
Purchases of longer term securities (1,046,552) (289,007)
Net increase in loans (233,232) (267,799)
Purchases of assets to be leased (65,047) (59,611)
Principal payments on lease receivables 67,193 68,192
Fixed asset purchases, net (13,454) (16,434)
Cash of banks acquired, net -- 11,400
Other 2,398 7,530
----------------------------
Net cash used in
investing activities (567,600) (146,462)
----------------------------
Cash Flows From Financing Activities:
- -------------------------------------
Net decrease in deposits (80,592) (21,104)
Proceeds from issuance of commercial paper 380,585 598,826
Payments for maturity of commercial paper (394,947) (608,449)
Net increase (decrease) in other
short-term borrowings 661,973 (166,260)
Proceeds from issuance of long-term debt 32,403 207,394
Payments of long-term debt (190,561) (78,079)
Dividends paid (34,060) (30,748)
Purchases of treasury stock (54,442) (31,301)
Other 6,617 4,824
----------------------------
Net cash provided by (used in)
financing activities 326,976 (124,897)
----------------------------
Net decrease in cash and cash equivalents (155,261) (171,990)
Cash and cash equivalents, beginning of year 897,489 967,891
----------------------------
Cash and cash equivalents, end of period $ 742,228 $ 795,901
============================
Supplemental cash flow information:
- -----------------------------------
Cash paid during the period for:
Interest $ 230,430 $ 196,429
Income taxes 56,715 56,172
See notes to financial statements
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements
June 30, 1996 & 1995 (Unaudited)
1. The accompanying unaudited consolidated financial statements should be read
in conjunction with Marshall & Ilsley Corporation's ("Corporation") 1995
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 and six
months ended June 30, 1996 and 1995. The results of operations for the
three months and six months ended June 30, 1996 and 1995 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):
June 30 December 31 June 30
1996 1995 1995
---------------------------------
Commercial financial & agricultural $3,052,286 $2,933,278 $2,875,578
Real estate:
Construction 274,670 303,345 335,270
Residential Mortgage 2,010,154 2,002,023 2,384,246
Commercial Mortgage 2,264,484 2,189,449 2,153,805
---------------------------------
Total real estate 4,549,308 4,494,817 4,873,321
Personal 1,122,209 1,163,127 1,163,407
Lease financing 288,220 277,680 262,242
---------------------------------
$9,012,023 $8,868,902 $9,174,548
=================================
4. Investment securities, by type, held by the Corporation are as
follows ($000's):
June 30 December 31 June 30
1996 1995 1995
---------------------------------
Investment securities held to maturity:
U.S. treasury and
government agencies $ -- $ -- $ 134,332
State and political subdivisions 616,103 446,113 312,384
Other 4,056 4,344 4,363
---------------------------------
Investment securities
held to maturity 620,159 450,457 451,079
Investment securities available for sale:
U.S. treasury and
government agencies 2,573,758 2,346,866 1,748,042
State and political subdivisions 888 894 --
Other 157,292 110,840 97,231
---------------------------------
Investment securities
available for sale 2,731,938 2,458,600 1,845,273
---------------------------------
Total investment securities $3,352,097 $2,909,057 $2,296,352
=================================
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements - Continued
June 30, 1996 & 1995 (Unaudited)
5. As part of its asset/liability management activities, the Corporation may
enter into interest rate futures, forwards, swaps and option contracts.
These derivative financial instruments are categorized as risk management
instruments and are carried at fair value unless the instrument qualifies
for hedge accounting treatment. Fair value adjustments on risk management
instruments carried at fair value are reflected in other operating income.
Gains and losses realized on futures and forward contracts qualifying as
hedges are deferred and amortized over the terms of the related assets or
liabilities and are included as adjustments to interest income or expense.
Settlement on interest rate swaps and option contracts are recognized over
the lives of the agreements as adjustments to interest income or interest
expense.
Interest rate contracts used in connection with the securities portfolio
that are designated as available for sale are carried at fair value with
gains and losses, net of applicable deferred income taxes, reported in a
separate component of shareholders' equity, consistent with the reporting
of unrealized gains and losses on such securities.
6. On April 1, 1996, $16,819 of the Corporation's 8.5% convertible subordinated
notes were converted by the holder into 1,922,114 shares of the
Corporation's common stock. The common stock acquired by conversion of the
notes was exchanged for 168,185 shares of the Corporation's Series A
convertible preferred stock. These are noncash transactions for purposes
of the Consolidated Statements of Cash Flows.
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEETS (Unaudited)
($000's)
Three Months Ended June 30,
----------------------------
Assets 1996 1995
- ------ ----------------------------
Cash and due from banks $ 573,774 $ 565,458
Short-term investments 184,521 209,041
Trading securities 23,327 13,821
Investment securities:
Taxable 2,643,004 1,927,107
Tax-exempt 615,473 334,911
----------------------------
Total investment securities 3,258,477 2,262,018
Loans:
Commercial 2,945,305 2,828,144
Real estate 4,445,908 4,811,227
Personal 1,132,631 1,158,117
Lease financing 282,448 259,581
----------------------------
8,806,292 9,057,069
Less: Allowance for loan losses 163,161 159,181
----------------------------
Total loans 8,643,131 8,897,888
Premises and equipment, net 302,970 294,411
Accrued interest and other assets 363,435 340,767
----------------------------
Total Assets $ 13,349,635 $ 12,583,404
============================
Liabilities and Shareholders' Equity
- ------------------------------------
Deposits:
Noninterest bearing $ 2,036,825 $ 1,933,437
Interest bearing 7,992,076 7,523,729
----------------------------
Total deposits 10,028,901 9,457,166
Funds purchased and security repurchase
agreements 832,692 773,713
Other short-term borrowings 168,188 94,767
Long-term borrowings 735,680 814,073
Accrued expenses and other liabilities 307,425 287,261
----------------------------
Total liabilities 12,072,886 11,426,980
Shareholders' equity 1,276,749 1,156,424
----------------------------
Total Liabilities and Shareholders' Equity $ 13,349,635 $ 12,583,404
============================
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEETS (Unaudited)
($000's)
Six Months Ended June 30,
----------------------------
Assets 1996 1995
- ------ ----------------------------
Cash and due from banks $ 568,299 $ 572,643
Short-term investments 188,552 223,696
Trading securities 21,824 12,285
Investment securities:
Taxable 2,584,684 1,947,086
Tax-exempt 574,524 332,425
----------------------------
Total investment securities 3,159,208 2,279,511
Loans:
Commercial 2,920,899 2,762,796
Real estate 4,434,139 4,771,566
Personal 1,139,776 1,162,021
Lease financing 279,837 259,137
----------------------------
8,774,651 8,955,520
Less: Allowance for loan losses 162,839 157,651
----------------------------
Total loans 8,611,812 8,797,869
Premises and equipment, net 303,832 292,459
Accrued interest and other assets 357,049 342,446
----------------------------
Total Assets $ 13,210,576 $ 12,520,909
============================
Liabilities and Shareholders' Equity
- ------------------------------------
Deposits:
Noninterest bearing $ 2,011,354 $ 1,920,798
Interest bearing 7,957,212 7,448,551
----------------------------
Total deposits 9,968,566 9,369,349
Funds purchased and security repurchase
agreements 755,739 860,446
Other short-term borrowings 129,151 93,373
Long-term borrowings 777,527 778,351
Accrued expenses and other liabilities 308,279 287,706
----------------------------
Total liabilities 11,939,262 11,389,225
Shareholders' equity 1,271,314 1,131,684
----------------------------
Total Liabilities and Shareholders' Equity $ 13,210,576 $ 12,520,909
============================
<PAGE>
MANAGEMENT'S DISCUSSION OF AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF
OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 AND 1995
- -----------------------------------------
Net income for the second quarter of 1996 amounted to $50.4 million compared to
$46.2 million for the same period in the prior year. Primary and fully diluted
earnings per share were $.51 and $.50, respectively for the three months ended
June 30, 1996, compared with $.47 and $.46 for the same period last year. The
return on average assets and return on average equity were 1.52% and 15.87% for
the quarter ended June 30, 1996, and 1.47% and 16.04% for the quarter ended June
30, 1995, respectively.
The increase in earnings is primarily due to noninterest revenue growth and, to
a lessor extent, an increase in net interest income and somewhat lower loan loss
provision. The continued growth in expenses associated with the investment in
new products and technology being developed by Data Services also impacts
earnings. Total noninterest expense in the second quarter of 1996 continues to
include costs incurred for implementing certain initiatives to make the
Corporation's banking business more effective and efficient.
The following tables present a summary of each of the major elements of the
consolidated income statement, certain financial statistics and a summary of the
major income statement elements stated as a percent of average consolidated
assets -- converted to a fully taxable equivalent basis (FTE) where appropriate
- -- for the current quarter and previous four quarters.
1996 1995
-------------------- -----------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
--------- ---------- --------- --------- ---------
Interest Income $ 236,027 $ 233,429 $ 236,598 $ 235,587 $ 230,792
Interest Expense (112,094) (110,792) (111,232) (112,703) (108,509)
--------- ---------- --------- --------- ---------
Net Interest Income 123,933 122,637 125,366 122,884 122,283
Provision for Loan Losses (3,548) (3,577) (4,100) (4,070) (4,005)
Net Securities Gains (Losses) 134 50 3,297 1,291 (51)
Other Income 120,476 112,663 112,012 107,637 102,294
Other Expense (164,195) (159,189) (156,572) (150,879) (149,487)
--------- ---------- --------- --------- ---------
Income Before Taxes 76,800 72,584 80,003 76,863 71,034
Income Tax Provision (26,432) (26,429) (27,655) (28,284) (24,797)
--------- ---------- --------- --------- ---------
Net Income $ 50,368 $ 46,155 $ 52,348 $ 48,579 $ 46,237
========= ========== ========= ========= =========
Per Share
Earnings Per Share
Primary $ $0.51 $ 0.47 $ 0.53 $ 0.49 $ 0.47
Fully Diluted 0.50 0.46 0.51 0.48 0.46
Dividends 0.185 0.165 0.165 0.165 0.165
Return on Average Equity 15.87% 14.66% 16.76% 15.96% 16.04%
<PAGE>
CONSOLIDATED INCOME STATEMENT COMPONENTS AS A PERCENT OF AVERAGE TOTAL ASSETS
- -----------------------------------------------------------------------------
1996 1995
-------------------- -----------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
--------- ---------- --------- --------- ---------
Interest Income (FTE) 7.21% 7.26% 7.32% 7.33% 7.43%
Interest Expense (3.38) (3.40) (3.40) (3.47) (3.46)
--------- ---------- --------- --------- ---------
Net Interest Income 3.83 3.86 3.92 3.86 3.97
Provision for Loan Losses (0.11) (0.11) (0.13) (0.13) (0.13)
Net Securities Gains 0.00 0.00 0.10 0.04 0.00
Other Income 3.63 3.46 3.43 3.31 3.26
Other Expense (4.93) (4.89) (4.79) (4.65) (4.77)
--------- ---------- --------- --------- ---------
Income Before Taxes 2.42 2.32 2.53 2.43 2.33
Income Tax Provision (0.90) (0.90) (0.93) (0.94) (0.86)
--------- ---------- --------- --------- ---------
Return on Average Assets 1.52% 1.42% 1.60% 1.49% 1.47%
========= ========== ========= ========= =========
NET INTEREST INCOME
- -------------------
Net interest income for the second quarter of 1996 amounted to $123.9 million,
an increase of $1.6 million or 1.3% from the $122.3 million reported in the
second quarter of 1995. The benefit from the increase in the volume of average
earning assets and decrease in the cost of interest bearing liabilities was
offset by the decrease in yield on earning assets and increase in volume of
interest bearing liabilities resulting in the slight increase in net interest
income.
Average earning assets increased $711.7 million or 6.2% in the second quarter
of 1996 compared to the same period a year ago. Excluding the effect of
securitizing adjustable rate mortgage loans (ARMS), average loans grew
approximately $231 million or 2.6% compared to the second quarter of last year.
Average loans in the second quarter of 1996 include the effect of a 1995
acquisition that was accounted for as a purchase with aggregate loans of
approximately $73 million. The remaining average earning asset growth was in
investment securities. Average tax-exempt securities increased $280.6 million
or 83.8% while average taxable securities increased $215.1 million or 11.1%.
Average interest bearing liabilities increased $522.4 million or 5.8% in the
second quarter of 1996 compared to the same period in 1995. Average interest
bearing deposits increased $468.3 million or 6.2%, average short-term borrowings
increased $132.4 million or 15.3% and average long-term borrowings decreased
$78.4 million or 9.6%. Average noninterest bearing deposits increased $103.4
million or 5.3% during the second quarter of 1996 compared to the second
quarter of 1995.
On April 1, 1996, the holder of the Corporation's 8.5% convertible subordinated
notes converted approximately $16.8 million of the notes as more fully described
in Note 6 of Notes to Financial Statements. Also during the second quarter of
1996, approximately $165.0 million of Bank notes matured and were refinanced
with short-term borrowings and brokered CDs.
<PAGE>
The growth and composition of the Corporation's quarterly average loan portfolio
for the current quarter and previous four quarters are reflected below. The
amortized cost of the securitized ARM loans that are classified as investment
securities available for sale are included to provide a more meaningful
comparison ($ in millions):
1996 1995
----------------- -------------------------- Annual
Second First Fourth Third Second Growth
Quarter Quarter Quarter Quarter Quarter PCT
-------- -------- -------------------------- -------
Commercial Loans $ 2,945 $ 2,897 $ 2,888 $ 2,913 $ 2,828 4.1 %
Real Estate Loans
Construction 267 288 317 329 354 (24.4)
Commercial Mortgages 2,226 2,190 2,174 2,169 2,102 5.9
Residential Mortgages 1,953 1,944 2,159 2,401 2,355 (17.1)
Securitized ARM loans 482 489 282 26 -- 100.0
-------- -------- -------- -------- -------- -------
Residential Mortgages 2,435 2,433 2,441 2,427 2,355 3.4
-------- -------- -------- -------- -------- -------
Total Real Estate Loans 4,928 4,911 4,932 4,925 4,811 2.4
Personal Loans
Personal Loans 841 847 868 876 873 (3.7)
Student Loans 292 300 287 285 285 2.4
-------- -------- -------- -------- -------- -------
Total Personal Loans 1,133 1,147 1,155 1,161 1,158 (2.2)
Lease Financing
Receivables 282 277 270 262 260 8.8
-------- -------- -------- -------- -------- -------
Total Consolidated
Average Loans & ARMs $ 9,288 $ 9,232 $ 9,245 $ 9,261 $ 9,057 2.6 %
======== ======== ======== ======== ======== =======
Total Consolidated
Average Loans $ 8,806 $ 8,743 $ 8,963 $ 9,235 $ 9,057 (2.8)%
======== ======== ======== ======== ======== =======
Beginning in the third quarter of 1995, the Corporation began converting ARM
loans into Federal National Mortgage Association ARM pool securities to enhance
liquidity. During the first quarter of 1996 an additional $88 million of such
loans were securitized. There were no ARM loan securitizations during the
second quarter of 1996. At June 30, 1996, the total amount of ARM loans that
have been securitized and transferred to investment securities available for
sale was approximately $542 million. As part of this process, the Corporation
pays a fee of 7.5 basis points to guarantee the securities which negatively
impacts net interest income.
<PAGE>
The growth and composition of the Corporation's quarterly average deposits for
the current and prior year's quarters are as follows ($ in millions):
1996 1995
----------------- -------------------------- Annual
Second First Fourth Third Second Growth
Quarter Quarter Quarter Quarter Quarter PCT
----------------- -------------------------- -------
Noninterest Bearing
Commercial $ 1,302 $ 1,280 $ 1,379 $ 1,282 $ 1,248 4.4 %
Personal 427 418 418 409 410 4.4
Other 308 316 298 290 275 11.3
-------- -------- -------- -------- -------- -------
Total Noninterest
Bearing Deposits 2,037 2,014 2,095 1,981 1,933 5.3
Interest Bearing
Savings & NOW 1,817 1,842 1,912 1,961 1,973 (7.9)
Money Market 2,407 2,386 2,237 2,049 1,875 28.4
Other CDs &
Time Deposits 3,039 3,034 3,064 3,145 3,135 (3.1)
CDs Greater than $100 614 621 607 603 525 17.0
Brokered CDs 115 39 21 16 16 621.1
-------- -------- -------- -------- -------- -------
Total Interest
Bearing Deposits 7,992 7,922 7,841 7,774 7,524 6.2
-------- -------- -------- -------- -------- -------
Total Consolidated
Average Deposits $ 10,029 $ 9,936 $ 9,936 $ 9,755 $ 9,457 6.0 %
======== ======== ======== ======== ======== =======
Money market savings, CDs greater than $100 and noninterest bearing deposits
exhibited the greatest growth when comparing average deposits in the second
quarter of 1996 to the second quarter of 1995. Average deposits in the second
quarter of 1996 include the effect of a 1995 acquisition that was accounted for
as a purchase with total deposits of approximately $83 million. As previously
discussed throughout 1995, the money market index account, which was introduced
in the third quarter of 1994, has been a substantial contributor to deposit
growth. The average amount of money market index accounts was $1.57 billion in
the second quarter of 1996 compared to $870 million in the same period one year
ago. The increase in this deposit type represents both new deposits and
disintermediation from the Corporation's other deposit accounts.
The Corporation has a brokered CD program to acquire longer-term CDs with
maturities of one year or more in order to provide a stable funding source that
over time is less costly than Bank notes or Fed Funds. Average brokered CDs
amounted to $115.4 million in the second quarter of 1996 compared to $38.7
million in the first quarter of 1996 and $16.0 million during the second quarter
of 1995. As previously discussed, the brokered CDs were used to partially
refinance the Bank notes that matured during the second quarter of 1996.
<PAGE>
The Corporation's consolidated average interest earning assets and interest
bearing liabilities, interest earned and interest paid for the current quarter
and comparative prior year quarter is presented below. Securitized ARM loans
are included with loans and investment securities classified as available for
sale are stated at amortized cost in order to make the comparative information
more meaningful.
YIELD & COST ANALYSIS SECOND QUARTER
($ in millions) --------------------------------------------------
1996 1995
------------------------ -------------------------
Average Average
Average Yield or Average Yield or
Balance Interest Cost Balance Interest Cost
--------------------------------------------------
Loans (a) $ 9,288.0 $ 194.1 8.40 % $ 9,057.1 $ 195.9 8.68 %
Investment Securities:
Taxable 2,149.8 32.4 6.07 1,934.6 28.0 5.82
Tax Exempt (a) 615.5 10.1 6.59 334.9 5.9 7.02
Other Short-term
Investments (a) 207.9 2.7 5.30 222.9 3.2 5.76
---------------------------------------------------
Total Interest
Earning Assets $12,261.2 $ 239.3 7.85 % $11,549.5 $ 233.0 8.09 %
===================================================
Money Market Savings $ 2,406.9 $ 24.4 4.07 % $ 1,875.0 $ 19.9 4.25 %
Regular Savings
& NOW 1,817.2 9.5 2.10 1,973.0 10.7 2.19
Other CDs & Time
Deposits 3,038.6 43.3 5.74 3,134.9 43.5 5.57
Brokered CDs 115.4 1.7 5.84 16.0 0.3 7.12
CDs Greater than
$100 613.9 8.6 5.66 524.8 7.6 5.81
---------------------------------------------------
Total Interest
Bearing Deposits 7,992.0 87.5 4.40 7,523.7 82.0 4.37
Short-term
Borrowings 1,000.9 12.8 5.13 868.5 12.7 5.87
Long-term
Borrowings 735.7 11.8 6.45 814.1 13.8 6.77
---------------------------------------------------
Total Interest
Bearing Liabilities $ 9,728.6 $ 112.1 4.63 % $ 9,206.3 $ 108.5 4.73 %
===================================================
Net Interest Margin
(FTE) as a Percent
of Average Earning
Assets $ 127.2 4.17 % $ 124.5 4.33 %
=============== ===============
(a) Fully taxable equivalent basis (FTE), assuming a Federal income tax rate
of 35%, and excluding disallowed interest expense.
<PAGE>
At the end of the first quarter in 1996, the Corporation began utilizing
interest rate swaps in the management of its interest rate exposure.
Interest rate swaps are contractual agreements between counterparties to
exchange interest streams based on notional principal amounts over a set period
of time. Such swap agreements normally involve the exchange of fixed and
floating rate payment obligations without the exchange of the underlying
principal amounts. The notional or principal amount does not represent an amount
at risk, but is used only as a basis for determining the actual cash flows
related to the interest rate contracts. Market risk, due to potential
fluctuations in interest rates, is inherent in swap agreements. All interest
rate swap counterparties are formally evaluated and continually monitored for
credit-quality.
At June 30, 1996, the Corporation's quarter-end position in interest rate swaps
amounted to $200 million in notional amount. The swaps have terms which range
from 2 to 5 years and are designated against variable rate commercial loans in
order to reduce interest rate volatility. The net fair values of the interest
rate swaps at June 30, 1996, was a negative $0.4 million. The impact of the
interest rate swaps in the second quarter was to increase interest income on
loans by $0.3 million and increase the yield on loans, yield on interest earning
assets and increase the net interest margin (FTE) as a percent of average
earning assets by one basis point.
The net interest margin as a percent of average earning assets declined 16 basis
points from 4.33% in the second quarter of 1995 to 4.17% in the current quarter.
The yield on average earning assets decreased 24 basis points while the cost of
interest bearing liabilities decreased 10 basis points. The cost of interest
bearing deposits increased slightly in the second quarter of 1996 compared to
the same period last year. The average cost of short-term borrowings decreased
74 basis points which reflects in part, the Corporation's banking affiliates
expanded use of the treasury tax and loan note option programs which provide a
lower cost funding source. The cost of long-term borrowings decreased 32 basis
points which reflects the maturity and conversion of higher cost debt.
The possible continuing lack of earning asset growth, particularly loan growth,
may continue to put pressure on the interest spreads and depress interest margin
growth.
<PAGE>
PROVISION FOR LOAN LOSSES AND CREDIT QUALITY
- --------------------------------------------
At June 30, 1996, nonperforming assets were $98.1 million compared to $ 90.8
million at March 31, 1996, and $68.2 million at June 30, 1995. Nonaccrual loans,
the largest component of nonperforming assets, increased $8.8 million since the
first quarter and increased $32.0 million since June 30, 1995. Renegotiated
loans and loans past due 90 days or more were relatively unchanged since March
31,1996 and decreased $0.5 million and $0.4 million, respectively since the
second quarter of 1995. Other real estate owned decreased $1.4 million since
the first quarter and decreased $1.2 million since June 30, 1995
During the second quarter of 1996 each loan type experienced an increase in
nonaccrual loans compared to the first quarter except for personal loans which
decreased $0.5 million. Nonaccrual commercial real estate loans increased $4.2
million, nonaccrual commercial loans and leases increased $3.5 million and
nonaccrual residential real estate loans increased $1.5 million. As previously
reported, one large commercial credit placed on nonaccrual in the first quarter
at the Corporation's lead bank represents approximately $22.5 million of the
$32.0 million increase in nonaccrual loans since June 30, 1995.
Net charge-offs in the second quarter of 1996 amounted to $1.5 million or 0.07%
of average loans compared to $2.7 million or 0.13% of average loans in the first
quarter of 1996 and $1.1 million or 0.05% of average loans in the second quarter
of 1995. Personal loan net charge-offs of approximately $1.1 million
accounted for the majority of net charge-off activity in the second quarter of
1996.
The allowance for loan losses amounted to $163.9 million or 1.82% of total loans
at June 30, 1996, compared to $161.8 million or 1.84% at March 31, 1996, and
$160.6 million or 1.75% at June 30, 1995. The coverage ratio of the allowance
for loan losses to nonperforming loans declined from 269% at June 30, 1995, and
197% at March 31, 1996, to 181% at June 30, 1996, largely due to the increase
in nonaccrual loans described above.
The Corporation believes that the current reserve and provision levels continue
to be adequate. The provision for loan losses amounted to $3.5 million in the
second quarter of 1996 compared to $3.6 million in the first quarter of 1996 and
$4.0 million in the second quarter of 1995.
<PAGE>
1996 1995
----------------- --------------------------
Second First Fourth Third Second
NONPERFORMING ASSETS Quarter Quarter Quarter Quarter Quarter
- -------------------- ----------------- --------------------------
Nonaccrual $ 80,344 $ 71,567 $ 50,598 $ 50,643 $ 48,359
Renegotiated 2,936 3,093 3,087 3,298 3,424
Past Due 90 Days or More 7,492 7,422 8,184 7,106 7,879
-------- -------- -------- -------- --------
Total Nonperforming Loans 90,772 82,082 61,869 61,047 59,662
Other Real Estate Owned 7,332 8,744 8,648 8,587 8,510
-------- -------- -------- -------- --------
Total Nonperforming Assets $ 98,104 $ 90,826 $ 70,517 $ 69,634 $ 68,172
======== ======== ======== ======== ========
ALLOWANCE FOR LOAN LOSSES $163,866 $161,841 $161,430 $164,287 $160,565
======== ======== ======== ======== ========
CONSOLIDATED STATISTICS
- -----------------------
Net Charge-offs
to Average Loans
Annualized 0.07 % 0.13 % 0.24 % 0.03 % 0.05 %
Total Nonperforming Loans
to Total Loans 1.01 0.93 0.70 0.67 0.65
Total Nonperforming Assets
to Total Loans and Other
Real Estate Owned 1.09 1.03 0.79 0.76 0.74
Allowance for Loan Losses
to Total Loans 1.82 1.84 1.82 1.80 1.75
Allowance for Loan Losses
to Nonperforming Loans 181 197 261 269 269
<PAGE>
1996 1995
----------------- --------------------------
Second First Fourth Third Second
NONACCRUAL LOANS BY TYPE Quarter Quarter Quarter Quarter Quarter
- ------------------------ ----------------- --------------------------
Commercial
Commercial, Financial &
Agricultural $ 37,495 $ 33,608 $ 13,527 $ 14,449 $ 13,703
Lease Financing
Receivables 1,677 2,069 1,244 2,323 2,246
-------- -------- -------- -------- --------
Total Commercial 39,172 35,677 14,771 16,772 15,949
Real Estate
Construction and Land
Development 642 630 618 242 666
Commercial Mortgage 21,295 17,063 16,653 17,407 17,626
Residential Mortgage 16,293 14,785 15,701 13,010 11,590
-------- -------- -------- -------- --------
Total Real Estate 38,230 32,478 32,972 30,659 29,882
Personal 2,942 3,412 2,855 3,212 2,528
-------- -------- -------- -------- --------
Total Nonaccrual Loans $ 80,344 $ 71,567 $ 50,598 $ 50,643 $ 48,359
======== ======== ======== ======== ========
1996 1995
RECONCILIATION OF ----------------- --------------------------
CONSOLIDATED ALLOWANCE Second First Fourth Third Second
FOR LOAN LOSSES Quarter Quarter Quarter Quarter Quarter
- ------------------------ ----------------- --------------------------
Beginning Balance $161,841 $161,430 $164,287 $160,565 $157,689
Provision for Loan Losses 3,548 3,577 4,100 4,070 4,005
Allowance of Bank Acquire -- -- -- 1,096 --
Allowance Transfer for Loan
Securitizations -- (440) (1,615) (660) --
Loans Charged-off
Commercial 1,012 763 3,465 502 354
Real Estate 242 455 896 466 161
Personal 1,663 1,336 1,779 1,250 1,402
Leases 61 1,989 380 104 258
-------- -------- -------- -------- --------
Total Charge-offs 2,978 4,543 6,520 2,322 2,175
Recoveries on Loans
Commercial 438 828 457 514 256
Real Estate 385 323 144 483 208
Personal 605 665 573 530 576
Leases 27 1 4 11 6
-------- -------- -------- -------- --------
Total Recoveries 1,455 1,817 1,178 1,538 1,046
-------- -------- -------- -------- --------
Net Loans Charged-off 1,523 2,726 5,342 784 1,129
-------- -------- -------- -------- --------
Ending Balance $163,866 $161,841 $161,430 $164,287 $160,565
======== ======== ======== ======== ========
<PAGE>
OTHER INCOME
- ------------
Total other income in the second quarter of 1996 amounted to $120.6 million, an
increase of $18.4 million or 18.0%, compared to $102.2 million in the same
period last year.
Data processing services revenue increased $13.6 million or 26.1% from $52.3
million in the second quarter of 1995 to $66.0 million in the current quarter.
Processing revenue increased $7.6 million or 19.3% and software revenue
increased $2.7 million or 34.3%. Buyout fees, which can vary from period to
period, decreased $1.7 million. Revenue from unique services such as contract
programming and consulting increased $4.2 million. Compared to the first
quarter of 1996, total data processing services revenue increased $7.6 million
or 13%. Significant components of the quarter over quarter increase include
increased processing revenue, $3.8 million, increased software revenue, $1.7
million and increased buyout fees, $1.6 million.
Trust services revenue amounted to $17.5 million in the second quarter of 1996,
an increase of $1.4 million or 9.1% compared to $16.1 million in the second
quarter of 1995 and increased $0.7 million or 4.3% from the first quarter of
1996.
Other customer services increased $2.7 million or 10.2% and totaled $28.7
million in the second quarter of 1996 compared to $26.1 million in the same
period one year ago. Service charges on deposits of $13.0 million increased
$0.3 million or 2.2% Mutual fund commissions and trailor fees increased $.9
million and credit card fees increased $0.6 million.
The effects of net securities transactions in the second quarters of 1996 and
1995 were not significant.
Other income amounted to $8.2 million in the second quarter of 1996 compared to
$7.8 million in the second quarter of 1995, an increase of $0.4 million or 5.3%.
Gains from the sale of residential mortgage loans that include servicing rights
increased $1.7 million and were offset by lower foreign exchange revenue of $0.5
million and decreased gains from the disposal of fixed assets of $0.7 million.
<PAGE>
OTHER EXPENSE
- -------------
Total other expenses in the second quarter of 1996 amounted to $164.2 million,
an increase of $14.7 million or 9.8% compared to $149.5 million in the same
period last year.
The increase in expenses is primarily attributable to the Corporation's
nonbanking businesses especially its Data Services Division. Data Services
expense growth reflects the impact of a 1995 acquisition, the cost of adding
processing capacity and certain costs associated with developing new products
and technology, in order to meet the ever-changing needs of its new and existing
customers as efficiently and effectively as possible.
Expenses of the Corporation's banks in the second quarter of 1996 continue to
include costs of implementing certain initiatives in the areas of retail and
small business lending, loan and deposit operational support and product and
service distribution networks which are intended to improve customer service,
enable more competitive pricing and achieve improved cost efficiencies. Total
operating expenses for the Corporation's combined banks and support services
group excluding costs of initiatives and the effect of lower deposit insurance
premiums increased 1.5% in the second quarter of 1996 compared to the first
quarter of 1996 and increased 4.9% compared to the second quarter of 1995.
Salaries and employee benefits expense which accounts for over one-half of total
other expenses, amounted to $93.2 million in the second quarter of 1996 compared
to $83.9 million in the second quarter of 1995, an increase of $9.3 million or
11.0%. Approximately, $0.9 million of the increase reflects severance and other
related costs associated with the implementation of the banking initiatives
described above. Excluding the initiatives, total salaries and benefits expense
for the Corporation's banks and support services group decreased in the second
quarter compared to the same period last year. Salaries and employee benefits
expense of Data Services increased $6.8 million or 21.2% in the current quarter
compared to the same period last year. At June 30, 1996, Data Services had
approximately 2,634 employees compared to 2,352 at June 30, 1995. Approximately
one-third of the employee increase relates to a New England data center that was
acquired in late June 1995.
Net occupancy expense increased $0.9 million or 10.0% and equipment expense
increased $3.6 million or 22.0%, in the second quarter of 1996 compared to the
same period last year. Data Services expense growth accounted for
approximately $3.8 million or 87% of the combined expense growth in these
categories.
The decrease in payments to regulatory agencies reflects the decrease in
insurance premium rates on deposits insured through the FDIC which went into
effect June 1, 1995.
Other expense increased 29.2% or $6.4 million from $22.0 million in the second
quarter of 1995 to $28.4 million in the second quarter of 1996. Data Services
contributed $4.1 million or 63% of the expense growth. During the second
quarter $0.3 million in write-downs were taken in conjunction with two bank
branch closures. Advertising, promotion and development increased $0.9 million
or 35% of which approximately $0.7 million is related to the banking affiliates.
<PAGE>
INCOME TAXES
- ------------
The provision for income taxes for the three months ended June 30, 1996,
amounted to $26.4 million compared to $24.8 million for the three months ended
June 30, 1995. The effective tax rate remained relatively unchanged.
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
- ---------------------------------------
Net income for the first half of 1996 amounted to $96.5 million compared to
$92.4 million in the first half of 1995. Primary and fully diluted earnings per
share amounted $0.98 and $0.96, respectively, for the six months ended June 30,
1996, compared with $0.94 and $0.91 per share respectively, for the same period
last year. The year to date return on average equity through June 30, was 15.27%
in the current year and 16.46% last year.
The following table presents a summarized view of each of the major elements of
the consolidated income statement for the first six months of 1996 and 1995
stated as a percent of average consolidated assets and converted to a fully
taxable equivalent where appropriate.
ROA
1996 1995 Impact
---------------------------
Interest Income 7.25 % 7.36 % (0.11)%
Interest Expense (3.40) (3.37) (0.03)
-------- -------- --------
Net Interest Income 3.85 3.99 (0.14)
Provision for Loan Losses (0.11) (0.13) 0.02
Net Securities Gains (Losses) 0.00 0.00 --
Other Income 3.55 3.22 0.33
Other Expense (4.92) (4.70) (0.22)
-------- -------- --------
Income Before Income Taxes 2.37 2.38 (0.01)
Income Taxes (0.90) (0.89) (0.01)
-------- -------- --------
Return on Average Assets 1.47 % 1.49 % (0.02)%
======== ======== ========
The increase in net income is primarily due to noninterest revenue growth which
was principally experienced in the second quarter, slow interest margin growth
and a somewhat lower loan loss provision which was offset, in part by the growth
in expenses for new products and technology at Data Services and the costs
associated with implementing certain initiatives at the banking affiliates.
CAPITAL RESOURCES
- -----------------
Shareholders' equity was $1.27 billion or 9.27% of total consolidated assets at
June 30, 1996, compared to $1.26 billion and 9.43% at December 31, 1995, and
$1.17 billion and 9.12% at June 30,1995.
Net unrealized gains and losses on securities available for sale decreased $20.8
million since December 31, 1995, and decreased $6.6 million since June 30, 1995.
<PAGE>
The Corporation continued to acquire common shares in accordance with the Stock
Repurchase Program approved by its Board of Directors. During the second
quarter of 1996 1.0 million shares of common stock were acquired with an
aggregate cost of $28.0 million. Since inception of the program to acquire up
to 21.5 million common shares, 14.6 million common shares have been acquired
with a cumulative cost of $333.5 million.
The Corporation continues to have a strong capital base and its regulatory
capital ratios are significantly above the minimum requirements as shown in the
following tables as of June 30, 1996.
RISK-BASED CAPITAL RATIOS
As of June 30, 1996
($ in millions)
-------------------------
Amount Ratio
--------- ----------
Tier 1 capital $ 1,202.9 11.96 %
Tier 1 capital
minimum requirement 402.2 4.00
--------- ----------
Excess $ 800.7 7.96 %
========= ==========
Total capital $ 1,432.5 14.25 %
Total capital
minimum requirement 804.4 8.00
--------- ----------
Excess $ 628.1 6.25 %
========= ==========
Risk-adjusted assets $10,054.7
=========
LEVERAGE RATIO
As of June 30, 1996
($ in millions)
-----------------------
Amount Ratio
--------- ----------
Tier 1 capital to
adjusted total assets $ 1,202.9 9.06 %
Minimum leverage
requirement 398.3-663.8 3.00-5.00
------------ ----------
Excess $804.6-539.1 6.06-4.06 %
============ ==========
Adjusted average total assets $13,277.2
=========
<PAGE>
OTHER DEVELOPMENTS
- ------------------
In June the Corporation announced that it had reached an agreement to acquire
EastPoint Technology, Inc. a software development company specializing in
client/server technology located in New Hampshire. The Corporation
anticipates that the acquisition, which will be a purchase of EastPoint's
assets for approximately $25.5 million and the assumption of certain nominal
liabilities, will be consummated during the third quarter of 1996. The
consolidated results of operations for the third quarter may be adversely
affected by the value of acquired in-process research and development that
must be immediately written off in accordance with purchase accounting rules.
<PAGE>
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
A. The Corporation held its Annual Meeting of Shareholders on April 23,
1996.
B. Votes cast for the election of six Directors to serve until the 1999
Annual Meeting of Shareholders are as follows:
Director For Against Abstentions Non-Vote
---------------------------------------------------------------------
Oscar C. Boldt 73,528,634 1,148,766 -- --
J.P. Bolduc 73,408,918 1,268,482 -- --
Glenn A. Francke 73,476,339 1,201,061 -- --
Burleigh E. Jacobs 73,478,486 1,198,914 -- --
James F. Kress 73,735,639 941,761 -- --
Gus A. Zuehlke 73,556,895 1,120,505 -- --
The continuing Directors of the Corporation are as follows:
Richard A. Abdoo Jon F. Chait
Wendell F. Bueche D. J. Kuester
G. H. Gunnlaugsson Edward L. Meyer, Jr.
Jack F. Kellner Don R. O'Hare
P. M. Platten, III San W. Orr, Jr.
J. B. Wigdale J. A. Puelicher
James O. Wright Stuart W. Tisdale
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
A. Exhibits:
Exhibit 11 - Statements - Computation of Earnings Per Share
Exhibit 12 - 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
August 14, 1996
<PAGE>
MARSHALL & ILSLEY CORPORATION EXHIBIT 11
CALCULATION OF EARNINGS PER SHARE
($000's except per share data)
Three Months Ended June 30,
---------------------------
PRIMARY 1996 1995
- ------- ---------- ---------
Earnings:
Net income $ 50,368 $ 46,237
========== =========
Shares:
Weighted average number of common shares
outstanding 92,373 93,386
Additional shares relating to:
Convertible preferred stock 5,755 3,833
Stock options outstanding at end
of each period and exercised
during each period (a) 1,292 1,096
---------- ---------
Total average primary shares outstanding 99,420 98,315
========== =========
EARNINGS PER SHARE:
Primary $ 0.51 $ 0.47
========== =========
FULLY DILUTED
- -------------
Earnings:
Net income $ 50,368 $ 46,237
Add: Interest on convertible notes,
net of income tax effect 232 465
---------- ---------
$ 50,600 $ 46,702
========== =========
Shares:
Weighted average number of common shares
outstanding 92,373 93,386
Additional shares relating to:
Convertible preferred stock 5,755 3,833
Stock options outstanding at end
of each period and exercised
during each period (b) 1,341 1,213
Assumed conversion of convertible notes 1,922 3,844
---------- ---------
Total average fully diluted
shares outstanding 101,391 102,276
========== =========
EARNINGS PER SHARE:
Fully Diluted $ 0.50 $ 0.46
========== =========
Notes:
- ------
(a) Based on the treasury stock method using average market price.
(b) Based on the treasury stock method using period-end market price, if
higher than average market price for options outstanding at end of each
period and market price at date of exercise for options exercised during
each period.
<PAGE>
MARSHALL & ILSLEY CORPORATION EXHIBIT 11
CALCULATION OF EARNINGS PER SHARE
($000's except per share data)
Six Months Ended June 30,
-------------------------
PRIMARY 1996 1995
- ------- ---------- ---------
Earnings:
Net income $ 96,523 $ 92,372
========== =========
Shares:
Weighted average number of common shares
outstanding 92,725 93,464
Additional shares relating to:
Convertible preferred stock 4,794 3,833
Stock options outstanding at end
of each period and exercised
during each period (a) 1,288 1,105
---------- ---------
Total average primary shares outstanding 98,807 98,402
========== =========
EARNINGS PER SHARE:
Primary $ 0.98 $ 0.94
========== =========
FULLY DILUTED
- -------------
Earnings:
Net income $ 96,523 $ 92,372
Add: Interest on convertible notes,
net of income tax effect 697 930
---------- ---------
$ 97,220 $ 93,302
========== =========
Shares:
Weighted average number of common shares
outstanding 92,725 93,464
Additional shares relating to:
Convertible preferred stock 4,794 3,833
Stock options outstanding at end
of each period and exercised
during each period (b) 1,394 1,284
Assumed conversion of convertible notes 2,883 3,844
---------- ---------
Total average fully diluted
shares outstanding 101,796 102,425
========== =========
EARNINGS PER SHARE:
Fully Diluted $ 0.96 $ 0.91
========== =========
Notes:
- ------
(a) Based on the treasury stock method using average market price.
(b) Based on the treasury stock method using period-end market price, if
higher than average market price for options outstanding at end of each
period and market price at date of exercise for options exercised during
each period.
<PAGE>
MARSHALL & ILSLEY CORPORATION Exhibit 12
Computation of Ratio of Earnings to Fixed Charges
($000's)
<TABLE>
<CAPTION>
Six
Months
Ended Years Ended December 31,
June 30, ------------------------------------------------------
Earnings: 1996 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Earnings before income taxes,
extraordinary items and cumulative
effect of changes in
accounting principles $ 149,383 $ 299,879 $ 167,803 $ 264,584 $ 231,792 $ 186,738
Fixed charges, excluding
interest on deposits 51,389 108,683 77,074 47,905 50,687 66,641
---------- ---------- ---------- ---------- ---------- ----------
Earnings including fixed charges
but excluding interest on deposits 200,772 408,562 244,877 312,489 282,479 253,379
Interest on deposits 175,115 331,734 255,861 272,100 334,443 448,757
---------- ---------- ---------- ---------- ---------- ----------
Earnings including fixed charges
and interest on deposits $ 375,887 $ 740,296 $ 500,738 $ 584,589 $ 616,922 $ 702,136
========== ========== ========== ========== ========== ==========
Fixed Charges:
Interest Expense:
Short-term borrowings $ 22,803 $ 47,740 $ 39,681 $ 18,010 $ 17,606 $ 32,065
Long-term borrowings 24,968 53,709 30,537 23,088 26,439 27,770
One-third of rental expense for
all operating leases (the amount
deemed representative of the
interest factor) 3,618 7,234 6,856 6,807 6,642 6,806
---------- ---------- ---------- ---------- ---------- ----------
Fixed charges excluding
interest on deposits 51,389 108,683 77,074 47,905 50,687 66,641
Interest on deposits 175,115 331,734 255,861 272,100 334,443 448,757
---------- ---------- ---------- ---------- ---------- ----------
Fixed charges including
interest on deposits $ 226,504 $ 440,417 $ 332,935 $ 320,005 $ 385,130 $ 515,398
========== ========== ========== ========== ========== ==========
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits 3.91x 3.76x 3.18x 6.52x 5.57x 3.80x
Including interest on deposits 1.66x 1.68x 1.50x 1.83x 1.60x 1.36x
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 606,384
<INT-BEARING-DEPOSITS> 8,035,514
<FED-FUNDS-SOLD> 59,076
<TRADING-ASSETS> 31,742
<INVESTMENTS-HELD-FOR-SALE> 2,731,938
<INVESTMENTS-CARRYING> 620,159
<INVESTMENTS-MARKET> 613,339
<LOANS> 9,012,023
<ALLOWANCE> 163,866
<TOTAL-ASSETS> 13,682,847
<DEPOSITS> 10,200,185
<SHORT-TERM> 1,662,806
<LIABILITIES-OTHER> 298,392
<LONG-TERM> 253,375
0
517
<COMMON> 99,494
<OTHER-SE> 1,168,078
<TOTAL-LIABILITIES-AND-EQUITY> 13,682,847
<INTEREST-LOAN> 370,739
<INTEREST-INVEST> 93,100
<INTEREST-OTHER> 5,617
<INTEREST-TOTAL> 469,456
<INTEREST-DEPOSIT> 175,115
<INTEREST-EXPENSE> 47,771
<INTEREST-INCOME-NET> 246,570
<LOAN-LOSSES> 7,125
<SECURITIES-GAINS> 184
<EXPENSE-OTHER> 323,385
<INCOME-PRETAX> 149,383
<INCOME-PRE-EXTRAORDINARY> 96,523
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 96,523
<EPS-PRIMARY> 0.98
<EPS-DILUTED> 0.96
<YIELD-ACTUAL> 4.19
<LOANS-NON> 80,344
<LOANS-PAST> 7,492
<LOANS-TROUBLED> 2,936
<LOANS-PROBLEM> 90,772
<ALLOWANCE-OPEN> 161,430
<CHARGE-OFFS> 7,521
<RECOVERIES> 3,272
<ALLOWANCE-CLOSE> 163,866
<ALLOWANCE-DOMESTIC> 163,866
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
