<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
---------------------------------------------
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, 1998
----- -----------------
Common Stock, $1.00 Par Value 105,855,245
<PAGE>
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
($000's except share data)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
Assets 1998 1997 1997
- ------ ------------------------------------------
<C> <S> <S> <S>
Cash and cash equivalents:
Cash and due from banks $ 702,579 $ 800,120 $ 683,073
Federal funds sold and
security resale agreements 85,301 26,880 108,776
Money market funds 74,845 62,787 56,376
------------ ------------ ------------
Total cash and cash equivalents 862,725 889,787 848,225
Trading securities 39,080 43,644 42,076
Other short-term investments 47,035 37,008 48,139
Investment securities available for sale at
market value 4,088,984 4,038,713 2,977,094
Investment securities held to maturity,
market value $1,006,107 ($953,316 December 31,
and $813,497 March 31, 1997) 983,574 930,090 812,122
------------ ------------ ------------
Total investment securities 5,072,558 4,968,803 3,789,216
Loans and leases 12,638,369 12,542,281 9,576,716
Less: Allowance for loan and lease losses 210,307 202,818 154,599
------------ ------------ ------------
Net loans and leases 12,428,062 12,339,463 9,422,117
Premises and equipment, net 343,423 338,818 318,092
Accrued interest and other assets 860,011 859,929 422,351
------------ ------------ ------------
Total Assets $ 19,652,894 $ 19,477,452 $ 14,890,216
============ ============ ============
Liabilities and Shareholders' Equity
- ------------------------------------
Deposits:
Noninterest bearing $ 2,601,390 $ 2,722,757 $ 2,261,330
Interest bearing 11,651,478 11,633,241 8,574,325
------------ ------------ ------------
Total deposits 14,252,868 14,355,998 10,835,655
Funds purchased and security
repurchase agreements 1,887,393 1,424,359 1,656,974
Other short-term borrowings 277,899 478,421 401,598
Accrued expenses and other liabilities 479,332 507,427 367,776
Long-term borrowings 787,141 791,176 348,042
------------ ------------ ------------
Total liabilities 17,684,633 17,557,381 13,610,045
Shareholders' equity:
Series A convertible preferred stock,
$1.00 par value; 685,314 shares issued 685 685 685
Common stock, $1.00 par value; 109,302,590
shares issued (99,494,335 at March 31, 1997) 109,303 109,303 99,494
Additional paid-in capital 604,963 608,087 209,855
Retained earnings 1,427,383 1,376,336 1,246,450
Less: Treasury common stock, at cost;
7,522,162 shares (7,765,169 December 31,
and 10,846,046 March 31, 1997) 211,312 215,787 286,186
Deferred compensation 7,443 7,132 1,170
Net unrealized gains on securities
available for sale, net of related taxes 44,682 48,579 11,043
------------ ------------ ------------
Total shareholders' equity 1,968,261 1,920,071 1,280,171
------------ ------------ ------------
Total Liabilities and
Shareholders' Equity $ 19,652,894 $ 19,477,452 $ 14,890,216
============ ============ ============
</TABLE>
See notes to financial statements.
<PAGE>
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
($000's except per share data)
Three Months Ended March 31,
------------------------------
Interest income 1998 1997
- --------------- ------------------------------
Loans $ 253,406 $ 194,946
Investment securities:
Taxable 66,725 50,091
Exempt from Federal income taxes 12,268 10,008
Trading securities 488 483
Short-term investments 2,020 2,395
------------ ------------
Total interest income 334,907 257,923
Interest expense
- ----------------
Deposits 134,302 94,309
Short-term borrowings 29,896 23,823
Long-term borrowings 14,072 10,149
------------ ------------
Total interest expense 178,270 128,281
------------ ------------
Net interest income 156,637 129,642
Provision for loan and lease losses 4,705 4,311
------------ ------------
Net interest income after
provision for loan and lease losses 151,932 125,331
Other income
- ------------
Data processing services 96,838 80,140
Trust services 21,464 18,931
Other customer services 36,242 29,557
Net securities gains 6,375 803
Other 15,331 8,164
------------ ------------
Total other income 176,250 137,595
Other expense
- -------------
Salaries and employee benefits 123,669 105,382
Net occupancy 10,955 10,130
Equipment 24,332 20,864
Software expenses 5,199 4,572
Payments to regulatory agencies 1,065 601
Processing charges 5,996 5,770
Supplies and printing 4,372 4,115
Professional services 4,417 4,126
Other 34,245 25,207
------------ ------------
Total other expense 214,250 180,767
------------ ------------
Income before income taxes 113,932 82,159
Provision for income taxes 41,001 27,360
------------ ------------
Net income $ 72,931 $ 54,799
============ ============
Net income per common share
- ---------------------------
Basic $ 0.70 $ 0.61
Diluted 0.66 0.56
Dividends paid per common share $ 0.200 $ 0.185
Weighted average common shares outstanding:
Basic 101,587 88,691
Diluted 111,121 98,290
See notes to financial statements.
<PAGE>
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
($000's)
Three Months Ended March 31
----------------------------
1998 1997
------------ ------------
Net Cash Provided by Operating Activities $ 89,275 $ 57,872
Cash Flows From Investing Activities:
- -------------------------------------
Net (increase)decrease in securities with
maturities of three months or less (10,050) 2,500
Proceeds from sales of securities
available for sale 6,076 80,207
Proceeds from maturities of longer
term securities 322,951 155,923
Purchases of longer term securities (317,593) (216,703)
Net increase in loans (243,116) (284,630)
Purchases of assets to be leased (51,039) (52,542)
Principal payments on lease receivables 56,730 39,622
Fixed asset purchases, net (19,288) (14,445)
Other 5,321 2,004
------------ ------------
Net cash used in
investing activities (250,008) (288,064)
------------ ------------
Cash Flows From Financing Activities:
- -------------------------------------
Net decrease in deposits (103,129) (116,703)
Proceeds from issuance of commercial paper 302,922 79,743
Payments for maturity of commercial paper (299,210) (81,036)
Net increase in other short-term
borrowings 308,007 374,325
Proceeds from issuance of long-term debt 2,844 8,916
Payments of long-term debt (56,250) (125,369)
Dividends paid (21,885) (17,516)
Purchases of treasury stock (4,577) (22,190)
Other 4,949 10,323
------------ ------------
Net cash provided by financing
activities 133,671 110,493
------------ ------------
Net decrease in cash and cash equivalents (27,062) (119,699)
Cash and cash equivalents, beginning of year 889,787 967,924
------------ ------------
Cash and cash equivalents, end of period $ 862,725 $ 848,225
============ ============
Supplemental cash flow information:
- -----------------------------------
Cash paid (received) during the period for:
Interest $ 177,239 $ 123,467
Income taxes (3,430) 8,914
See notes to financial statements.
<PAGE>
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements
March 31, 1998 & 1997 (Unaudited)
1. The accompanying unaudited consolidated financial statements should be
read in conjunction with Marshall & Ilsley Corporation's ("Corporation")
1997 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, 1998 and 1997. The results of operations for the
three months ended March 31, 1998 and 1997 are not necessarily indicative
of results to be expected for the entire year. Certain amounts in the
1997 consolidated financial statements and analyses have been
reclassified to conform with the 1998 presentation.
2. The Corporation has 5,000,000 shares of preferred stock authorized, of
which the Board of Directors has designated 2,000,000 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. A reconciliation of the numerators and denominators of the basic and
diluted per share computations are as follows (dollars and shares in
thousands, except per share data):
Period Ending March 31, 1998
---------------------------------
Per
Income Average Share Share
(Numerator) (Denominator) Amount
---------------------------------
Net Income $ 72,931
Convertible Preferred Dividends (1,535)
---------
Basic Earnings Per Share
Income Available to Common Shareholders $ 71,396 101,587 $ 0.70
Effect of Dilutive Securtities
Convertible Preferred Stock 1,535 7,677
Stock Option and Restricted Stock Plans -- 1,857
--------- -----------
Diluted Earnings Per Share
Income Available to Common Shareholders
Plus Assumed Conversions $ 72,931 111,121 $ 0.66
Period Ending March 31, 1997
---------------------------------
Per
Income Average Share Share
(Numerator) (Denominator) Amount
---------------------------------
Net Income $ 54,799
Convertible Preferred Dividends (1,065)
---------
Basic Earnings Per Share
Income Available to Common Shareholders $ 53,734 88,691 $ 0.61
Effect of Dilutive Securtities
Convertible Preferred Stock 1,065 5,776
8.5% Convertible Debt 232 1,901
Stock Options, Restricted Stock and
Performance Plans -- 1,709
Forward Repurchase Contract -- 213
--------- -----------
Diluted Earnings Per Share
Income Available to Common Shareholders
Plus Assumed Conversions $ 55,031 98,290 $ 0.56
<PAGE>
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements - Continued
March 31, 1998 & 1997 (Unaudited)
4. Investment securities, by type, held by the Corporation are as follows
($000's):
March 31, December 31, March 31,
1998 1997 1997
---------------------------------------
Investment securities available for sale:
U.S. treasury and
government agencies $ 3,814,382 $ 3,786,390 $ 2,830,401
State and political subdivisions 224 487 717
Other 274,378 251,836 145,976
---------------------------------------
Investment securities
available for sale 4,088,984 4,038,713 2,977,094
Investment securities held to maturity:
State and political subdivisions 979,153 925,644 808,072
Other 4,421 4,446 4,050
---------------------------------------
Investment securities
held to maturity 983,574 930,090 812,122
---------------------------------------
Total investment securities $ 5,072,558 $ 4,968,803 $ 3,789,216
=======================================
5. The Corporation's loan portfolio consists of the following ($000's):
March 31, December 31, March 31,
1998 1997 1997
---------------------------------------
Commercial, financial & agricultural $ 3,569,977 $ 3,375,519 $ 3,056,559
Real estate:
Construction 395,806 402,892 315,401
Residential Mortgage 3,638,424 3,782,181 2,245,344
Commercial Mortgage 3,410,293 3,339,592 2,461,223
---------------------------------------
Total real estate 7,444,523 7,524,665 5,021,968
Personal 1,131,607 1,153,003 1,144,859
Lease financing 492,262 489,094 353,330
---------------------------------------
$ 12,638,369 $ 12,542,281 $ 9,576,716
=======================================
6. The Corporation's deposit liabilities consists of the following ($000's):
March 31, December 31, March 31,
1998 1997 1997
---------------------------------------
Noninterest bearing demand $ 2,601,390 $ 2,722,757 $ 2,261,330
Savings and NOW 5,822,897 5,610,445 4,374,810
Other time deposits $100 and over 1,468,529 1,390,464 1,188,661
Other time deposits under $100 4,360,052 4,632,332 3,010,854
---------------------------------------
$ 14,252,868 $ 14,355,998 $ 10,835,655
=======================================
7. On March 31, 1997, $16.8 million 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. This is a noncash transaction for
purposes of the Consolidated Statements of Cash Flows.
<PAGE>
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements - Continued
March 31, 1998 & 1997 (Unaudited)
8. Comprehensive Income
On January 1, 1998, the Corporation adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income." This
statement establishes standards for reporting and display of
comprehensive income and its components in a complete set of financial
statements. Comprehensive income is the total of reported net income and
all other revenues, expenses, gains and losses that under generally
accepted accounting principles are not includable in reported net income
but are reflected in shareholders' equity. The standard permits the
statement of changes in shareholders' equity to be used to satisfy its
requirements and requires companies to report comparative totals for
comprehensive income in interim reports. The following table presents
the Corporation's comprehensive income ($000's):
Three Months Ended
----------------------------------
March 31, March 31,
1998 1997
------------- -------------
Net income $ 72,931 $ 54,799
Other comprehensive income
Net change in unrealized securities
gains (losses), net (3,897) (16,822)
------------- -------------
Total comprehensive income $ 69,034 $ 37,977
============= =============
Other comprehensive income as shown is net of deferred income tax
benefits of $2,093 and $9,703 for the three months ended March 31, 1998
and 1997, respectively.
<PAGE>
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEETS (Unaudited)
($000's)
Three Months Ended March 31
------------------------------
Assets 1998 1997
- ------ ------------------------------
Cash and due from banks $ 645,383 $ 578,564
Short-term investments 151,533 180,108
Trading securities 37,727 40,528
Investment securities:
Taxable 3,975,709 3,027,293
Tax-exempt 1,024,921 848,712
------------ ------------
Total investment securities 5,000,630 3,876,005
Loans and leases:
Commercial 3,381,047 2,946,136
Real estate 7,486,639 4,933,500
Personal 1,136,516 1,159,720
Lease financing 484,706 342,995
------------ ------------
12,488,908 9,382,351
Less: Allowance for loan and lease losses 205,106 157,314
------------ ------------
Total loans and leases 12,283,802 9,225,037
Premises and equipment, net 340,112 316,588
Accrued interest and other assets 852,569 390,713
------------ ------------
Total Assets $ 19,311,756 $ 14,607,543
============ ============
Liabilities and Shareholders' Equity
- ------------------------------------
Deposits:
Noninterest bearing $ 2,362,304 $ 2,087,103
Interest bearing 11,439,013 8,513,308
------------ ------------
Total deposits 13,801,317 10,600,411
Funds purchased and security repurchase
agreements 1,958,933 1,645,089
Other short-term borrowings 239,194 164,563
Long-term borrowings 872,763 574,791
Accrued expenses and other liabilities 483,972 344,549
------------ ------------
Total liabilities 17,356,179 13,329,403
Shareholders' equity 1,955,577 1,278,140
------------ ------------
Total Liabilities and Shareholders' Equity $ 19,311,756 $ 14,607,543
============ ============
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF
OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
- ------------------------------------------
Net income for the first quarter of 1998 amounted to $72.9 million compared to
$54.8 million for the same period in the prior year. Basic and diluted earnings
per share were $.70 and $.66 respectively for the three months ended March 31,
1998, compared with $.61 and $.56, respectively for the three months ended March
31, 1997. The return on average assets and average equity were 1.53% and 15.12%
for the quarter ended March 31, 1998 and 1.52% and 17.39% for the quarter ended
March 31, 1997.
The Corporation's results of operations and average financial position for the
first quarter of 1998 includes the effects of the merger with Security Capital
Corporation ("Security") which was completed on October 1, 1997 and accounted
for as a purchase. Security had approximately $2.2 billion of consolidated
loans and $2.3 billion of deposits at the time of merger.
The following tables present a summary of each of the major elements of the
consolidated operating income statement, certain financial statistics and a
summary of the major operating 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.
SUMMARY CONSOLIDATED OPERATING INCOME STATEMENTS AND FINANCIAL STATISTICS
- -------------------------------------------------------------------------
($000's except per share data)
- ------------------------------
<TABLE>
<CAPTION>
1998 1997
---------- -------------------------------------------
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Interest Income $ 334,907 $ 343,884 $ 274,583 $ 267,280 $ 257,923
Interest Expense (178,270) (178,237) (139,065) (134,040) (128,281)
---------- ---------- ---------- ---------- ----------
Net Interest Income 156,637 165,647 135,518 133,240 129,642
Provision for Loan and Lease Losses (4,705) (4,378) (4,258) (4,306) (4,311)
Net Securities Gains 6,375 2,285 137 13 803
Other Income 169,875 168,178 152,076 138,574 136,792
Other Expense (214,250) (221,958) (190,149) (182,527) (180,767)
---------- ---------- ---------- ---------- ----------
Income Before Taxes 113,932 109,774 93,324 84,994 82,159
Income Tax Provision (41,001) (37,915) (31,460) (28,372) (27,360)
---------- ---------- ---------- ---------- ----------
Operating Income $ 72,931 $ 71,859 $ 61,864 $ 56,622 $ 54,799
========== ========== ========== ========== ==========
Per Common Share
Operating Income Per Share
Basic $ 0.70 $ 0.69 $ 0.68 $ 0.62 $ 0.61
Diluted 0.66 0.65 0.63 0.58 0.56
Dividends 0.200 0.200 0.200 0.200 0.185
Return on Average Equity
Based on Operating Income 15.12 % 15.06 % 18.01 % 17.37 % 17.39 %
</TABLE>
<PAGE>
<PAGE>
CONSOLIDATED OPERATING INCOME STATEMENT COMPONENTS AS A PERCENT OF
- ------------------------------------------------------------------
AVERAGE TOTAL ASSETS
- --------------------
<TABLE>
<CAPTION>
1998 1997
---------- -------------------------------------------
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Interest Income (FTE) 7.16 % 7.27 % 7.29 % 7.35 % 7.30 %
Interest Expense (3.74) (3.69) (3.62) (3.61) (3.56)
---------- ---------- ---------- ---------- ----------
Net Interest Income 3.42 3.58 3.67 3.74 3.74
Provision for Loan and Lease Losses (0.10) (0.09) (0.11) (0.12) (0.12)
Net Securities Gains 0.13 0.05 0.00 0.00 0.02
Other Income 3.57 3.49 3.96 3.74 3.80
Other Expense (4.50) (4.61) (4.95) (4.92) (5.02)
---------- ---------- ---------- ---------- ----------
Income Before Taxes 2.52 2.42 2.57 2.44 2.42
Income Tax Provision (0.99) (0.93) (0.96) (0.91) (0.90)
---------- ---------- ---------- ---------- ----------
Return on Average Assets
Based on Operating Income 1.53 % 1.49 % 1.61 % 1.53 % 1.52 %
========== ========== ========== ========== ==========
</TABLE>
The following table reconciles net income to operating income before
amortization of intangibles ("tangible operating income"). Amortization
includes amortization of goodwill and core deposit premiums and is net of
negative goodwill accretion and the income tax expense or benefit, if any,
related to each component. These calculations were specifically formulated by
the Corporation and may not be comparable to similarly titled measures reported
by other companies.
SUMMARY CONSOLIDATED TANGIBLE OPERATING INCOME AND FINANCIAL STATISTICS
- -----------------------------------------------------------------------
($000's except per share data)
- ------------------------------
<TABLE>
<CAPTION>
1998 1997
---------- -------------------------------------------
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Income $ 72,931 $ 71,859 $ 61,864 $ 56,622 $ 54,799
Amortization, net of tax 5,193 5,093 871 872 870
---------- ---------- ---------- ---------- ----------
Tangible Operating Income $ 78,124 $ 76,952 $ 62,735 $ 57,494 $ 55,669
========== ========== ========== ========== ==========
Tangible Operating Income Per Share
Basic $ 0.75 $ 0.74 $ 0.69 $ 0.63 $ 0.62
Diluted 0.70 0.69 0.64 0.59 0.57
Return on Average
Tangible Assets 1.67 1.62 % 1.64 % 1.56 % 1.55 %
Tangible Equity 19.11 19.24 18.80 18.19 18.25
</TABLE>
NET INTEREST INCOME
- -------------------
Net interest income for the first quarter of 1998 amounted to $156.6 million,
an increase of $27.0 million or 20.8% from the $129.6 million reported for the
first quarter of 1997. The increase in the volume of average earning assets
contributed approximately $84.4 million while the decrease in yield on earning
assets, primarily loans, decreased interest income by approximately $7.4
million. The increase in the volume of average interest bearing liabilities
contributed approximately $42.8 million and the increase in the cost of interest
bearing liabilities contributed approximately $7.2 million to the increase in
interest expense. The large changes attributable to volume reflect the effect
of the acquisition of Security in the fourth quarter of 1997.
<PAGE>
<PAGE>
Average earning assets increased $4.2 billion or 31.2% in the first quarter of
1998 compared to the same period a year ago and increased $116.6 million or .7%
since the fourth quarter of 1997. Including securitized adjustable rate
mortgage loans (ARMS), average loans grew approximately $3.6 billion or 36.1%
compared to the first quarter of last year and were relatively unchanged since
the fourth quarter of 1997. Average securities, excluding securitized ARMs,
increased $649.6 million for the three months ended March 31, 1998 compared with
the same period in the prior year and increased $131.5 million since the fourth
quarter of 1997.
Average interest bearing liabilities increased $3.6 billion or 33.1% in the
first quarter of 1998 compared to the same period in 1997 and increased $272.2
million or 1.9% since the fourth quarter of 1997. Since the fourth quarter of
1997, average interest bearing deposits increased $249.4 million or 2.2% while
average total borrowings increased $22.9 million.
The growth and composition of the Corporation's quarterly average loan portfolio
for the current quarter and previous four quarters are reflected in the
following table. Securitized ARM loans which are classified in the consolidated
balance sheets as investment securities available for sale are included to
provide a more meaningful comparison ($ in millions):
Marshall & Ilsley Corporation's quarterly average loan and lease portfolio
<TABLE>
<CAPTION>
Growth Pct.
-----------------
1998 1997 First Qtr
-------- ----------------------------------- 1998 Vs.
First Fourth Third Second First Fourth Qtr
Quarter Quarter Quarter Quarter Quarter Annual 1997
-------- -------- -------- ----------------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Commercial Loans $ 3,381 $ 3,285 $ 3,143 $ 3,057 $ 2,946 14.8 % 2.9 %
Real Estate Loans
Construction 402 397 336 320 323 24.1 1.2
Commercial Mortgages 3,365 3,295 2,526 2,496 2,417 39.2 2.1
Residential Mortgages 3,720 3,919 2,480 2,329 2,193 69.6 (5.1)
Securitized ARM loans 1,025 972 436 512 550 86.4 5.5
-------- -------- -------- -------- -------- ------- --------
Residential Mortgages 4,745 4,891 2,916 2,841 2,743 73.0 (3.0)
-------- -------- -------- -------- -------- ------- --------
Total Real Estate Loans 8,512 8,583 5,778 5,657 5,483 55.2 (0.8)
Personal Loans
Personal Loans 857 876 854 850 872 (1.7) (2.1)
Student Loans 279 274 267 277 288 (3.0) 1.9
-------- -------- -------- -------- -------- ------- --------
Total Personal Loans 1,136 1,150 1,121 1,127 1,160 (2.0) (1.2)
Lease Financing Receivables
Commercial 322 321 287 280 279 15.3 0.4
Personal 163 141 114 88 64 155.4 15.1
-------- -------- -------- -------- -------- ------- --------
Lease Financing Receivables 485 462 401 368 343 41.3 4.9
-------- -------- -------- -------- -------- ------- --------
Total Consolidated Average
Loans, Leases and ARMS $ 13,514 $ 13,480 $ 10,443 $ 10,209 $ 9,932 36.1 % 0.3 %
======== ======== ======== ======== ======== ======= ========
Total Consolidated
Average Loans and Leases $ 12,489 $ 12,508 $ 10,007 $ 9,697 $ 9,382 33.1 % (0.2)%
======== ======== ======== ======== ======== ======= ========
</TABLE>
As previously discussed, the annual growth is largely attributable to the
Security merger.
During the first quarter of 1998, approximately $117 million of ARM loans were
converted into government guaranteed agency pool securities. Approximately $218
million of ARM loans were securitized in all of 1997. In addition,
approximately $580 million of securitized ARMs were acquired in the Security
merger.
<PAGE>
<PAGE>
Compared with the fourth quarter of 1997, total consolidated average loans,
leases and securitized ARMs were relatively unchanged. The growth in commercial
and commercial real estate loans and lease financing receivables of
approximately $188.7 million was offset by declines in total residential real
estate loans and securitized ARMs of $145.3 million. The decrease in
residential real estate loans and securitized ARMs reflects the effect of
increased prepayments associated with customer refinancings to fixed rate loans
in response to the recent interest rate environment. Generally, the Corporation
sells fixed rate residential real estate loans in the secondary market.
The growth and composition of the Corporation's quarterly average deposits for
the current and prior year's quarters are as follows ($ in millions):
Marshall & Ilsley Corporation's quarterly average deposits
<TABLE>
<CAPTION>
Growth Pct.
-----------------
1998 1997 First Qtr
-------- ----------------------------------- 1998 Vs.
First Fourth Third Second First Fourth Qtr
Quarter Quarter Quarter Quarter Quarter Annual 1997
-------- -------- -------- ----------------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Noninterest Bearing
Commercial $ 1,539 $ 1,670 $ 1,476 $ 1,388 $ 1,362 13.0 % (7.9)%
Personal 482 468 443 443 430 12.1 3.0
Other 341 402 349 324 295 15.6 (15.2)
-------- -------- -------- -------- -------- ------- --------
Total Noninterest
Bearing Deposits 2,362 2,540 2,268 2,155 2,087 13.2 (7.0)
Interest Bearing
Savings & NOW 2,043 2,060 1,753 1,732 1,753 16.5 (0.9)
Money Market 3,647 3,517 2,695 2,642 2,613 39.6 3.7
Other CDs & Time Deposits 4,314 4,237 3,122 3,032 3,027 42.5 1.8
Cds Greater than $100,000 831 776 678 672 662 25.5 7.0
Brokered CDs 604 600 600 559 458 31.8 0.7
-------- -------- -------- -------- -------- ------- --------
Total Interest
Bearing Deposits 11,439 11,190 8,848 8,637 8,513 34.4 2.2
-------- -------- -------- -------- -------- ------- --------
Total Consolidated
Average Deposits $ 13,801 $ 13,730 $ 11,116 $ 10,792 $ 10,600 30.2 % 0.5 %
======== ======== ======== ======== ======== ======= ========
</TABLE>
Compared with the fourth quarter of 1997, average deposit growth amounted to
$71.6 million or .5%. Money market, CDs greater than $100 and foreign time
deposits exhibited the largest growth and accounted for approximately $332.7
million of the growth in average deposits. Offsetting this growth were declines
in noninterest bearing deposits of $177.8 million, other time deposits,
excluding foreign time, of $70.1 million and savings and NOW declines of $17.5
million. This shift in deposit mix had a negative impact on the net interest
margin.
The Corporation's consolidated average interest earning assets and interest
bearing liabilities, interest earned and interest paid for the current quarter,
prior year fourth quarter and prior year first quarter are presented in the
following table. Securitized ARM loans that are classified as investment
securities available for sale are included with loans to make the comparative
information more meaningful.
<PAGE>
<PAGE>
YIELD & COST ANALYSIS
($ in millions)
<TABLE>
<CAPTION>
Three Months Ended Mar. 31, Three Months Ended Dec. 31, Three Months Ended Mar. 31,
---------------------------- ---------------------------- ----------------------------
1998 1997 1997
---------------------------- ----------------------------- ----------------------------
Average Average Average
Average Yield or Average Yield or Average Yield or
Balance Interest Cost (b) Balance Interest Cost (b) Balance Interest Cost (b)
---------------------------- ----------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans and Leases (a) $13,513.8 $ 273.2 8.22 % $13,479.0 $ 281.4 8.30 % $ 9,932.2 $ 205.4 8.40 %
Investment Securities:
Taxable 2,950.8 47.4 6.55 2,883.3 46.3 6.41 2,477.4 40.1 6.59
Tax Exempt (a) 1,024.9 17.9 7.33 961.0 19.8 8.36 848.7 14.6 7.09
Other Short-term
Investments (a) 189.3 2.5 5.38 238.9 3.2 5.39 220.7 2.9 5.29
---------------------------- ------------------------------ -----------------------------
Total Interest
Earning Assets $17,678.8 $ 341.0 7.86 % $17,562.2 $ 350.7 7.95 % $13,479.0 $ 263.0 7.94 %
============================= ============================= =============================
Money Market Savings $ 3,647.5 $ 40.8 4.54 % $ 3,517.2 $ 39.5 4.46 % $ 2,613.0 $ 27.0 4.18 %
Regular Savings
& NOW 2,042.6 11.1 2.20 2,060.1 11.3 2.17 1,752.9 9.1 2.12
Other CDs & Time
Deposits 4,314.3 61.4 5.77 4,236.5 61.7 5.78 3,027.3 42.3 5.67
CDs Greater than
$100 & Brokered CDs 1,434.6 21.0 5.93 1,375.8 20.8 6.00 1,120.1 15.9 5.74
----------------------------- ----------------------------- -----------------------------
Total Interest
Bearing Deposits 11,439.0 134.3 4.76 11,189.6 133.3 4.73 8,513.3 94.3 4.49
Short-term
Borrowings 2,198.1 29.9 5.52 2,221.1 31.2 5.57 1,809.7 23.8 5.34
Long-term
Borrowings 872.8 14.1 6.54 826.9 13.7 6.58 574.8 10.2 7.16
----------------------------- ----------------------------- -----------------------------
Total Interest
Bearing Liabilities $14,509.9 $ 178.3 4.98 % $14,237.6 $ 178.2 4.97 % $10,897.8 $ 128.3 4.77 %
============================= ============================= =============================
Net Interest Margin
(FTE) as a Percent
of Average Earning
Assets $ 162.7 3.75 % $ 172.5 3.91 % $ 134.7 4.06 %
================== ================== ==================
</TABLE>
(a) Fully taxable equivalent basis (FTE), assuming a Federal income tax rate
of 35%, and excluding disallowed interest expense.
(b) Based on average balances excluding fair value adjustments for available
for sale securities.
<PAGE>
<PAGE>
The net interest margin as a percent of average earning assets declined 31 basis
points since the first quarter of 1997 and decreased 16 basis points from 3.91%
in the fourth quarter of 1997 to 3.75% in the current quarter. The yield on
average earning assets decreased 9 basis points since the fourth quarter of
1997. The yield on loans and securitized ARMs, the largest earning asset,
declined 8 basis points and contributed approximately $8.8 million to the
decline in net interest income compared with the fourth quarter of 1997. This
decline reflects, in part, accelerated run-off of higher yielding loans and
securitized ARMs due to prepayments and refinancings in response to the interest
rate environment. As a result, the Corporation increased the amortization
associated with the purchase accounting premium assigned to loans and investment
securities acquired in the Security merger. Net interest income may continue
to be adversely affected if the current prepayment experience continues. In
addition, the decline in tax-free dividend income of $1.9 million also
contributed to the decrease in net interest income in the current quarter
compared with the fourth quarter of 1997. The cost of interest bearing deposits
increased 3 basis points while short-term and long-term borrowing costs
decreased 5 and 4 basis points, respectively compared with the fourth quarter
of 1997.
At March 31, 1998, the Corporation had standard receive fixed/pay floating
interest rate swaps and interest rate caps and floors designated as hedges to
manage the interest rate volatility associated with variable rate loans and
variable rate debt. In addition, the Corporation had callable receive fixed /
pay floating interest rate swaps designated as hedges to offset the brokered
callable CDs previously discussed.
The Corporation's position with respect to interest rate swaps and interest rate
caps and floors at March 31, 1998 consisted of the following ($ in millions):
Interest Rate Swaps
-------------------
Notional Value $575
Weighted average receive rate 6.24%
Weighted average pay rate 5.68%
Weighted average remaining term (in years) 2.06
Estimated fair value $4.20
Callable Interest Rate Swaps
----------------------------
Notional Value $230
Weighted average receive rate 6.47%
Weighted average pay rate 5.46%
Weighted average remaining term (in years) 7.16
Estimated fair value ($0.67)
Interest Rate Caps and Floors
-----------------------------
Notional Value $50
Strike Rate 5.63%
Index 5.75%
Weighted average remaining term (in years) 2.63
Estimated fair value $0.18
Unamortized premium $0.30
For the three months ended March 31, 1998, the effect on net interest income
resulting from the swaps, net of cap and floor premium amortization, was a
positive $1.1 million compared with a positive $.8 million in the same period
in 1997.
<PAGE>
<PAGE>
PROVISION FOR LOAN AND LEASE LOSSES AND CREDIT QUALITY
- ------------------------------------------------------
At March 31, 1998, nonperforming assets were $84.9 million compared to $87.3
million at December 31, 1997 and $77.6 million at March 31, 1997. Nonaccrual
loans and leases, the largest component of nonperforming assets, increased $2.4
million since the fourth quarter and increased $3.9 million since March 31,
1997. Other real estate owned decreased $3.5 million and loans and leases past
due 90 days or more decreased $1.2 million while since the fourth quarter of
1997. Compared to March 31, 1997, renegotiated loans and loans and leases past
due 90 days or more decreased $.5 million and $.4 million, respectively. Other
real estate owned increased $4.3 million since March 31, 1997,which is primarily
due to branch closures associated with the Security merger which occurred in the
fourth quarter of 1997.
Total nonaccrual commercial loans and leases increased $2.9 million since the
fourth quarter but decreased $1.1 million since March 31, 1997. Nonaccrual
commercial loans and leases are substantially responsible for the increase in
nonaccrual loans at March 31, 1998 compared to December 31, 1997. Increases in
nonaccrual construction and land development loans and nonaccrual commercial
real estate loans were offset by declines in nonaccrual residential
real estate loans. As a result total nonaccrual real estate loans at March 31,
1998 were relatively unchanged since December 31, 1997.
Net recoveries in the first quarter of 1998 amounted to $2.8 million or (.09)%
of average loans and leases compared to net charge-offs of $2.2 million or .07%
of average loans and leases in the fourth quarter of 1997 and $5.6 million or
.24% of average loans and leases in the first quarter of 1997. One larger
commercial loan at the Corporation's lead bank accounted for $4.3 million of the
recoveries for the three months ended March 31, 1998.
The allowance for loan and lease losses amounted to $210.3 million or 1.66% of
total loans at March 31, 1998 compared to $202.8 million or 1.62% at December
31, 1997 and $154.6 million or 1.61% at March 31, 1997. The coverage ratio of
the allowance for loan and lease losses to nonperforming loans and leases was
281% at March 31, 1998 compared with 275% at December 31, 1997 and 215% at March
31, 1997.
The provision for loan and lease losses amounted to $4.7 million in the first
quarter of 1998 compared to $4.3 million in the first quarter of 1997. The
increase is primarily due to loan growth.
<PAGE>
<PAGE>
CONSOLIDATED CREDIT QUALITY INFORMATION ($000's)
1998 1997
-------- -----------------------------------
First Fourth Third Second First
NONPERFORMING ASSETS Quarter Quarter Quarter Quarter Quarter
- -------------------- -------- -------- -------- -------- --------
Nonaccrual $ 66,517 $ 64,153 $ 61,685 $ 56,723 $ 62,576
Renegotiated 1,241 1,338 1,242 1,636 1,736
Past Due 90 Days or More 7,080 8,238 7,721 7,461 7,517
-------- -------- -------- -------- --------
Total Nonperforming
Loans and Leases 74,838 73,729 70,648 65,820 71,829
Other Real Estate Owned 10,042 13,567 3,637 5,625 5,729
-------- -------- -------- -------- --------
Total Nonperforming Assets $ 84,880 $ 87,296 $ 74,285 $ 71,445 $ 77,558
======== ======== ======== ======== ========
ALLOWANCE FOR LOAN
AND LEASE LOSSES $210,307 $202,818 $157,893 $155,620 $154,599
======== ======== ======== ======== ========
CONSOLIDATED STATISTICS
- -----------------------
Net Charge-offs (Recoveries)
to Average Loans and Leases
Annualized (0.09)% 0.07 % 0.08 % 0.14 % 0.24 %
Total Nonperforming Loans
and Leases to Total
Loans and Leases 0.59 0.59 0.69 0.66 0.75
Total Nonperforming Assets
to Total Loans and Other
Real Estate Owned 0.67 0.70 0.73 0.72 0.81
Allowance for Loan and
Lease Losses to Total
Loans and Leases 1.66 1.62 1.54 1.57 1.61
Allowance for Loan and
Lease Losses to Nonperforming
Loans and Leases 281 275 223 236 215
<PAGE>
<PAGE>
1998 1997
NONACCRUAL LOANS -------- -----------------------------------
- ---------------- First Fourth Third Second First
AND LEASES BY TYPE Quarter Quarter Quarter Quarter Quarter
- ------------------ -------- -------- -------- -----------------
Commercial
Commercial, Financial &
Agricultural $ 16,491 $ 12,362 $ 17,229 $ 13,462 $ 17,945
Lease Financing
Receivables 2,648 3,855 2,073 1,430 2,290
-------- -------- -------- -------- --------
Total Commercial 19,139 16,217 19,302 14,892 20,235
Real Estate
Construction and Land
Development 1,869 1,329 573 1,311 1,650
Commercial Mortgage 14,942 13,901 19,631 18,185 19,987
Residential Mortgage 27,640 29,320 18,848 19,203 17,286
-------- -------- -------- -------- --------
Total Real Estate 44,451 44,550 39,052 38,699 38,923
Personal 2,927 3,386 3,331 3,132 3,418
-------- -------- -------- -------- --------
Total Nonaccrual Loans
and Leases $ 66,517 $ 64,153 $ 61,685 $ 56,723 $ 62,576
======== ======== ======== ======== ========
RECONCILIATION OF CONSOLIDATED ALLOWANCE FOR LOAN AND LEASE LOSSES ($000's)
- ---------------------------------------------------------------------------
1998 1997
-------- -----------------------------------
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
-------- -------- -------- -----------------
Beginning Balance $202,818 $157,893 $155,620 $154,599 $155,895
Provision for Loan and
Lease Losses 4,705 4,378 4,258 4,306 4,311
Allowance of Bank Acquired -- 42,773 -- -- --
Loans and Leases Charged-off
Commercial 396 1,249 1,024 2,773 3,305
Real Estate 906 911 807 446 1,466
Personal 2,367 1,992 1,841 1,706 2,003
Leases 165 416 208 462 80
-------- -------- -------- -------- --------
Total Charge-offs 3,834 4,568 3,880 5,387 6,854
Recoveries on Loans and Leases
Commercial 5,704 1,387 916 1,089 349
Real Estate 150 302 249 314 235
Personal 759 619 596 617 652
Leases 5 34 134 82 11
-------- -------- -------- -------- --------
Total Recoveries 6,618 2,342 1,895 2,102 1,247
-------- -------- -------- -------- --------
Net Loans and Leases
Charge-offs (Recoveries) (2,784) 2,226 1,985 3,285 5,607
-------- -------- -------- -------- --------
Ending Balance $210,307 $ 202,818 $157,893 $155,620 $154,599
======== ======== ======== ======== ========
<PAGE>
<PAGE>
OTHER INCOME
- ------------
Total other income in the first quarter of 1998 amounted to $176.3 million, an
increase of $38.7 million or 28.1%, compared to $137.6 million in the same
period last year.
Data processing revenue increased $16.7 million or 20.8% from $80.1 million in
the first quarter of 1997 to $96.8 million in the current quarter. Processing
revenue increased $10.3 million or 18.4%. Software revenue increased $4.2
million or 31.9%. Buyout fees, which can vary from period to period, decreased
$2.4 million while conversion fees increased $1.5 million or 54.8%. Revenues
from professional services such as contract programming and consulting increased
$3.1 million. Compared to the fourth quarter of 1997, revenue from data
processing services increased $2.1 million or 2.2%.
Trust services revenue amounted to $21.5 million in the first quarter of 1998,
an increase of $2.5 million or 13.4% compared to $18.9 million in the first
quarter of 1997. All components of trust services revenue experienced an
increase led by personal trust fees and corporate trust fees which increased
$.9 million and $1.0 million, respectively.
Other customer services revenue amounted to $36.2 million in the first quarter
of 1998 compared to $29.6 million in the first quarter of 1997. Other customer
services revenue for the current quarter include the effects of the Security
merger. Service charges on deposits amounted to $14.4 million in the first
quarter of 1998 a decrease of $.4 million compared to the fourth quarter of
1997. Compared with the fourth quarter of 1997, real estate loan and late fees
increased $1.1 million and Corporate finance fees associated with the
Corporation's Capital Markets Group increased $0.2 million in the first quarter
of 1998.
Net securities gains in the first quarter of 1998 amounted to $6.4 million
compared with $.8 million in the first quarter of 1997. The Corporation's
Capital Markets Group realized gains of $6.4 million in the three months ended
March 31, 1998 compared to $2.1 million for the same period in the prior year.
The Capital Markets Group gain recognized in the first quarter of 1997 was
offset by $1.3 million of losses recognized by the Corporation from the sale
of available for sale securities.
All other income amounted to $15.3 million in the first quarter of 1998 compared
to $8.2 million in the first quarter of 1997. Gains from the sale of
residential mortgage loans, which includes the servicing rights, increased $6.2
million. Revenue from bank-owned life insurance acquired in the Security merger
amounted to $.8 million for the three months ended March 31, 1998.
OTHER EXPENSE
- -------------
Total other expenses in the first quarter of 1998 amounted to $214.3 million
compared with $222.0 million in the fourth quarter of 1997 and $180.8 million
in the first quarter of 1997.
Expenses of the Corporation's banking business in the first quarter of 1998
include the effects of the Security merger. The Corporation added approximately
400 full-time equivalent employees as a direct result of the merger even though
the majority of Security' branches and operations facilities were closed due to
customer service and operating overlap.
The Corporation's nonbanking businesses, especially its Data Services segment
("Data Services"), continue to be the primary contributor to operating expense
growth. Data Services expense growth represents over half of the consolidated
operating expense growth and reflects the cost of adding processing capacity
and other related costs associated with increased revenue growth and maintenance
activities for Year 2000.
<PAGE>
<PAGE>
Expense Control is sometimes measured in the financial services industry by the
efficiency ratio statistic. The efficiency ratio is calculated by taking total
other expense (excluding nonrecurring charges) divided by the sum of total other
income (excluding securities gains or losses) and net interest income on a fully
taxable equivalent basis. The Corporation's efficiency ratios for the three
months ended March 31, 1998 and years ended December 31, 1997 and 1996:
Three
Months Years Ended Dec. 31,
Ended -----------------------
Efficiency Ratios Mar. 31, 1998 1997 1996
- -------------------------------------- ------------- ----------- -----------
Consolidated Corporation 64.4 % 65.6 % 65.9 %
Consolidated Corporation
Excluding Data Services 54.6 % 56.6 % 57.9 %
Salaries and employee benefits expense amounted to $123.7 million in the first
quarter of 1998 compared to $105.4 million in the first quarter of 1997, an
increase of $18.3 million or 17.4%. Salaries and employee benefits expense of
Data Services increased $12.0 million or 24.7% in the current quarter compared
to the same period last year. At March 31, 1998 Data Services had on average
approximately 621 more full time equivalent employees when compared to March 31,
1997 which reflects, in part, additional processing and service centers. In
addition, expense associated with contract programmers and other temporary help
primarily used in the Year 2000 project increased $.8 million over the
comparative periods.
Data Services expense growth accounted for approximately $3.4 million or 69% of
the increase in net occupancy, equipment and software expenses in the first
quarter of 1998 compared to the first quarter of 1997.
The increase in payments to regulatory agencies in the first quarter of 1998
compared to the like period in the prior year reflects the additional deposits
acquired in the Security merger.
Other expense amounted to $34.2 million in the first quarter of 1998, an
increase of $9.0 million or 35.9% compared to the first quarter of 1997. Other
expenses associated with Data Services accounted for approximately $2.2 million
of the increase including the effect of the capitalization of costs, net of
amortization, associated with software development and data processing
conversions. Amortization expense for goodwill, core deposit premiums and
mortgage servicing rights, primarily attributable to the Security merger,
increased $7.4 million.
INCOME TAXES
- ------------
The provision for income taxes for the three months ended March 31, 1998
amounted to $41.0 million or 36% of pre-tax income compared to $27.4 million or
33% of pre-tax income for the three months ended March 31, 1997. The change in
the effective tax is primarily due to the increase in nondeductible goodwill
amortization expense and the decrease in tax-exempt income relative to total
pre-tax income in the current quarter compared to the prior year quarter.
CAPITAL RESOURCES
- -----------------
Shareholders' equity was $1.97 billion at March 31, 1998 compared to $1.92
billion at December 31, 1997 and $1.28 billion at March 31, 1997.
Net unrealized gains on securities available for sale at March 31, 1998
decreased $3.9 million compared to December 31, 1997.
On February 19, 1998, the Corporation announced that its Board of Directors
voted to rescind the Corporation's Stock Repurchase Program effective March 16,
1998. During the first quarter of 1998, prior to March 16, 1998, 74,500 shares
of common stock were acquired with an aggregate cost of $4.3 million.
The Corporation continues to have a strong capital base and its regulatory
capital ratios are significantly above the minimum requirements as shown in the
following tables.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
RISK-BASED CAPITAL RATIOS ($in millions)
-------------------------------------------------------------------------
March 31, 1998 December 31, 1997
------------------------------------ ------------------------------------
Amount Ratio Amount Ratio
------------------- ---------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Tier 1 Capital $ 1,785.3 12.51 % $ 1,735.5 12.19 %
Tier 1 Capital Minimum Requirement 570.6 4.00 569.7 4.00
---------- ------ ---------- ------
Excess $ 1,214.7 8.51 % $ 1,165.8 8.19 %
========== ====== ========== ======
Total Capital $ 2,064.0 14.47 % $ 2,013.9 14.14 %
Total Capital Minimum Requirement 1,141.3 8.00 1,139.4 8.00
---------- ------ ---------- ------
Excess $ 922.7 6.47 % $ 874.5 6.14 %
========== ====== ========== ======
Risk-Adjusted Assets $ 14,265.9 $ 14,241.9
========== ==========
</TABLE>
<TABLE>
<CAPTION>
LEVERAGE RATIOS ($in millions)
-------------------------------------------------------------------------
March 31, 1998 December 31, 1997
------------------------------------ ------------------------------------
Amount Ratio Amount Ratio
------------------- ---------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Tier 1 Capital $ 1,785.3 9.45 % $ 1,735.5 9.25 %
Minimum Leverage Requirement 567.0 -945.1 3.00 - 5.00 562.7 -937.8 3.00 - 5.00
----------------- -------------- ----------------- --------------
Excess $ 1,218.3 -840.2 6.45 - 4.45 % $ 1,172.8 -797.7 6.25 - 4.25 %
================= ============== ================= ==============
Adjusted Average Total Assets $ 18,901.4 $ 18,756.0
========== ==========
</TABLE>
Year 2000 Update
- ----------------
At December 31, 1997, Data Services estimated that the net cost to change
existing computer programs for both internal and external software will be
approximately $30 million. As of March 31, 1998, the most recent estimate
places the net cost at approximately $34 million. During the first quarter of
1998, Data Services had net expense related to Year 2000 of approximately $3.1
million and estimates total net expense in 1998 will be approximately $15
million compared with $10 million net expense in 1997. Currently there are
approximately 150 full-time equivalent people on the Year 2000 project which
generally consists of service bureau code testing and system verification which
is scheduled to take place throughout 1998. The majority of Data Services'
contracts do not provide for reimbursement over and above the previously
contracted maintenance amounts. Future data processing revenue is critically
dependent upon the successful implementation of the necessary changes.
The Corporation and its other affiliates continue to anticipate that its program
for hardware, software, office machines and building systems will be completed
late in 1998 in order to allow for adequate testing and contingency planning.
Replacement equipment and software will be expensed or capitalized in accordance
with the Corporation's normal accounting policies. The effect of writing off
the net book value of equipment or software that is not Year 2000 compliant is
not considered material.
<PAGE>
<PAGE>
RECENT DEVELOPMENTS
- -------------------
On April 1, 1998, the Corporation completed the merger with Advantage Bancorp,
Inc. ("Advantage") a Kenosha, Wisconsin based savings and loan holding company
for 1.2 shares of the Corporation's Common Stock for each share of Advantage
Common Stock. The transaction was accounted for as a pooling-of-interests.
In conjunction with this transaction, in the second quarter of 1998, the
Corporation will record a merger / restructuring charge of approximately $16.3
million ($23.4 million before-tax) consisting of approximately $9.4 million
related to operations and $6.9 million of non-cash employee benefit expenses.
<PAGE>
<PAGE>
Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- -------------------------------------------------------------------
Market risk arises from exposure to changes in interest rates, exchange
rates, commodity prices, and other relevant market rate or price risk. The
Corporation faces market risk through trading and other than trading
activities. While market risk that arises from trading activities in the form
of foreign exchange and interest rate risk is immaterial to the Corporation,
market risk from other than trading activities in the form of interest rate risk
is measured and managed through a number of methods. The Corporation uses
financial modeling techniques which measure the sensitivity of future earnings
and the change in fair value due to changing rate environments to measure
interest rate risk. Policies established by the Corporate Asset/Liability
Committee and approved by the Corporate Board of Directors limit exposure for
both earnings and fair value at risk. General interest rate movements are used
to develop sensitivity as the Corporation feels it has no primary exposure to
a specific point on the yield curve. These limits are based on the Corporation's
exposure to a 100 basis point immediate and sustained parallel rate move, either
upward or downward. The Corporation manages interest rate risk through the use
of a limited array of derivative financial instruments. These instruments allow
the Corporation to produce the desired balance sheet repricing structure while
simultaneously meeting the desired objectives of both its borrowing and
depositing customers. For additional information on the Corporation's derivative
financial instruments, see Management's Discussion and Analysis of Financial
Position and Results of Operations.
Interest Rate Risk
- ------------------
In order to measure earnings and fair value sensitivity to changing rates,
the Corporation uses three different measurement tools including static gap
analysis, simulation of earnings, and market value sensitivity (fair value at
risk). The static gap analysis starts with contractual repricing information
for assets, liabilities and off-balance sheet instruments. These items are then
combined with repricing estimations for administered rate (NOW, Savings, and
Money Market accounts) and non rate related products (DDA accounts, Other Assets
and Other Liabilities) to create a baseline repricing balance sheet. In addition
to the contractual information, residential mortgage whole loan product and
mortgage-backed securities are adjusted based on industry estimates of
prepayment speeds that capture the expected prepayment of principal above the
contractual amount based on how far away the contractual coupon is from market
coupon rates. The resulting static gap is the base for the earnings sensitivity
calculation. The Corporation's consolidated static gap position as of March 31,
1998 has not materially changed since December 31, 1997.
The static gap analysis provides a representation of the Corporation's
earnings sensitivity to changes in interest rates. Interest rate risk of
embedded positions including prepayment and early withdrawal options, lagged
interest rate changes, administered interest rate products, and cap and floor
options within products require a more dynamic measuring tool to capture
earnings and fair value risk. Earnings simulation and fair value sensitivity
analysis are used to create a more complete assessment of interest rate risk.
Along with the static gap analysis, determining the sensitivity of future
earnings to a hypothetical +/- 100 basis point parallel rate shock can be
accomplished through the use of simulation modeling. In addition to the
assumptions used to create the static gap, simulation of earnings includes the
modeling of the balance sheet as an ongoing entity. Future business assumptions
involving administered rate products, prepayments for future rate sensitive
balances, and the reinvestment of maturing assets and liabilities are included.
These items are then modeled to project income based on a hypothetical change
in interest rates. The resulting pretax income for the next 12 month period is
compared to the pretax income amount calculated using flat rates. This
difference represents the Corporation's earnings sensitivity to a +/- 100 basis
point parallel rate shock. The following table illustrates these amounts as of
March 31, 1998 and December 31, 1997, which are within the limits established
by the Corporation:
<PAGE>
<PAGE>
Hypothetical Change
in Interest Rates Impact to Pretax Net Income
- ----------------- -----------------------------------
March 31, 1998 December 31, 1997
-------------- -----------------
100 basis point Shock Up (7.2%) (7.1%)
100 basis point Shock Down 6.0 6.1%
These results are based solely on immediate and sustained parallel changes
in market rates and do not reflect the earnings sensitivity that may arise from
other factors such as changes in the shape of the yield curve, the change in
spread between key market rates, or accounting recognition for impairment of
certain intangibles. The above results are also considered to be conservative
estimates due to the fact that no management action to mitigate potential income
variances are included within the simulation process. This action would include,
but would not be limited to, adjustments to the repricing characteristics of any
on or off balance sheet item with regard to short-term rate projections and
current market value assessments.
Another component of interest rate risk, fair value at risk, is
determined by the Corporation through the technique of simulating the fair value
of equity in changing rate environments. This technique involves determining the
present value of all contractual asset and liability cash flows (adjusted for
prepayments) based on a predetermined discount rate. The net result of all these
balance sheet items determine the fair value of equity. The fair value of equity
resulting from the current flat rate scenario is compared to the fair value of
equity calculated using discount rates +/- 100 basis points from flat rates to
determine the fair value of equity at risk. Currently, fair value of equity at
risk is less than 1.0% of the market value of the Corporation as of March 31,
1998.
Equity Risk
- -----------
In addition to interest rate risk, the Corporation incurs market risk
in the form of equity risk. M&I's Capital Markets Group invests in private,
medium-sized companies to help establish new businesses or recapitalize
existing ones. Exposure to the change in equity values for the companies that
are held in their portfolio exists, but due to the nature of the investments,
cannot be quantified within acceptable levels of precision.
M&I Trust Services administers more than $39 billion in assets and
directly manages a portfolio of more than $9 billion. Exposure exists to
changes in equity values due to the fact that fee income is partially based
on equity balances. While this exposure is present, quantification remains
difficult due to the number of other variables affecting fee income. Interest
rate changes can also have an effect on fee income for the above stated
reasons.
In addition to the above market risks, material limitations exist in
determining the overall net market risk exposure of the Corporation.
Computation of prospective effects of hypothetical interest rate changes are
based on many assumptions, including levels of market interest rates,
predicted prepayment speeds, and projected decay rates of core deposits.
Other items, such as post retirement benefit obligations can also have fair
value at risk exposure due to changes in interest rates. Therefore, the above
outcomes should not be relied upon as indicative of actual results.
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
A. Exhibits:
Exhibit 10 - Amended 1995 Directors Stock Option Plan
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>
<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 14, 1998
<PAGE>
EXHIBIT 10
<PAGE>
MARSHALL & ILSLEY CORPORATION
1995 DIRECTORS STOCK OPTION PLAN, AS AMENDED
(March 30, 1998)
1. PURPOSE OF THE PLAN
-------------------------
The purpose of the Marshall & Ilsley Corporation 1995 Directors Stock
Option Plan (the "Plan") is to promote the best interests of Marshall &
Ilsley Corporation (the "Company") and its shareholders by providing the non-
employee directors of the Company with an opportunity to acquire a
proprietary interest in the Company thereby more closely aligning their
interests with those of shareholders and providing a stronger incentive for
them to put forth maximum effort for the continued success and growth of the
Company. In addition, the opportunity to acquire a proprietary interest in
the Company will aid the Company in attracting and retaining qualified
personnel to serve as directors of the Company.
2. ADMINISTRATION OF THE PLAN
--------------------------------
(a) Procedure; Disinterested Directors. The Board of Directors will
administer the Plan; provided, however, that the Board of Directors may
appoint a committee (the "Committee") of not less than three (3) directors to
administer the Plan if the Board of Directors deems it necessary or advisable
to appoint such Committee, or if it is otherwise necessary to appoint such
Committee in order to comply with the exemptive rules promulgated pursuant to
Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(b) Powers. Grants of options to purchase the common stock, par
value $1.00 per share ("Common Stock"), of the Company under the Plan (the
"Options") and the amount, price, and timing of the awards to be granted will
be automatic as described in Section 5. However, all questions of
interpretation of the Plan will be determined by the Board of Directors or
the Committee, as applicable, and such determination will be final and
binding upon all parties.
3. PARTICIPANTS IN THE PLAN
------------------------------
Participants in the Plan shall consist of all present or future
directors of the Company who are not employees of the Company or its
subsidiaries. Any director who is an employee of the Company or its
subsidiaries and who subsequently ceases to be an employee of the Company and
its subsidiaries, but remains a director of the Company, shall become
eligible to participate in the Plan at the time such director ceases to be
employed by the Company or its subsidiaries.
4. SHARES RESERVED UNDER THE PLAN
------------------------------------
The aggregate number of shares of the Company's Common Stock which may
be issued under the Plan shall not exceed an aggregate of five hundred
thousand (500,000) shares of Common Stock, which may be treasury shares or
authorized but unissued shares, or a combination of the two, subject to
adjustment as provided in Paragraph 11 hereof. Any shares of Common Stock
which are subject to an Option which expires or terminates for any reason
(whether by voluntary surrender, lapse of time, or otherwise) and which is
unexercised as to such shares, may again be the subject of an Option under
the Plan. The holder of an Option shall be entitled to the rights and
privileges of ownership with respect to the shares of Common Stock subject to
the Option only after actual purchase and issuance of such shares of Common
Stock pursuant to the exercise of all or part of an Option.
<PAGE>
<PAGE>
5. NUMBER OF SHARES TO BE GRANTED EACH ELIGIBLE DIRECTOR; EXERCISE
---------------------------------------------------------------------
(a) Automatic Grant. On the date of the Company's 1995 Annual
Meeting of Shareholders, each eligible director of the Company whose term of
office continues after the Company's 1995 Annual Meeting of Shareholders
shall be granted an Option to purchase that number of shares of Common Stock
equal to the multiple of two thousand five hundred (2,500) and the number of
years remaining in such director's term as a director of the Company. On the
date of each Annual Meeting of Shareholders of the Company after the
Company's 1995 Annual Meeting of Shareholders, each eligible director elected
or re-elected at such Annual Meeting shall be granted an Option to purchase
that number of shares of Common Stock equal to the multiple of two thousand
five hundred (2,500) and the number of years in the term to which such
director has been elected to the Company's Board of Directors.
(b) Exercise. An Option may be exercised in whole at any time or in
part from time to time on or after the date of grant; provided, however, that
if an Option is exercised within six (6) months from the date of grant, the
Common Stock issued upon exercise of such Option may not be sold,
transferred, or otherwise disposed of by the director exercising such Option
until such six (6) month period has expired.
(c) Written Agreement. Each Option shall be evidenced by an
appropriate written agreement, the form of which shall be consistent with the
terms and conditions of the Plan and applicable law, and which shall be
signed by one or more designated members of the Board of Directors or the
Committee and the non-employee director.
(d) Tax Status of Options. Options granted hereunder shall not
comply with the provisions of Section 422 of Internal Revenue Code of 1986,
as amended.
6. OPTION PRICE; TERM
------------------------
Options granted hereunder shall consist of options to purchase shares
of Common Stock at purchase prices per share of not less than 100 percent of
the fair market value per share of the shares of Common Stock on the date the
Option is granted. For purposes of this Plan, the fair market value per
share of the Common Stock on any date shall be the closing sale price per
share of the Common Stock on the National Association of Securities Dealers
Automated Quotation/National Market System ("NASDAQ/NMS") on the business day
immediately preceding such date. If the Common Stock ceases to be listed on
the NASDAQ/NMS, the Board of Directors or the Committee, as applicable, shall
designate an alternative method of determining the fair market value per
share of the Common Stock. No Option will be exercisable after the
expiration of ten (10) years after the date of its grant, and each Option
will terminate no later than three (3) years after the holder thereof ceases
to be a director of the Company for any reason (but in no event later than
ten (10) years after its date of grant).
7. FORM OF PAYMENT
---------------------
The exercise price of the Option shall be payable in whole or in part
in cash or in shares of Common Stock held by the director for more than six
(6) months. If the director elects to pay all or a part of the exercise
price in shares of Common Stock, such director may make such payment by
delivering to the Company a number of shares already owned by the director
equal to the exercise price. All shares of Common Stock so delivered shall
be valued at their fair market value per share on the date delivered.
8. TAXES
-----------
The Company shall be entitled to pay or withhold the amount of any tax
which it believes is required as a result of the grant or exercise of any
Option under the Plan, and the Company may defer making delivery with respect
to the Common Stock obtained pursuant to exercise of any Option until
arrangements satisfactory to it have been made with respect to any such
withholding obligations. A director exercising an Option may, at such
director's election and subject to Paragraph 5(b), satisfy the obligation for
payment of withholding taxes either by having the Company retain a number of
shares having an aggregate fair market value per share on the date the shares
are withheld equal to the amount of the withholding tax or by delivering to
the Company shares already owned by the director having an aggregate fair
market value per share on the date the shares are delivered equal to the
amount of the withholding tax.
<PAGE>
<PAGE>
9. TRANSFERABILITY
---------------------
Except as provided below, Options granted to a director under this Plan
shall not be transferable and during the lifetime of such director shall be
exercisable only by such director. Notwithstanding the foregoing, a director
may transfer Options to members of the director's immediate family, to trusts
for the benefit of the director and/or such immediate family members and to
partnerships and other entities in which such director and/or such immediate
family members own all the equity interests, provided any such holder shall
be subject to all the terms and conditions of this Plan as the director,
except as otherwise expressly provided herein. For purposes of the preceding
sentence, "immediate family" shall be a director's spouse, issue and spouses
of issue.
A holder of an Option shall have the right to transfer the Option upon
such holder's death, either by the terms of such holder's will or under the
laws of descent and distribution, subject to the limitations set forth
herein, and all such distributees shall be subject to all terms and
conditions of this Plan to the same extent as would such holder if still
alive, except as otherwise expressly provided herein.
10. SECURITIES LAW
--------------------
Each Option agreement shall contain such representations, warranties
and other terms and conditions as shall be necessary in the opinion of
counsel to the Company to comply with all applicable federal and state
securities law. The Company shall have the right to delay the issue or
delivery of any shares of Common Stock under the Plan until (a) the
completion of such registration or qualification of such shares under any
federal or state law, ruling or regulation as the Company shall determine to
be necessary or advisable, and (b) receipt from the holder of the Option of
such documents and information as the Company may deem necessary or
appropriate in connection with such registration or qualification.
11. ADJUSTMENT PROVISIONS
---------------------------
If the Company shall effect a subdivision or consolidation of the
Common Stock or other capital readjustment, the payment of a stock dividend,
or other increase or reduction in the number of shares of Common Stock
outstanding, or shall effect a spin-off, split-off, or other distribution of
assets to shareholders, in any case without receiving consideration therefor
in money, services or property, the number of shares of Common Stock then
remaining subject to or available for Options, including shares as to which
Options have been granted but which remain unexercised and shares of Common
Stock reserved for Options, shall be appropriately adjusted by the Board of
Directors or the Committee, as applicable, subject to the express terms and
conditions of this Plan.
Subject to any required action by the Company's shareholders, if the
Company shall be a party to any merger or consolidation in which the Company
is not the surviving corporation or any other transaction or series of
transactions which has a reasonable likelihood or a purpose of causing the
Common Stock to be neither listed on any national securities exchange nor
authorized to be quoted on an inter-dealer quotation system of any registered
national securities association, or registered under Section 12 of the
Exchange Act, each outstanding Option shall pertain to and apply to the
securities which a holder of the number of shares of Common Stock subject to
the Option would have been entitled to receive pursuant to such transaction,
with any such adjustment in the exercise price as the Board of Directors or
the Committee, as applicable, shall deem appropriate. A dissolution of the
Company or a sale of all or substantially all of the assets and property of
the Company shall cause each outstanding Option to terminate forthwith;
provided, however, the holders of outstanding Options may exercise such
Options to the extent exercisable immediately prior to such dissolution or
sale.
12. EFFECTIVENESS OF THE PLAN
-------------------------------
The Plan shall become effective on February 16, 1995, subject to
approval of the Plan by the shareholders of the Company.
<PAGE>
<PAGE>
13. RULE 16b-3
----------------
It is intended that the Plan and any award made to a person subject to
Section 16 of the Exchange Act, and any transaction or election hereunder by
any such person, shall meet all of the requirements of Rule 16b-3. If any
provision of the Plan or any award hereunder would disqualify the Plan or
such award hereunder, or would not comply with Rule 16b-3, such provision or
award shall be construed or deemed amended to conform to Rule 16b-3.
14. TENURE
------------
The Plan shall not be construed as conferring any rights upon any
person for continuation as a member of the Board of Directors of the Company.
15. TERMINATION AND AMENDMENT
-------------------------------
Unless the Plan shall theretofore have been terminated as hereinafter
provided, no Option hereunder shall be granted after February 16, 2005. The
Plan may be terminated, modified or amended by the affirmative vote of the
holders of a majority of the shares of Common Stock present, or represented,
and entitled to vote at a meeting of the shareholders of the Company. The
Board of Directors of the Company may also terminate the Plan or make such
modifications or amendments thereof as it shall deem advisable, including
such modifications or amendments as it shall deem advisable in order to
conform to any law or regulation applicable thereto; provided, however, that
the Board of Directors may not, unless otherwise permitted under the federal
securities laws, without further approval of the shareholders of the Company,
adopt any amendment to the Plan which would cause the Plan to no longer
comply with Rule 16b-3, or any successor rule or other regulatory
requirements. No termination, modification or amendment of the Plan may,
without the consent of the holder an Option granted hereunder, adversely
affect the rights of such holder under an outstanding Option then held by the
holder.
MW1-116334-1
<PAGE>
EXHIBIT 11
<PAGE>
MARSHALL & ILSLEY CORPORATION EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
($000's except per share data)
Three Months Ended March 31,
-----------------------------
BASIC 1998 1997
- ----- ------------ ------------
Earnings:
Net income $ 72,931 $ 54,799
Less: Convertible preferred dividends (1,535) (1,065)
------------ ------------
Income available to common shareholders $ 71,396 $ 53,734
============ ============
Shares:
Weighted average number of common shares
outstanding 101,692 88,838
Less: Unvested restricted stock (105) (147)
------------ ------------
Total average basic shares outstanding 101,587 88,691
============ ============
Basic earnings per share $ 0.70 $ 0.61
============ ============
DILUTED
- -------
Earnings:
Net income $ 72,931 $ 54,799
Add: Interest on convertible notes,
net of income tax effect -- 232
------------ ------------
Income available to common shareholders
plus conversions $ 72,931 $ 55,031
============ ============
Shares:
Weighted average number of common shares
outstanding 101,692 88,838
Additional shares relating to:
Convertible preferred stock 7,677 5,776
8.5% convertible debt -- 1,901
Stock options, restricted stock and
performance plans 1,752 1,562
Forward repurchase contracts -- 213
------------ ------------
Total average diluted shares outstanding 111,121 98,290
============ ============
Diluted earnings per share $ 0.66 $ 0.56
============ ============
<PAGE>
EXHIBIT 12
<PAGE>
EXHIBIT 12
MARSHALL & ILSLEY CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
($000's)
<TABLE>
<CAPTION>
Three
Months
Ended Years Ended December 31,
March 31, ----------------------------------------------------------
Earnings: 1998 1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Earnings before income taxes, extraordinary
items and cumulative effect of changes
in accounting principles $ 113,932 $ 370,251 $ 313,141 $ 299,879 $ 167,803 $ 264,584
Fixed charges, excluding interest on deposits 46,508 159,977 113,515 108,683 77,074 47,905
---------- ---------- ---------- ---------- ---------- ----------
Earnings including fixed charges but
excluding interest on deposits 160,440 530,228 426,656 408,562 244,877 312,489
Interest on deposits 134,302 429,805 360,838 331,734 255,861 272,100
---------- ---------- ---------- ---------- ---------- ----------
Earnings including fixed charges and
interest on deposits $ 294,742 $ 960,033 $ 787,494 $ 740,296 $ 500,738 $ 584,589
========== ========== ========== ========== ========== ==========
Fixed Charges:
Interest Expense:
Short-term borrowings $ 29,896 $ 108,398 $ 62,071 $ 47,740 $ 39,681 $ 18,010
Long-term borrowings 14,072 41,420 42,808 53,709 30,537 23,088
One-third of rental expense for all operating
leases (the amount deemed representative
of the interest factor) 2,540 10,159 8,636 7,234 6,856 6,807
---------- ---------- ---------- ---------- ---------- ----------
Fixed charges excluding interest on deposits 46,508 159,977 113,515 108,683 77,074 47,905
Interest on deposits 134,302 429,805 360,838 331,734 255,861 272,100
---------- ---------- ---------- ---------- ---------- ----------
Fixed charges including interest on deposits $ 180,810 $ 589,782 $ 474,353 $ 440,417 $ 332,935 $ 320,005
========== ========== ========== ========== ========== ==========
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits 3.45 x 3.31 x 3.76 x 3.76 x 3.18 x 6.52 x
Including interest on deposits 1.63 x 1.63 x 1.66 x 1.68 x 1.50 x 1.83 x
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1998
<CASH> 702,579
<INT-BEARING-DEPOSITS> 121,880
<FED-FUNDS-SOLD> 85,301
<TRADING-ASSETS> 39,080
<INVESTMENTS-HELD-FOR-SALE> 4,088,984
<INVESTMENTS-CARRYING> 983,574
<INVESTMENTS-MARKET> 1,006,107
<LOANS> 12,638,369
<ALLOWANCE> 210,307
<TOTAL-ASSETS> 19,652,894
<DEPOSITS> 14,252,868
<SHORT-TERM> 2,165,292
<LIABILITIES-OTHER> 479,332
<LONG-TERM> 787,141
0
685
<COMMON> 109,303
<OTHER-SE> 1,858,273
<TOTAL-LIABILITIES-AND-EQUITY> 19,652,894
<INTEREST-LOAN> 253,406
<INTEREST-INVEST> 78,993
<INTEREST-OTHER> 2,508
<INTEREST-TOTAL> 334,907
<INTEREST-DEPOSIT> 134,302
<INTEREST-EXPENSE> 178,270
<INTEREST-INCOME-NET> 156,637
<LOAN-LOSSES> 4,705
<SECURITIES-GAINS> 6,375
<EXPENSE-OTHER> 214,250
<INCOME-PRETAX> 113,932
<INCOME-PRE-EXTRAORDINARY> 72,931
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 72,931
<EPS-PRIMARY> 0.70
<EPS-DILUTED> 0.66
<YIELD-ACTUAL> 3.75
<LOANS-NON> 66,517
<LOANS-PAST> 7,080
<LOANS-TROUBLED> 1,241
<LOANS-PROBLEM> 74,838
<ALLOWANCE-OPEN> 202,818
<CHARGE-OFFS> 3,834
<RECOVERIES> 6,618
<ALLOWANCE-CLOSE> 210,307
<ALLOWANCE-DOMESTIC> 210,307
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
