<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, 2000
-----------------------------------------------
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 28, 2000
------- ----------------
Common Stock, $1.00 Par Value 104,008,959
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
($000's except share data)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
Assets 2000 1999 1999
- ------ -----------------------------------------
<S> <C> <C> <C>
Cash and cash equivalents:
Cash and due from banks $ 674,604 $ 705,293 $ 641,648
Federal funds sold and
security resale agreements 64,655 101,922 16,954
Money market funds 153,652 72,641 71,408
------------ ------------ ------------
Total cash and cash equivalents 892,911 879,856 730,010
Investment securities:
Trading securities, at market value 43,342 40,334 33,234
Short-term investments, at cost which
approximates market value 16,382 6,828 54,571
Available for sale at market value 4,306,051 4,357,196 4,402,071
Held to maturity at amortized cost,
market value $1,130,123 ($1,137,126
December 31, and $1,147,979 March 31, 1999) 1,160,104 1,170,734 1,112,843
------------ ------------ ------------
Total investment securities 5,525,879 5,575,092 5,602,719
Loans and leases 16,965,521 16,335,061 14,260,672
Less: Allowance for loan and lease losses 232,471 225,862 229,669
------------ ------------ ------------
Net loans and leases 16,733,050 16,109,199 14,031,003
Premises and equipment 370,663 370,534 354,504
Intangible assets 358,842 366,416 321,157
Accrued interest and other assets 1,040,043 1,068,626 950,216
------------ ------------ ------------
Total Assets $ 24,921,388 $ 24,369,723 $ 21,989,609
============ ============ ============
Liabilities and Shareholders' Equity
- ------------------------------------
Deposits:
Noninterest bearing $ 2,658,348 $ 2,830,960 $ 2,681,922
Interest bearing 14,409,973 13,604,222 12,793,158
------------ ------------ ------------
Total deposits 17,068,321 16,435,182 15,475,080
Funds purchased and security
repurchase agreements 2,125,022 1,402,077 2,609,501
Other short-term borrowings 2,044,667 3,138,178 549,492
Accrued expenses and other liabilities 568,333 612,336 498,068
Long-term borrowings 1,038,184 665,024 680,236
------------ ------------ ------------
Total liabilities 22,844,527 22,252,797 19,812,377
Shareholders' equity:
Series A convertible preferred stock,
$1.00 par value; 336,370 shares issued
(685,314 March 31,1999) 336 336 685
Common stock, $1.00 par value; 112,757,546
shares issued 112,757 112,757 112,757
Additional paid-in capital 455,217 457,097 618,466
Retained earnings 1,978,813 1,914,128 1,724,779
Net unrealized (losses) gains on securities
available for sale, net of related taxes (45,057) (32,749) 40,601
Less: Treasury common stock, at cost;
8,752,702 shares (6,941,684 December 31,
and 8,385,347 March 31, 1999) 405,805 314,513 301,529
Deferred compensation 19,400 20,130 18,527
------------ ------------ ------------
Total shareholders' equity 2,076,861 2,116,926 2,177,232
------------ ------------ ------------
Total Liabilities and Shareholders' Equity $ 24,921,388 $ 24,369,723 $ 21,989,609
============ ============ ============
See notes to financial statements.
</TABLE>
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
($000's except per share data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
Interest income 2000 1999
- --------------- ---------------------------
<S> <C> <C>
Loans and leases $ 326,478 $ 271,977
Investment securities:
Taxable 67,890 64,300
Exempt from Federal income taxes 16,447 13,674
Trading securities 527 399
Short-term investments 3,283 2,236
------------ ------------
Total interest income 414,625 352,586
Interest expense
- ----------------
Deposits 172,578 133,651
Short-term borrowings 57,039 30,282
Long-term borrowings 15,887 15,836
------------ ------------
Total interest expense 245,504 179,769
------------ ------------
Net interest income 169,121 172,817
Provision for loan and lease losses 5,819 4,873
------------ ------------
Net interest income after
provision for loan and lease losses 163,302 167,944
Other income
- ------------
Data processing services
Processing 65,871 62,648
Software and consulting 19,925 21,759
E-commerce 39,553 24,392
Other 5,955 3,248
------------ ------------
Total data processing services 131,304 112,047
Internet banking 505 519
Trust services 27,808 23,872
Service charges on deposits 18,514 16,453
Mortgage banking 2,912 11,186
Capital Markets revenue 15,111 1,582
Net investment securities gains -- --
Life insurance revenue 6,672 6,225
Other 27,477 23,476
------------ ------------
Total other income 230,303 195,360
Other expense
- -------------
Salaries and employee benefits 156,220 134,123
Net occupancy 13,328 12,093
Equipment 27,362 26,474
Software expenses 6,865 6,103
Processing charges 7,540 7,923
Supplies and printing 4,852 4,515
Professional services 7,574 7,213
Amortization of intangibles 7,706 15,025
Other 25,659 20,826
------------ ------------
Total other expense 257,106 234,295
------------ ------------
Income before income taxes 136,499 129,009
Provision for income taxes 45,917 43,478
------------ ------------
Net income $ 90,582 $ 85,531
============ ============
Net income per common share
- ---------------------------
Basic $ 0.86 $ 0.79
Diluted 0.83 0.75
Dividends paid per common share $ 0.24 $ 0.22
Weighted average common shares outstanding:
Basic 104,657 105,466
Diluted 109,564 114,743
See notes to financial statements.
</TABLE>
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
($000's)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
2000 1999
---------------------------
<S> <C> <C>
Net Cash Provided by Operating Activities $ 88,892 $ 249,179
Cash Flows From Investing Activities:
- -------------------------------------
Net (increase)/decrease in securities with
maturities of three months or less -- (2,480)
Proceeds from sales of securities
available for sale 11,498 --
Proceeds from maturities of longer
term securities 173,386 288,712
Purchases of longer term securities (136,933) (726,903)
Net increase in loans (607,295) (344,688)
Purchases of assets to be leased (102,100) (93,486)
Principal payments on lease receivables 81,334 73,006
Fixed asset purchases, net (14,571) (9,820)
Acquisitions and investments in joint ventures (265) --
Other 2,396 2,606
------------ ------------
Net cash used in investing activities (592,550) (813,053)
------------ ------------
Cash Flows From Financing Activities:
- -------------------------------------
Net increase /(decrease) in deposits 633,140 (444,839)
Proceeds from issuance of commercial paper 804,280 230,453
Payments for maturity of commercial paper (625,093) (132,960)
Net increase /(decrease) in other short-term
borrowings (534,826) 893,964
Proceeds from issuance of long-term debt 378,110 4,361
Payments of long-term debt (19,913) (28,385)
Dividends paid (25,897) (24,876)
Purchases of treasury stock (94,756) (116,512)
Other 1,668 5,940
------------ ------------
Net cash provided by financing activities 516,713 387,146
------------ ------------
Net increase/(decrease) in cash and cash equivalents 13,055 (176,728)
Cash and cash equivalents, beginning of year 879,856 906,738
------------ ------------
Cash and cash equivalents, end of period $ 892,911 $ 730,010
============ ============
Supplemental cash flow information:
- -----------------------------------
Cash paid during the period for:
Interest $ 224,574 $ 181,667
Income taxes 930 3,921
See notes to financial statements.
</TABLE>
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements
March 31, 2000 & 1999 (Unaudited)
1. The accompanying unaudited consolidated financial statements should be
read in conjunction with Marshall & Ilsley Corporation's ("M&I" or
"Corporation") 1999 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, 2000 and 1999. The results of
operations for the three months ended March 31, 2000 and 1999 are not
necessarily indicative of results to be expected for the entire year.
Certain amounts in the 1999 consolidated financial statements and
analyses have been reclassified to conform with the 2000 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. At the 2000 Annual Meeting of Shareholders held April
25, 2000, the shareholders of the Corporation approved an amendment to
the Corporation's Restated Articles of Incorporation to increase the
authorized common stock to 320,000,000 shares.
3. Acquisitions / Acquisition Update
During the first quarter of 2000, the Corporation paid an additional
$0.3 million in settlement of the assets acquired and liabilities
assumed in the October 1, 1999 purchase acquisition of Cardpro Services,
Inc. Initial goodwill subject to the completion of appraisals and
valuations of the assets acquired and liabilities assumed amounted to
$10.5 million and is being amortized on a straight-line basis over ten
years.
Also during the first quarter of 2000, appraisals and valuations
associated with the April 1, 1999 purchase acquisition of the Electronic
Banking Services business unit of ADP were completed. Goodwill
associated with this transaction amounted to $44.0 million and is being
amortized on a straight-line basis over twenty five years.
In conjunction with the October 1, 1997 purchase acquisition of Security
Capital Corporation, $18.6 million of exit costs were recorded as
liabilities assumed in the acquisition. As of March 31, 2000, the
remaining liability amounted to $0.4 million which consists of unpaid
severance. Periodic severance payments will continue through 2002.
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements - Continued
March 31, 2000 & 1999 (Unaudited)
4. 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):
<TABLE>
<CAPTION>
Three Months Ended March 31, 2000
-------------------------------------
Per
Income Average Shares Share
(Numerator) (Denominator) Amount
-------------------------------------
<S> <C> <C> <C>
Net Income $ 90,582
Convertible Preferred Dividends (923)
------------
Basic Earnings Per Share
Income Available to Common Shareholders $ 89,659 104,657 $ 0.86
=======
Effect of Dilutive Securities
Convertible Preferred Stock 923 3,844
Stock Options and Restricted Stock Plans -- 1,063
------------ ---------------
Diluted Earnings Per Share
Income Available to Common Shareholders
Plus Assumed Conversions $ 90,582 109,564 $ 0.83
=======
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended March 31, 1999
-------------------------------------
Per
Income Average Shares Share
(Numerator) (Denominator) Amount
-------------------------------------
<S> <C> <C> <C>
Net Income $ 85,531
Convertible Preferred Dividends (1,689)
------------
Basic Earnings Per Share
Income Available to Common Shareholders $ 83,842 105,466 $ 0.79
=======
Effect of Dilutive Securities
Convertible Preferred Stock 1,689 7,677
Stock Options and Restricted Stock Plans -- 1,600
------------ ---------------
Diluted Earnings Per Share
Income Available to Common Shareholders
Plus Assumed Conversions $ 85,531 114,743 $ 0.75
=======
</TABLE>
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements - Continued
March 31, 2000 & 1999 (Unaudited)
5. Selected investment securities, by type, held by the Corporation are as
follows ($000's):
<TABLE>
<CAPTION>
March 31, December 31, March 31,
2000 1999 1999
-----------------------------------------
<S> <C> <C> <C>
Other investment securities available for sale:
U.S. treasury and
government agencies $ 3,760,161 $ 3,852,731 $ 4,059,856
State and political subdivisions 145,993 109,971 153
Other 399,897 394,494 342,062
------------ ------------ ------------
Other available for sale $ 4,306,051 $ 4,357,196 $ 4,402,071
============ ============ ============
Investment securities held to maturity:
U.S. treasury and
government agencies $ 5 $ 9 $ 58
State and political subdivisions 1,154,905 1,165,756 1,108,128
Other 5,194 4,969 4,657
------------ ------------ ------------
Held to maturity $ 1,160,104 $ 1,170,734 $ 1,112,843
============ ============ ============
</TABLE>
6. The Corporation's loan and lease portfolio consists of the following
($000's):
<TABLE>
<CAPTION>
March 31, December 31, March 31,
2000 1999 1999
-----------------------------------------
<S> <C> <C> <C>
Commercial, financial & agricultural $ 5,031,736 $ 4,754,857 $ 4,228,402
Real estate:
Construction 515,502 494,558 395,718
Residential mortgage 5,154,388 4,941,450 4,081,788
Commercial mortgage 4,095,617 4,034,771 3,750,583
------------ ------------ ------------
Total real estate 9,765,507 9,470,779 8,228,089
Personal 1,320,014 1,299,416 1,154,191
Lease financing 848,264 810,009 649,990
------------ ------------ ------------
$ 16,965,521 $ 16,335,061 $ 14,260,672
============ ============ ============
</TABLE>
7. The Corporation's deposit liabilities consists of the following
($000's):
<TABLE>
<CAPTION>
March 31, December 31, March 31,
2000 1999 1999
-----------------------------------------
<S> <C> <C> <C>
Noninterest bearing demand $ 2,658,348 $ 2,830,960 $ 2,681,922
Savings and NOW 7,033,134 6,966,423 6,860,544
CD's $100,000 and over 1,993,954 1,885,933 1,596,154
Other time deposits 3,456,666 3,419,333 3,428,472
Foreign Deposits 1,926,219 1,332,533 907,988
------------ ------------ ------------
$ 17,068,321 $ 16,435,182 $ 15,475,080
============ ============ ============
</TABLE>
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements - Continued
March 31, 2000 & 1999 (Unaudited)
8. Comprehensive Income
The following table presents the Corporation's comprehensive income
($000's):
<TABLE>
<CAPTION>
Three Months Ended
----------------------------
March 31, March 31,
2000 1999
------------ ------------
<S> <C> <C>
Net income $ 90,582 $ 85,531
Other comprehensive income
Unrealized gains (losses) on
securities, net of tax:
Arising during the period (20,086) (17,501)
Reclassification for securities
transactions included in net income
net of income taxes of $4,188 7,778 --
------------ ------------
(12,308) (17,501)
------------ ------------
Total comprehensive income $ 78,274 $ 68,030
============ ============
</TABLE>
Other comprehensive income as shown is net of deferred income tax
benefits of $10,833 and $10,705 for the three months ended March 31,
2000 and 1999, respectively.
9. Segments
Generally, the Corporation organizes its segments based on legal
entities and segregates the Data Services Division of the Corporation.
Each entity offers a variety of products and services to meet the needs
of its customers and the particular market served. Each entity or
division has its own president and is separately managed subject to
adherence to Corporate policies. Discrete financial information is
reviewed by senior management to assess performance on a monthly basis.
Certain segments are combined and consolidated for purposes of assessing
financial performance. No changes have been made in the organization
or reporting of the Corporation's segments since the 1999 Annual Report.
The Corporation evaluates the profit or loss performance of its segments
based on operating income. Operating income is after-tax income
excluding nonrecurring charges and charges for services from the holding
company, excluding its Data Services Division. Operating income for the
banking entities and certain other entities also excludes certain
assets, liabilities, equity, revenues and expenses associated with
adjustments, charges or credits arising from acquisitions accounted for
as purchases (hereinafter called acquisition costs). The accounting
policies of the Corporation's segments are the same as those described
in Note 1 to the Corporation's Annual Report on Form 10K, Item 8.
Intersegment revenues may be based on cost, current market prices or
negotiated prices between the providers and receivers of services.
Based on the way the Corporation organizes its segments and the
requirements of Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information",
the Corporation has determined that it has two reportable segments.
Information with respect to M&I's segments is as follows:
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements - Continued
March 31, 2000 & 1999 (Unaudited)
Banking
-------
Banking represents the aggregation of twenty-six separately chartered
banks located in Wisconsin, one bank in Arizona, one federally chartered
thrift headquartered in Nevada and an operational support subsidiary.
Banking consists of accepting deposits, making loans and providing other
services such as cash management, foreign exchange and correspondent
banking to a variety of commercial and retail customers. Products and
services are provided through a variety of delivery channels including
traditional branches, supermarket branches, telephone centers, ATMs and
the internet. In addition, the Corporation's larger affiliate banks
provide numerous services such as cash management, regional credit, and
centralized accounting to M&I's community banking affiliates.
Intrasegment revenues, expenses and assets have been eliminated in the
following information. ($ in millions):
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
March 31, March 31,
2000 1999
------------ ------------
<S> <C> <C>
Revenue:
Net interest income $ 170.9 $ 171.0
Other revenues:
Unaffiliated customers 43.8 45.2
Affiliated customers 4.6 3.6
------------ ------------
Total revenues 219.3 219.8
Expenses:
Intersegment charges 18.9 22.4
Other operating expense 81.5 78.3
------------ ------------
Total expenses 100.4 100.7
Provision for loan and lease losses 5.8 4.7
Income tax expense 34.9 36.4
------------ ------------
Operating income $ 78.2 $ 78.0
============ ============
Identifiable assets $ 23,566.8 $ 20,820.5
============ ============
Return on tangible equity 19.1 % 19.9 %
============ ============
</TABLE>
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements - Continued
March 31, 2000 & 1999 (Unaudited)
Banking (continued)
-------------------
The following tables present revenue and operating income by line of
business for Banking. This information is based on the Corporation's
product profitability measurement system and is an aggregation of the
revenues and expenses associated with the products and services within
each line of business. Net interest income is derived from the
Corporation's internal funds transfer pricing system, expenses are
allocated based on available transaction volumes and the provision for
loan and lease losses is allocated based on credit risk. Equity is
assigned to products and services on a basis that considers market,
operational and reputation risk. ($ in millions):
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
March 31, March 31,
2000 1999
------------ ------------
<S> <C> <C>
Banking revenues:
Commercial Banking $ 98.6 $ 89.8
Retail Banking 95.1 94.7
Investments and Other 25.6 35.3
------------ ------------
Total banking revenues $ 219.3 $ 219.8
============ ============
Percent of total banking revenue:
Commercial Banking 45.0 % 40.8 %
Retail Banking 43.4 43.1
Investments and Other 11.6 16.1
------------ ------------
Total banking revenues 100.0 % 100.0 %
============ ============
Operating banking income
Commercial Banking $ 40.3 $ 42.3
Retail Banking 24.4 25.4
Investments and Other 13.5 10.3
------------ ------------
Total operating banking income $ 78.2 $ 78.0
============ ============
Percent of total operating banking income:
Commercial Banking 51.5 % 54.3 %
Retail Banking 31.2 32.5
Investments and Other 17.3 13.2
------------ ------------
Total operating banking income 100.0 % 100.0 %
============ ============
Banking return on tangible equity
Commercial Banking 21.9 % 25.5 %
Retail Banking 19.4 22.7
------------ ------------
Total banking return on tangible equity 19.1 % 19.9 %
============ ============
</TABLE>
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements - Continued
March 31, 2000 & 1999 (Unaudited)
Data Services
-------------
Data Services includes the Data Services Division of the Corporation as
well as two nonbank subsidiaries. Data Services provides data
processing services, develops and sells software and provides consulting
services to M&I affiliates as well as banks, thrifts, credit unions,
trust companies and other financial services companies throughout the
world although its activities are primarily domestic. In addition, Data
Services derives revenue from the Corporation's credit card merchant
operations. The majority of Data Services revenue is derived from
internal and external processing. Intrasegment revenues, expenses and
assets have been eliminated in the following information. ($ in
millions):
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
March 31, March 31,
2000 1999
------------ ------------
<S> <C> <C>
Revenue:
Net interest expense $ (1.3) $ (0.6)
Other revenues:
Unaffiliated customers 131.9 112.7
Affiliated customers 23.4 21.5
------------ ------------
Total revenues 154.0 133.6
Expenses:
Intersegment charges 0.3 0.1
Other operating expense 131.9 114.4
------------ ------------
Total expenses 132.2 114.5
Income tax expense 9.1 8.3
------------ ------------
Operating income $ 12.7 $ 10.8
============ ============
Identifiable assets $ 505.5 $ 426.8
============ ============
Return on equity 19.6 % 19.9 %
============ ============
</TABLE>
Data Services revenue from unaffiliated customers consist of the
following ($ in millions):
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
March 31, March 31,
2000 1999
------------ ------------
<S> <C> <C>
Data Processing Services $ 131.3 $ 112.0
Other 0.6 0.7
------------ ------------
Total unaffiliated customer revenue $ 131.9 $ 112.7
============ ============
</TABLE>
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements - Continued
March 31, 2000 & 1999 (Unaudited)
All Others
----------
M&I's primary other operating segments includes Trust Services, Mortgage
Banking (residential and commercial), Capital Markets Group, Brokerage
and Insurance Services and Commercial Leasing. Trust Services provide
investment management and advisory services as well as personal,
commercial and corporate trust services in Wisconsin, Florida and
Arizona. Capital Markets Group provide venture capital and advisory
services. Intrasegment revenues, expenses and assets for the entities
that comprise Trust Services and Capital Markets Group have been
eliminated in the following information. ($ in millions):
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
March 31, March 31,
2000 1999
------------ ------------
<S> <C> <C>
Revenue:
Net interest income $ 5.0 $ 5.8
Other revenues:
Unaffiliated customers 52.9 36.2
Affiliated customers 2.8 5.2
------------ ------------
Total revenues 60.7 47.2
Expenses:
Intersegment charges 7.1 6.3
Other operating expense 26.0 25.8
------------ ------------
Total expenses 33.1 32.1
Provision for loan and lease losses -- 0.2
Income tax expense 11.1 5.9
------------ ------------
Operating income $ 16.5 $ 9.0
============ ============
Identifiable assets $ 704.1 $ 678.4
============ ============
Return on tangible equity 30.7 % 18.0 %
============ ============
</TABLE>
Total Revenues by type in All Others consist of the following:
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
March 31, March 31,
2000 1999
------------ ------------
<S> <C> <C>
Trust Services $ 28.5 $ 24.5
Residential Mortgage Banking 5.7 10.3
Internet Mortgage Banking 0.6 0.5
Capital Markets 15.5 2.7
Brokerage and Insurance 6.4 5.0
Commercial Leasing 2.4 2.7
Commercial Mortgage Banking 0.4 0.3
Others 1.2 1.2
------------ ------------
Total revenues $ 60.7 $ 47.2
============ ============
</TABLE>
<PAGE>
MARSHALL & ILSLEY CORPORATION
Notes to Financial Statements - Continued
March 31, 2000 & 1999 (Unaudited)
Segment information reconciled to the Consolidated Financial Statements
is as follows ($ in millions):
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
March 31, March 31,
2000 1999
------------ ------------
<S> <C> <C>
Revenues:
Banking $ 219.3 $ 219.8
Data Services 154.0 133.6
All Others 60.7 47.2
Corporate overhead (4.2) (1.6)
Acquisition costs 0.3 (0.4)
Intersegment eliminations (30.7) (30.4)
------------ ------------
Consolidated revenues $ 399.4 $ 368.2
============ ============
Expenses:
Banking $ 100.4 $ 100.7
Data Services 132.2 114.5
All Others 33.1 32.1
Corporate overhead 17.2 11.7
Acquisition costs 4.9 5.7
Intersegment eliminations (30.7) (30.4)
------------ ------------
Consolidated expenses $ 257.1 $ 234.3
============ ============
Net income (loss):
Operating income:
Banking $ 78.2 $ 78.0
Data Services 12.7 10.8
All Others 16.5 9.0
Corporate overhead (12.9) (7.5)
Acquisition costs (3.9) (4.8)
------------ ------------
Consolidated net income $ 90.6 $ 85.5
============ ============
Assets:
Banking $ 23,566.8 $ 20,820.5
Data Services 505.5 426.8
All Others 704.1 678.4
Corporate overhead 196.4 173.3
Acquisition costs 264.1 283.3
Intersegment eliminations (315.5) (392.7)
------------ ------------
Consolidated assets $ 24,921.4 $ 21,989.6
============ ============
</TABLE>
<PAGE>
MARSHALL & ILSLEY CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEETS (Unaudited)
($000's)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
Assets 2000 1999
- ------ ----------------------------
<S> <C> <C>
Cash and due from banks $ 630,113 $ 658,996
Trading securities 41,553 32,093
Short-term investments 234,435 190,542
Other investment securities:
Taxable 4,132,667 4,092,000
Tax-exempt 1,341,892 1,128,932
------------ ------------
Total investment securities 5,750,547 5,443,567
Loans and leases:
Commercial 4,896,688 4,132,882
Real estate 9,599,400 8,156,151
Personal 1,313,719 1,154,323
Lease financing 825,300 627,461
------------ ------------
16,635,107 14,070,817
Less: Allowance for loan and lease losses 228,464 228,619
------------ ------------
Total loans and leases 16,406,643 13,842,198
Premises and equipment, net 372,300 357,233
Accrued interest and other assets 1,398,920 1,294,022
------------ ------------
Total Assets $ 24,558,523 $ 21,596,016
============ ============
Liabilities and Shareholders' Equity
- ------------------------------------
Deposits:
Noninterest bearing $ 2,609,079 $ 2,567,832
Interest bearing 14,422,706 12,718,488
------------ ------------
Total deposits 17,031,785 15,286,320
Funds purchased and security repurchase
agreements 2,751,558 2,447,332
Other short-term borrowings 1,143,504 121,809
Long-term borrowings 1,010,484 1,028,593
Accrued expenses and other liabilities 540,613 480,806
------------ ------------
Total liabilities 22,477,944 19,364,860
Shareholders' equity 2,080,579 2,231,156
------------ ------------
Total Liabilities and Shareholders' Equity $ 24,558,523 $ 21,596,016
============ ============
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION
AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
------------------------------------------
Net income for the first quarter of 2000 amounted to $90.6 million compared
to $85.5 million for the same period in the prior year. Basic and diluted
earnings per share were $.86 and $.83 respectively for the three months ended
March 31, 2000, compared with $.79 and $.75, respectively for the three months
ended March 31, 1999. The return on average assets and average equity were
1.48% and 17.51% for the quarter ended March 31, 2000 and 1.61% and 15.55% for
the quarter ended March 31, 1999.
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.
"Cash operating income" and related statistics is operating income before
amortization of intangibles. 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 OPERATING INCOME STATEMENTS AND FINANCIAL STATISTICS
-------------------------------------------------------------------------
($000's except per share data)
<TABLE>
<CAPTION>
2000 1999
---------- ----------------------------------------------
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Interest income $ 414,625 $ 398,819 $ 380,477 $ 364,702 $ 352,586
Interest expense (245,504) (221,900) (202,674) (186,960) (179,769)
---------- ---------- ---------- ---------- ----------
Net interest income 169,121 176,919 177,803 177,742 172,817
Provision for loan
and lease losses (5,819) (10,938) (4,797) (4,811) (4,873)
Net investment securities
gains (losses) -- (4,513) 59 355 --
Other income 230,303 223,633 222,708 208,172 195,360
Other expense (257,106) (255,063) (260,394) (247,945) (234,295)
---------- ---------- ---------- ---------- ----------
Income before taxes 136,499 130,038 135,379 133,513 129,009
Income tax provision (45,917) (39,412) (44,543) (45,995) (43,478)
---------- ---------- ---------- ---------- ----------
Operating income $ 90,582 $ 90,626 $ 90,836 $ 87,518 $ 85,531
========== ========== ========== ========== ==========
Cash operating income $ 95,071 $ 95,664 $ 95,796 $ 92,475 $ 94,372
========== ========== ========== ========== ==========
Per Common Share
Operating income
Basic $ 0.86 $ 0.84 $ 0.86 $ 0.82 $ 0.79
Diluted 0.83 0.81 0.81 0.77 0.75
Cash Operating income
Basic $ 0.90 $ 0.89 $ 0.91 $ 0.87 $ 0.88
Diluted 0.87 0.86 0.85 0.81 0.82
Dividends 0.24 0.24 0.24 0.24 0.22
Return on Average Equity
Operating income 17.51 % 16.86 % 16.85 % 16.04 % 15.55 %
Cash Operating income 21.86 21.14 21.04 20.04 19.78
</TABLE>
<PAGE>
SUMMARY CONSOLIDATED OPERATING INCOME STATEMENT COMPONENTS
AS A PERCENT OF AVERAGE TOTAL ASSETS
<TABLE>
<CAPTION>
2000 1999
---------- ----------------------------------------------
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Interest income (FTE) 6.92 % 6.77 % 6.68 % 6.68 % 6.75 %
Interest expense (4.02) (3.70) (3.49) (3.36) (3.38)
---------- ---------- ---------- ---------- ----------
Net interest income 2.90 3.07 3.19 3.32 3.37
Provision for loan
and lease losses (0.10) (0.18) (0.08) (0.09) (0.09)
Net investment securities
gains (losses) -- (0.07) -- 0.01 --
Other income 3.77 3.72 3.83 3.74 3.67
Other expense (4.21) (4.25) (4.49) (4.46) (4.40)
---------- ---------- ---------- ---------- ----------
Income before taxes 2.36 2.29 2.45 2.52 2.55
Income tax provision (0.88) (0.78) (0.89) (0.95) (0.94)
---------- ---------- ---------- ---------- ----------
Return on average assets
based on operating income 1.48 % 1.51 % 1.56 % 1.57 % 1.61 %
========== ========== ========== ========== ==========
Return on tangible
average assets based on
cash operating income 1.58 % 1.62 % 1.67 % 1.69 % 1.80 %
========== ========== ========== ========== ==========
</TABLE>
NET INTEREST INCOME
-------------------
Net interest income for the first quarter of 2000 amounted to $169.1 million
compared to $172.8 million reported for the first quarter of 1999. The
inability of bank issued deposit growth to keep pace with strong loan growth,
reduced spreads in loan and deposit products, the continued use of higher-cost
borrowings and wholesale deposits, in the recent rising interest rate
environment and the costs associated with treasury share buybacks and recent
acquisitions all contributed to the $3.7 million decline in net interest
income.
Average earning assets in the first quarter of 2000 increased $2.9 billion or
14.7% compared to the same period a year ago. Average loans, including
securitized adjustable rate mortgage loans (ARMs), accounted for $2.3 billion
or 81.5% of the growth in earning assets compared to the first quarter of last
year. Average investment securities, excluding securitized ARMs, increased
$478.6 million while other earning assets increased $53.3 million for the
three months ended March 31, 2000 compared with the same period in the prior
year.
Average interest bearing liabilities increased $3.0 billion or 18.5% in the
first quarter of 2000 compared to the same period in 1999. Since the first
quarter of 1999, average interest bearing deposits increased $1.7 billion.
Approximately 81% of the growth in interest bearing deposits was attributable
to higher-cost wholesale deposits. Average total borrowings which reflects,
in part, the effect of the Corporation's repurchase program, increased $1.3
billion.
Beginning in September, 1999 certain of the Corporation's banking affiliates
began offering Bank Notes to institutional investors. Issuing banks may from
time to time issue Short-term Senior Notes and Medium-term Senior Notes as
well as Subordinated Notes with maturities ranging from seven days to thirty
years and at fixed or floating rates. As of March 31, 2000, Short-term Senior
Notes amounted to $649.8 million, Medium-term Senior Notes amounted to $199.4
million and Subordinated Notes amounted to $98.8 million.
Average noninterest bearing deposits increased $41.2 million or 1.6% in the
current quarter compared to the same period last year.
<PAGE>
The growth and composition of the Corporation's quarterly average loan
portfolio for the current quarter and previous four quarters are reflected in
the following table. Securitized ARM loans which are classified in the
consolidated balance sheets as investment securities available for sale are
included to provide a more meaningful comparison ($ in millions):
<TABLE>
<CAPTION>
2000 1999 Growth Pct.
-------- -------------------------------------- -------------------
First Fourth Third Second First Prior
Quarter Quarter Quarter Quarter Quarter Annual Quarter
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Average Loans,
Leases and Securitized ARMs
Commercial $ 4,897 $ 4,566 $ 4,424 $ 4,311 $ 4,133 18.5 % 7.2 %
Real Estate
Construction
Commercial 407 365 344 304 305 33.4 11.3
Residential 106 98 95 101 107 (0.8) 8.6
-------- -------- -------- -------- -------- -------- --------
Total Construction 513 463 439 405 412 24.5 10.7
Commercial Mortgages 4,050 3,985 3,884 3,792 3,717 9.0 1.6
Residential
Residential mortgages 2,862 2,701 2,474 2,334 2,333 22.7 5.9
Home equity loans and lines 2,174 2,084 1,982 1,845 1,694 28.3 4.3
Securitized ARM loans 424 450 490 560 649 (34.7) (5.8)
-------- -------- -------- -------- -------- -------- --------
Total Residential 5,460 5,235 4,946 4,739 4,676 16.8 4.3
-------- -------- -------- -------- -------- -------- --------
Total Real Estate 10,023 9,683 9,269 8,936 8,805 13.8 3.5
Personal
Student 262 258 254 255 264 (1.0) 1.3
Credit card 151 144 139 137 137 9.6 4.8
Other 901 872 828 777 753 19.8 3.4
-------- -------- -------- -------- -------- -------- --------
Total Personal 1,314 1,274 1,221 1,169 1,154 13.8 3.1
Lease financing
Commercial 335 335 337 333 335 (0.0) 0.2
Personal 490 444 397 345 293 67.7 10.3
-------- -------- -------- -------- -------- -------- --------
Total Lease Financing 825 779 734 678 628 31.5 6.0
-------- -------- -------- -------- -------- -------- --------
Total Consolidated Average
Loans, Leases and ARMs $ 17,059 $ 16,302 $ 15,648 $ 15,094 $ 14,720 15.9 % 4.6 %
======== ======== ======== ======== ======== ======== ========
Total Consolidated Average
Loans, Leases and ARMs
Commercial Banking $ 9,689 $ 9,251 $ 8,989 $ 8,740 $ 8,490 14.1 % 4.7 %
Retail Banking 7,370 7,051 6,659 6,354 6,230 18.3 4.5
-------- -------- -------- -------- -------- -------- --------
Total Consolidated Average
Loans, Leases and ARMs $ 17,059 $ 16,302 $ 15,648 $ 15,094 $ 14,720 15.9 % 4.6 %
======== ======== ======== ======== ======== ======== ========
Total Consolidated Average
Loans and Leases $ 16,635 $ 15,852 $ 15,158 $ 14,534 $ 14,071 18.2 % 4.9 %
======== ======== ======== ======== ======== ======== ========
</TABLE>
Compared with the first quarter of 1999, total consolidated average loans,
leases and securitized ARMs increased $2.3 billion or 15.9%. Loan growth was
relatively evenly distributed between commercial and retail banking. Total
loan growth in commercial banking amounted to $1.2 billion or 14.1% and was
driven by commercial loan growth of $764 million and commercial real estate
loan growth of $435 million of which, $102 million was attributable to
commercial construction loan growth. Retail banking loan growth amounted to
$1.1 billion or 18.3%. Residential real estate loans and ARMs increased $304
million, home equity loans and lines increased $480 million and lease
financing receivables increased $197 million. During the first quarter of
2000, the Corporation began selling a portion of ARM loan production in the
secondary market in addition to fixed rate residential mortgage loans. Total
loans sold in the first quarter of 2000 amounted to $71.6 million of which
approximately $15 million were ARM loans. By comparison, fixed rate loan
sales in the first quarter of 1999 amounted to $530 million which reflected
the accelerated refinancing to fixed rate loans experienced throughout 1998
and the first quarter of 1999.
<PAGE>
The growth and composition of the Corporation's quarterly average deposits for
the current and prior year's quarters are as follows ($ in millions):
<TABLE>
<CAPTION>
2000 1999 Growth Pct.
-------- -------------------------------------- -------------------
First Fourth Third Second First Prior
Quarter Quarter Quarter Quarter Quarter Annual Quarter
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Noninterest bearing deposits
Commercial $ 1,668 $ 1,791 $ 1,732 $ 1,682 $ 1,655 0.8 % (6.8)%
Personal 576 564 555 567 549 5.1 2.1
Other 365 420 402 372 364 0.1 (13.1)
-------- -------- -------- -------- -------- -------- --------
Total noninterest
bearing deposits 2,609 2,775 2,689 2,621 2,568 1.6 (6.0)
Interest bearing deposits
Savings & NOW 1,919 1,957 2,019 2,054 2,082 (7.9) (2.0)
Money market 5,065 5,021 4,837 4,762 4,697 7.8 0.9
Other CDs & time deposits 3,428 3,430 3,444 3,398 3,476 (1.4) (0.1)
CDs greater than $100,000 909 887 841 780 762 19.3 2.5
Brokered CDs 1,045 970 932 845 755 38.4 7.7
Foreign time 2,057 1,896 1,887 1,273 946 117.5 8.5
-------- -------- -------- -------- -------- -------- --------
Total interest
bearing deposits 14,423 14,161 13,960 13,112 12,718 13.4 1.8
-------- -------- -------- -------- -------- -------- --------
Total consolidated
average deposits $ 17,032 $ 16,936 $ 16,649 $ 15,733 $ 15,286 11.4 % 0.6 %
======== ======== ======== ======== ======== ======== ========
Bank issued deposits $ 13,688 $ 13,819 $ 13,582 $ 13,326 $ 13,320 2.8 % (1.0)%
Wholesale deposits 3,344 3,117 3,067 2,407 1,966 70.1 7.3
-------- -------- -------- -------- -------- -------- --------
Total consolidated
average deposits $ 17,032 $ 16,936 $ 16,649 $ 15,733 $ 15,286 11.4 % 0.6 %
======== ======== ======== ======== ======== ======== ========
</TABLE>
Due to continued strong earning asset growth, particularly loan growth, the
Corporation continued to rely on wholesale deposits for funding. Compared
with the first quarter of 1999, average wholesale deposit growth amounted to
$1.4 billion or 70.1%. Eurodollar term and overnight deposits, which are
included in Foreign time increased $1.1 billion and Brokered CDs increased
$0.3 billion.
By comparison, average bank issued deposits increased $0.3 billion or 2.8 %
in the first quarter of 2000 compared to the first quarter of 1999. Money
market, primarily money market index accounts, accounted for approximately
$327 million of the growth while CDs, primarily large CDs, accounted for $164
million of the growth in average bank issued deposits. As previously
discussed noninterest bearing deposits increased $41.2 million. Partially,
offsetting this growth was a decline in less costly Savings and NOW deposits
of $164 million.
<PAGE>
The Corporation's consolidated average interest earning assets and interest
bearing liabilities, interest earned and interest paid for the current quarter
and prior year first quarter are presented in the following table.
Securitized ARM loans that are classified in the balance sheet as investment
securities available for sale are included with loans to provide a more
meaningful comparison ($ in millions):
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 2000 March 31, 1999
---------------------------- ----------------------------
Average Average
Average Yield or Average Yield or
Balance Interest Cost (b) Balance Interest Cost (b)
---------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Loans and leases (a) $ 17,059.0 $ 335.0 7.90 % $ 14,719.6 $ 284.4 7.84 %
Investment securities:
Taxable 3,708.8 59.9 6.34 3,443.2 52.4 6.24
Tax Exempt (a) 1,341.9 23.8 7.20 1,128.9 19.9 7.26
Other short-term
investments (a) 276.0 3.8 5.56 222.7 2.6 4.81
---------- -------- -------- ---------- -------- --------
Total interest
earning assets $ 22,385.7 $ 422.5 7.57 % $ 19,514.4 $ 359.3 7.50 %
========== ======== ======== ========== ======== ========
Money market savings $ 5,065.3 $ 61.2 4.86 % $ 4,697.3 $ 47.7 4.12 %
Regular savings & NOW 1,918.4 8.5 1.78 2,081.9 8.6 1.68
Other CDs & time
deposits 5,484.9 74.6 5.47 4,422.1 56.9 5.21
CDs greater than
$100 & Brokered CDs 1,954.1 28.3 5.82 1,517.2 20.5 5.48
---------- -------- -------- ---------- -------- --------
Total interest
bearing deposits 14,422.7 172.6 4.81 12,718.5 133.7 4.26
Short-term borrowings 3,895.1 57.0 5.89 2,569.1 30.3 4.78
Long-term borrowings 1,010.5 15.9 6.32 1,028.6 15.8 6.24
---------- -------- -------- ---------- -------- --------
Total interest
bearing liabilities $ 19,328.3 $ 245.5 5.11 % $ 16,316.2 $ 179.8 4.47 %
========== ======== ======== ========== ======== ========
Net interest margin (FTE)
as a percent of average
earning assets $ 177.0 3.17 % $ 179.5 3.75 %
======== ======== ======== ========
Net interest spread (FTE) 2.46 % 3.03 %
======== ========
</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.
The yield on average earning assets increased 7 basis points since the first
quarter of 1999 which had a positive impact on interest income (FTE) of
approximately $6.5 million. The slowing of accelerated amortization of
purchase accounting premiums assigned to acquired loans and investment
securities due to prepayments increased interest income by approximately $1.4
million. The benefit of lower amortization was offset by a decline of
approximately $2.0 million in interest income from the use of derivatives.
The increase in the volume of earning assets, primarily loans and securitized
ARMs, increased interest income by approximately $56.7 million compared with
the first quarter of 1999. The cost of interest bearing deposits increased
55 basis points from the same quarter of the previous year. Short-term
borrowing costs increased 111 basis points and long-term borrowing costs
increased 8 basis points, respectively, compared with the first quarter of
1999. The overall increase in the cost of interest bearing liabilities of 64
basis points increased interest expense by approximately $27.5 million while
the increase in the volume of interest bearing liabilities increased interest
expense by approximately $38.3 million. The decline in benefit from use of
derivatives increased interest expense by $0.1 million in the current quarter
compared to the same period last year. The Corporation estimates that
approximately $5.2 million of the increase in interest expense is attributable
to the treasury shares repurchased throughout 1999 and the first quarter of
2000.
<PAGE>
The Corporation's positions with respect to derivative financial instruments
consisted of the following at March 31, 2000, ($ in millions):
<TABLE>
<CAPTION>
<S> <C>
Interest Rate Swaps - Loans
Notional value $520
Weighted average receive rate 5.92%
Weighted average pay rate 6.11%
Weighted average remaining term (in years) 2.26
Estimated fair value ($13.68)
Interest Rate Swaps - Callable Deposits
Notional value $487
Weighted average receive rate 6.45%
Weighted average pay rate 5.95%
Weighted average remaining term (in years) 6.91
Estimated fair value ($19.47)
Interest Rate Swaps - Equity Indexed Deposits
Notional value $15
Receive - Index interest upon maturity or call
Weighted average pay rate 5.92%
Weighted average remaining term (in years) 5.01
Estimated fair value ($0.84)
Interest Rate Swaps - Short-term Borrowings
Notional value $200
Weighted average receive rate 7.65%
Weighted average pay rate 5.58%
Weighted average remaining term (in years) 26.69
Estimated fair value $1.80
Interest Rate Swaps - Long-term Borrowings
Notional value $200
Weighted average receive rate 5.77%
Weighted average pay rate 7.27%
Weighted average remaining term (in years) 6.67
Estimated fair value ($0.20)
Interest Rate Floors - Loans
Notional value $275
Strike rate 7.19%
Index 6.39%
Weighted average remaining term (in years) 6.13
Estimated fair value $3.69
Unamortized premium $5.19
</TABLE>
For the three months ended March 31, 2000, the effect on net interest income
resulting from derivative financial instruments was a positive $0.2 million
compared with a positive $2.3 million in the same period in 1999.
<PAGE>
In June 1998, the FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES. In June 1999, the FASB issued SFAS 137,
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - DEFERRAL OF THE
EFFECTIVE DATE OF SFAS 133. SFAS 133 establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value. The
Statement requires that changes in the derivatives fair value be recognized
currently in earnings unless specific hedge accounting criteria are met.
Special accounting for qualifying hedges allows a derivative instrument's
gains and losses to offset related results on the hedged item in the income
statement, and requires that a company must formally document, designate, and
assess the effectiveness of transactions that receive hedge accounting.
Statement 133, as amended, is effective for fiscal years beginning after June
15, 2000. A company may also implement the Statement as of the beginning of
any quarter after issuance. Statement 133 cannot be applied retroactively.
Statement 133 must be applied to (a) derivative instruments and (b) certain
derivative instruments embedded in hybrid contracts. With respect to hybrid
instruments, A company may elect to apply SFAS 133, as amended, to (1) all
hybrid contracts, (2) only those hybrid instruments that were issued, acquired
or substantively modified after December 31, 1997, or (3) only those hybrid
instruments that were issued, acquired or substantively modified after
December 31, 1998.
The Corporation has not determined the timing of adoption. Presented above
is the fair value of the freestanding derivatives held by the Corporation as
of March 31, 2000. Statement 133 would require that those derivative
instruments be recognized in the Corporation's Consolidated Balance Sheets as
assets or liabilities at their fair value. The Corporation has not yet
completed quantifying the other effects of adopting Statement 133 on its
consolidated financial statements nor has it completed its determination which
of the freestanding derivatives shown above qualify for hedge accounting
prescribed by the statement. However, the Statement could increase volatility
in earnings and other comprehensive income.
Throughout 1999 and the first quarter of 2000, the Corporation has been
experiencing favorable loan growth and has had to rely on wholesale deposits
and borrowings to fund growth in excess of core deposit growth. As previously
discussed, the use of higher cost funding sources in lieu of core deposit
growth contributed to the decline in net interest income. Based on the
Corporation's existing balance sheet, net interest margin will also continue
to be adversely affected by rising interest rates in the near term. In
addition to continuing to seek less costly funding sources, the Corporation
may, among other things, consider divesting of lower yielding assets through
sale or securitization in the future.
<PAGE>
PROVISION FOR LOAN AND LEASE LOSSES AND CREDIT QUALITY
------------------------------------------------------
The following tables present comparative consolidated credit quality
information as of March 31, 2000 and the prior four quarters.
NONPERFORMING ASSETS
--------------------
($000's)
<TABLE>
<CAPTION>
2000 1999
--------- ---------------------------------------
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Nonaccrual $ 111,642 $ 106,387 $ 121,091 $ 122,561 $ 116,632
Renegotiated 688 708 725 746 878
Past due 90 days or more 9,334 9,975 7,630 6,525 7,275
--------- --------- --------- --------- ---------
Total nonperforming loans and leases 121,664 117,070 129,446 129,832 124,785
Other real estate owned 6,247 6,230 6,660 6,766 9,245
--------- --------- --------- --------- ---------
Total nonperforming assets $ 127,911 $ 123,300 $ 136,106 $ 136,598 $ 134,030
========= ========= ========= ========= =========
Allowance for loan and lease losses $ 232,471 $ 225,862 $ 226,461 $ 225,277 $ 229,669
========= ========= ========= ========= =========
</TABLE>
CONSOLIDATED STATISTICS
-----------------------
<TABLE>
<CAPTION>
2000 1999
--------- ---------------------------------------
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Charge-offs (Recoveries) to
average loans and leases annualized (0.02)% 0.29 % 0.09 % 0.25 % 0.04 %
Total nonperforming loans and leases
to total loans and leases 0.72 0.72 0.83 0.87 0.88
Total nonperforming assets to
total loans and leases and
other real estate owned 0.75 0.75 0.87 0.92 0.94
Allowance for loan and lease losses
to total loans and leases 1.37 1.38 1.45 1.51 1.61
Allowance for loan and lease losses
to nonperforming loans and leases 191 193 175 174 184
</TABLE>
<PAGE>
NONACCRUAL LOANS AND LEASES BY TYPE
-----------------------------------
($000's)
<TABLE>
<CAPTION>
2000 1999
--------- ---------------------------------------
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Commercial
Commercial, financial & agricultural $ 49,006 $ 52,563 $ 60,627 $ 57,524 $ 51,472
Lease financing receivables 3,929 4,243 4,655 4,041 3,046
--------- --------- --------- --------- ---------
Total commercial 52,935 56,806 65,282 61,565 54,518
Real estate
Construction & land development 5,284 2,609 2,463 3,004 1,498
Commercial mortgage 28,069 19,668 22,911 25,763 24,865
Residential mortgage 23,715 25,901 28,651 30,154 33,517
--------- --------- --------- --------- ---------
Total real estate 57,068 48,178 54,025 58,921 59,880
Personal 1,639 1,403 1,784 2,075 2,234
--------- --------- --------- --------- ---------
Total nonaccrual loans and leases $ 111,642 $ 106,387 $ 121,091 $ 122,561 $ 116,632
========= ========= ========= ========= =========
</TABLE>
RECONCILIATION OF ALLOWANCE FOR LOAN AND LEASE LOSSES
-----------------------------------------------------
($000's)
<TABLE>
<CAPTION>
2000 1999
--------- ---------------------------------------
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Beginning balance $ 225,862 $ 226,461 $ 225,277 $ 229,669 $ 226,052
Provision for loan and lease losses 5,819 10,938 4,797 4,811 4,873
Loans and leases charged-off
Commercial 449 7,949 1,653 7,117 556
Real estate 653 1,953 1,198 1,475 1,250
Personal 1,544 2,086 1,794 1,544 1,697
Leases 198 1,103 300 686 196
--------- --------- --------- --------- ---------
Total charge-offs 2,844 13,091 4,945 10,822 3,699
Recoveries on loans and leases
Commercial 2,811 724 610 389 973
Real estate 206 258 195 405 561
Personal 525 457 472 611 704
Leases 92 115 55 214 205
--------- --------- --------- --------- ---------
Total Recoveries 3,634 1,554 1,332 1,619 2,443
--------- --------- --------- --------- ---------
Net loans and leases
charge-offs (recoveries) (790) 11,537 3,613 9,203 1,256
--------- --------- --------- --------- ---------
Ending balance $ 232,471 $ 225,862 $ 226,461 $ 225,277 $ 229,669
========= ========= ========= ========= =========
</TABLE>
<PAGE>
Nonperforming assets consist of nonperforming loans and other real estate
owned (OREO).
OREO is comprised of commercial and residential properties acquired in partial
or total satisfaction of problem loans and branch premises held for sale. At
March 31, 2000, OREO acquired in satisfaction of debts amounted to $5.0
million and branch premises held for sale amounted to $1.2 million.
Nonperforming loans and leases consist of nonaccrual, renegotiated or
restructured loans, and loans and leases that are delinquent 90 days or more
and still accruing interest. The balance of nonperforming loans and leases
can fluctuate widely based on the timing of cash collections, renegotiations
and renewals.
Maintaining nonperforming assets at an acceptable level is important to the
ongoing success of a financial services institution. The Corporation's
comprehensive credit review and approval process is critical to ensuring that
the amount of nonperforming assets on a long-term basis is minimized within
the overall framework of acceptable levels of credit risk. In addition to the
negative impact on net interest income and credit losses, nonperforming assets
also increase operating costs due to the expense associated with collection
efforts.
At March 31, 2000, nonperforming loans and leases amounted to $121.7 million
or 0.72% of consolidated loans and leases of $17.0 billion, an increase of
$4.6 million or 3.9% since December 31, 1999. Nonaccrual loans and leases,
primarily real estate loans, have shown the largest increases since year end
1999. Nonaccrual loans secured by real estate, primarily commercial mortgages
increased $8.9 million since December 31, 1999. Commercial loans and leases
decreased $3.9 million during the same period.
Net recoveries amounted to $0.8 million or (0.02)% of average loans in the
first quarter of 2000 compared with net charge-offs of $11.5 million or 0.29%
of average loans in the fourth quarter of 1999 and $1.3 million or 0.04% of
average loans in the first quarter of 1999. One large commercial loan
accounted for $2.0 million of the net recoveries in the current quarter.
The allowance for loan and lease losses represents management's estimate of
probable inherent losses which have occurred as of the date of the financial
statements. In determining the adequacy of the reserve the Corporation
evaluates the reserves necessary for specific nonperforming loans and also
estimates losses inherent in other loans and leases. As a result, the
allowance for loans and leases contains the following components:
Specific Reserve. The amount of specific reserves is determined
through a loan-by-loan analysis of nonperforming loans that
considers expected future cash flows, the value of collateral and
other factors that may impact the borrower's ability to make
payments when due. Included in this group are those nonaccrual
or renegotiated loans which meet the criteria as being "impaired"
under the definition in SFAS 114. A loan is impaired when, based
on current information and events, it is probable that a creditor
will be unable to collect all amounts due according to the
contractual terms of the loan agreement.
Allocated inherent reserve. The amount of the allocated portion
of the inherent loss reserve is determined by reserving factors
assigned to loans and leases based on the Corporation's internal
loan grading system. Line officers and loan committees are
responsible for continually assigning grades to commercial loan
types based on standards established in the Corporation's loan
policies and adherence to the standards is closely monitored by
the Corporation's Loan Review Group. Loan grades are similar to,
but generally more conservative than, regulatory classifications.
In addition, reserving factors are applied to retail and smaller
balance ungraded credits as well as specialty loan products such
as credit card, student loans and mortgages. Reserving factors
are derived and are determined based on such factors as historical
charge-off experience, remaining life, and industry practice for
reserve levels. The use of industry practice is intended to
prevent an understatement of reserves based upon an over-reliance
on historical charge-offs during favorable economic conditions.
Unallocated inherent reserve. Management determines the
unallocated portion of the inherent loss reserve based on factors
that cannot be associated with a specific credit or loan
categories. These factors include management's subjective
evaluation of local, national and international economic and
business conditions, changes to underwriting standards and
marketing channels such as use of centralized retail and small
business credit centers, trends towards higher advance rates and
longer amortization periods and the impact of acquisitions on the
Corporation's credit risk profile. The unallocated portion of the
inherent loss reserve also reflects management's attempt to ensure
that the overall reserve appropriately reflects a margin for the
imprecision necessarily inherent in estimates of expected credit
losses.
<PAGE>
Management's evaluation of the factors described above resulted in an
allowance for loan and lease losses of $232.5 million at March 31, 2000
compared to $225.9 million at December 31,1999. The level of reserve reflects
management's belief that losses inherent in the loan and lease portfolio were
larger than would otherwise be suggested by the Corporation's favorable
charge-off experience in recent years; the Corporation's experience, as most
recently evidenced in the second quarter and fourth quarter of 1999, of larger
losses in commercial and commercial real estate loans in brief periods at
particular points in economic cycles; and the view that the absolute level of
the allowance should not decline appreciably given continuing loan growth and
the potential for the unprecedented period of economic prosperity to come to
an end.
The resulting provision for loan and lease losses amounted to $5.8 million for
the three months ended March 31, 2000.
OTHER INCOME
------------
Total other income in the first quarter of 2000 amounted to $230.3 million,
an increase of $34.9 million or 17.9%, compared to $195.4 million in the same
period last year.
Total data processing services revenue increased $19.3 million or 17.2% from
$112.0 million in the first quarter of 1999 to $131.3 million in the current
quarter. Processing revenue which includes processing, conversions, and
contract buyouts increased $3.2 million or 5.1% and amounted to $65.9 million.
Conversion revenue and buyout fees, which vary from period to period,
decreased $2.9 million compared with the first quarter of the prior year.
Software and consulting revenue decreased $1.8 million in the current quarter
compared to the same period last year. E-commerce revenue which includes
electronic funds transfer, electronic banking, cash management, home banking,
Internet banking, electronic payment services and a mortgage solution joint
venture, increased $15.2 million or 62.2% from $24.4 million in the first
quarter of 1999 to $39.6 million in the current quarter. Revenue associated
with recent acquisitions and the joint venture accounted for $13.1 million of
the increase. Other data processing services revenue which consists of
merchant credit card fees, credit card plastics sales and equipment sales
increased $2.7 million of which $1.8 million related to card plastics sales,
and $0.8 million related to equipment sales.
Trust services revenue amounted to $27.8 million in the first quarter of 2000,
an increase of $3.9 million or 16.5% compared to $23.9 million in the first
quarter of 1999. Net new business growth in personal trust and commercial
trust and increased balances in proprietary mutual fund balances resulted in
favorable revenue growth in major product lines. Total assets in trust
accounts were approximately $8 billion or 16% greater in the current year
compared to the prior year.
For the three months ended March 31, 2000, service charges on deposits
amounted to $18.5 million, an increase of $2.0 million or 12.5% compared to
$16.5 million in the three months ended March 31, 1999. Service charges
associated with commercial demand accounts increased $1.2 million and service
charges associated with personal demand accounts increased $0.6 million.
Mortgage banking revenue amounted to $2.9 million in the first quarter of 2000
compared with $11.2 million in the first quarter of 1999. While all sources
of mortgage banking revenue decreased compared to the prior year, gains on the
sale of mortgages accounted for $7.9 million of the decline which reflects the
slowing of refinancing activity experienced in the first quarter of the 1999.
The increase in Capital Markets revenue is due to gains from the sale of
investments and other net unrealized gains. Net securities gains from Capital
Markets investments, which can vary from period to period, amounted to $14.8
million in the current quarter compared to gains of $1.5 million in the
comparative quarter of the prior year.
Other income in the first quarter of 2000 amounted to $27.5 million compared
to $23.5 million in the first quarter of 1999, an increase of $4.0 million or
17.0%. Reversion income associated with the final settlement of the former
Security pension plan accounted for $1.8 million of the increase. The
remainder of the increase was associated with increases in commissions and
fees primarily discount brokerage revenue.
<PAGE>
OTHER EXPENSE
-------------
Total other expense in the first quarter of 2000 amounted to $257.1 million
compared with $234.3 million in the first quarter of 1999 an increase of $22.8
million or 9.7%.
The Corporation's nonbanking businesses, especially its Data Services segment
("Data Services"), continue to be the primary contributors to operating
expense growth. Data Services expense growth represents approximately 75% of
the consolidated operating expense growth and reflects the cost of adding
processing capacity and other related costs associated with increased revenue
growth, costs associated with developing new products and services and
operating expenses associated with the recent acquisitions.
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 (including Capital Markets revenue but excluding investment
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, 2000 and 1999 and the year ended December 31, 1999 are:
<TABLE>
<CAPTION>
Three Months Year Three Months
Ended Ended Ended
March 31, December 31, March 31,
2000 1999 1999
------------ ------------ ------------
<S> <C> <C> <C>
Consolidated Corporation 63.1 % 63.0 % 62.5 %
Consolidated Corporation
Excluding Data Services
Including Intangible Amortization 52.0 % 52.1 % 52.2 %
Excluding Intangible Amortization 49.7 % 49.3 % 48.6 %
</TABLE>
Salaries and employee benefits expense amounted to $156.2 million in the first
quarter of 2000 compared to $134.1 million in the first quarter of 1999, an
increase of $22.1 million or 16.5%. Salaries and employee benefits expense
of Data Services increased $17.4 million. At March 31, 2000, Data Services
had on average approximately 665 more full time equivalent employees when
compared to March 31, 1999 which reflects increases in E-commerce (407
including acquisitions) and technology services. Compared to the first
quarter of 1999, expense growth in the current quarter in salaries and
employee benefits was $1.8 million or 3.8% for the banking segment. All other
segments increased $1.5 million due to growth in the trust business and
mortgage Internet development. Incentive compensation which includes
incentive compensation based on the Corporation's common stock performance
increased $1.0 million.
Data Services expense growth accounted for approximately $3.0 million or all
of the increase in net occupancy, equipment, software, supplies and printing
and processing expenses in the first quarter of 2000 compared to the first
quarter of 1999.
Professional services expense amounted to $7.6 million in the current quarter
compared to $7.2 million in the first quarter of the prior year. Data
Services professional services expense accounted for $0.6 million of the
increase. Expense increases associated with banking initiatives and mortgage
internet development of approximately $1.3 million were offset by professional
services fee recoveries recognized by Capital Markets.
Amortization of intangibles decreased $7.3 million. Approximately $0.8
million of the decrease is due to lower amortization of mortgage servicing
rights due to slower prepayments in the servicing portfolio and $0.7 million
of the decrease is due to lower core deposit premium amortization. The
remainder of the decline is due to accelerated amortization of goodwill by
Data Services in the first quarter of 1999 relating to a 1996 acquisition.
Other expense amounted to $25.7 million in the first quarter of 2000, an
increase of $4.8 million or 23.2% compared to the first quarter of 1999. Other
expense growth of Data Services which includes the effect of the
capitalization of costs, net of amortization and write-downs associated with
software development and customer data processing conversions accounted for
$2.1 million of the increase. Advertising and promotion expense of other
segments increased $1.8 million in the current quarter compared to the same
period last year. During the first quarter of 1999, the Corporation reduced
its recourse obligations associated with securitized ARMs by $0.8 million.
<PAGE>
INCOME TAXES
------------
The provision for income taxes for the three months ended March 31, 2000
amounted to $45.9 million or 33.6% of pre-tax income compared to $43.5 million
or 33.7% of pre-tax income for the three months ended March 31, 1999.
CAPITAL RESOURCES
-----------------
Shareholders' equity was $2.08 billion at March 31, 2000 compared to $2.12
billion at December 31, 1999 and $2.18 billion at March 31, 1999.
The Corporation had net unrealized losses on securities available for sale at
March 31, 2000 of $45.1 million, a decrease in market value net of related
income tax effects of $12.3 million since December 31, 1999.
For the three months ended March 31, 2000, M&I repurchased 1.9 million shares
of its Common Stock under the authorization by the Board of Directors to
repurchase up to 6.0 million common shares annually. The aggregate cost of
the shares repurchased was $94.7 million.
During the first quarter of 2000, the Corporation filed a shelf registration
with the Securities and Exchange Commission to offer debt securities from time
to time that may consist of senior or subordinated debentures, notes, bonds
and/or other forms of indebtedness up to an aggregate principal amount of $1.5
billion. The specific terms of debt securities, when issued, will be
described in a prospectus supplement. Net proceeds from the sale of debt
securities may be used for debt reduction or debt refinancing, investments in
or advances to subsidiaries, acquisitions, repurchase of shares of common
stock or other securities and other general corporate purposes.
On April 25, 2000, the Corporation announced that its Board of Directors
approved an increase in the quarterly cash dividend on common stock to $0.265
per share from $0.24 per share payable on June 14, 2000 to shareholders of
record as of May 31, 2000.
<PAGE>
The Corporation continues to have a strong capital base and its regulatory
capital ratios are significantly above the minimum requirements as shown in
the following tables.
RISK-BASED CAPITAL RATIOS
($ in millions)
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
----------------------------------- -----------------------------------
Amount Ratio Amount Ratio
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Tier 1 Capital $ 2,005 10.89 % $ 1,993 11.11 %
Tier 1 Capital
Minimum Requirement 737 4.00 718 4.00
----------------- ----------------- ----------------- -----------------
Excess $ 1,268 6.89 % $ 1,275 7.11 %
================= ================= ================= =================
Total Capital $ 2,295 12.46 % $ 2,277 12.69 %
Total Capital
Minimum Requirement 1,473 8.00 1,435 8.00
----------------- ----------------- ----------------- -----------------
Excess $ 822 4.46 % $ 842 4.69 %
================= ================= ================= =================
Risk-Adjusted Assets $ 18,413 $ 17,937
================= =================
</TABLE>
LEVERAGE RATIOS
($ in millions)
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
----------------------------------- -----------------------------------
Amount Ratio Amount Ratio
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Tier 1 Capital $ 2,005 8.26 % $ 1,993 8.49 %
Minimum Leverage
Requirement 728 - 1,213 3.00 - 5.00 704 - 1,174 3.00 - 5.00
----------------- ----------------- ----------------- -----------------
Excess $ 1,277 - 792 5.26 - 3.26 % $ 1,289 - 819 5.49 - 3.49 %
================= ================= ================= =================
Adjusted Average
Total Assets $ 24,255 $ 23,481
================= =================
</TABLE>
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The following updated information should be read in conjunction with the
Corporation's 1999 Annual Report on Form 10-K. Updated information regarding
the Corporation's use of derivative financial instruments is contained in
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF
OPERATIONS."
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.
INTEREST RATE RISK
The Corporation uses financial modeling techniques to identify potential
changes in income under a variety of possible interest rate scenarios.
Financial institutions, by their nature, bear interest rate and liquidity risk
as a necessary part of the business of managing financial assets and
liabilities. The Corporation has designed strategies to confine these risks
within prudent parameters and identify appropriate risk/reward tradeoffs in
the financial structure of the balance sheet.
The financial models identify the specific cash flows, repricing timing and
embedded option characteristics across the array of assets and liabilities
held by the Corporation. Policies are in place to assure that neither
earnings nor fair value at risk exceed appropriate limits. The use of a
limited array of derivative financial instruments has allowed the Corporation
to achieve the desired balance sheet repricing structure while simultaneously
meeting the desired objectives of both its borrowing and depositing customers.
The models used include measures of the expected repricing characteristics of
administered rate (NOW, savings and money market accounts) and non-rate
related products (demand deposit accounts, other assets and other
liabilities). These measures recognize the relative insensitivity of these
accounts to changes in market interest rates, as demonstrated through current
and historical experiences. In addition to information about contractual
payment information for most other assets and liabilities, the models also
include estimates of expected prepayment characteristics for those items that
are likely to materially change their payment structures in different rate
environments, including residential mortgage products, certain commercial and
commercial real estate loans and certain mortgage-related securities.
Estimates for these sensitivities are based on industry assessments and are
substantially driven by the differential between the contractual coupon of the
item and current market rates for similar products.
This information is incorporated into a model that allows the projection of
future income levels in several different interest rate environments.
Earnings at risk are calculated by modeling income in an environment where
rates remain constant, and comparing this result to income in a different rate
environment, and then dividing this result into the Corporation's
budgeted/forecasted pre-tax income for the ensuing twelve months. Since
future interest rate moves are difficult to predict, the following table
presents two potential scenarios - a gradual increase of 100bp across the
entire yield curve over the course of a year (+25bp per quarter), and a
gradual decrease of 100bp across the entire yield curve over the course of a
year (-25bp per quarter) for the balance sheet as of March 31,2000 and
December 31, 1999:
<TABLE>
<CAPTION>
Impact to Annual Pretax Income as of:
-------------------------------------
Hypothetical Change in Interest Rate March 31, 2000 December 31,1999
- --------------------------------------- ---------------- ------------------
<S> <C> <C>
100 basis point gradual:
Rise in rates (7.8) % (8.6)%
Decline in rates 7.7 % 8.6 %
</TABLE>
<PAGE>
These results are based solely on the modeled 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 changes in spread
between key market rates, or accounting recognition for impairment of certain
intangibles. These results are also considered to be conservative estimates
due to the fact that they do not include any management action to mitigate
potential income variances within the simulation process. Such action could
potentially 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.
Actual results will differ from simulated results due to timing, magnitude,
and frequency of interest rate changes as well as changes in market conditions
and management strategies.
Another component of interest rate risk is measuring the fair value at risk
for a given change in market interest rates. The Corporation also uses
computer modeling techniques to determine the present value of all asset and
liability cash flows (both on- and off-balance sheet), adjusted for prepayment
expectations, using a market discount rate. The net change in the present
value of the assets and liability cash flows in different market rate
environments is the amount of fair value at risk from those rate movements.
As of March 31, 2000 the fair value of equity at risk for a gradual 100bp
shift in rates was less than 2.0% of the market value of the Corporation.
In addition to using derivatives to manage interest rate exposure, the
Corporation also uses derivatives to create synthetic financial instruments
that more closely match desired rate and liquidity characteristics than would
otherwise be available on cash instruments directly. A small amount of
derivatives are sold to customers where the Corporation acts as an
intermediary. These instruments are matched off by the Corporation through
its trading accounts in order to minimize exposure to market risks. Customer
interest rate derivatives held for trading amounted to $95 million of notional
value, consisting of $47.5 million in notional value of received fixed and
$47.5 million in notional value of pay fixed interest rate swaps as of March
31, 2000.
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 $68 billion in assets and directly
manages a portfolio of more than $11 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.
<PAGE>
PART II - OTHER INFORMATION
Item 2 - Changes in Securities and Use of Proceeds
- --------------------------------------------------
C. During the period covered by this report, 43,000 shares of the
Registrant's Common Stock were issued pursuant to employee stock options
which had been gifted to family members of the original option holder.
The option exercise prices were $51.8125 and $61.50 per share. The
issuance of the securities was exempt from the registration provisions
of the Securities Act of 1933, as amended, as a transaction not
involving a public offering.
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
A. Exhibits:
Exhibit 3(a)(i) - Amendment to Restated Articles of Incorporation
Exhibit 3(a)(ii) - Restated Articles of Incorporation
Exhibit 3(b)(i) - Certificate of Secretary
Exhibit 3(b)(ii) - By-Laws, as amended
Exhibit 11 - Statements - Computation of Earnings Per Share Incorporated
by Reference to NOTE 4 of Notes to Financial Statements
contained in Item 1 - Financial Statements (unaudited)
of Part 1-Financial Information herein.
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
May 12, 2000
<PAGE>
EXHIBIT 3(a)(i)
<PAGE>
AMENDMENT TO RESTATED
ARTICLES OF INCORPORATION OF
MARSHALL & ILSLEY CORPORATION
Pursuant to and in accordance with Section 180.1003 of the Wisconsin
Statutes, the following amendment to the Restated Articles of Incorporation
was duly adopted by the vote required on February 10, 2000 by the Board of
Directors and April 25, 2000 by the shareholders of Marshall & Ilsley
Corporation:
BE IT RESOLVED, that the first paragraph of Article III of
the Restated Articles of Incorporation of Marshall & Ilsley
Corporation be, and hereby is, amended to read as follows:
ARTICLE III
-----------
The aggregate number of shares which the Corporation shall
have the authority to issue, the designation of each class of
shares, the authorized number of shares of each class of par value
and the par value thereof per share, shall be as follows:
Designation Par Value Authorized
of Class per Share Number of Shares
----------- --------- ----------------
Preferred Stock $1.00 5,000,000
Common Stock $1.00 320,000,000
BE IT FURTHER RESOLVED, except as set forth above, Article
III shall remain in full force and effect without further
amendment or modification.
Executed in duplicate as of the 28th day of April, 2000.
MARSHALL & ILSLEY CORPORATION
By: /s/ M.A. Hatfield
----------------------------------
M.A. Hatfield,
Sr. Vice President and Secretary
This instrument was drafted by:
Renee M. Hardt
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202
MW388966_1.DOC
<PAGE>
EXHIBIT 3(a)(ii)
<PAGE>
RESTATED ARTICLES OF INCORPORATION
OF
MARSHALL & ILSLEY CORPORATION
These Restated Articles of Incorporation are executed by the
undersigned to supersede and replace the heretofore existing Articles of
Incorporation and amendments thereto of Marshall & Ilsley Corporation, a
corporation organized under the laws of the State of Wisconsin:
ARTICLE I
The name of the corporation is Marshall & Ilsley Corporation (the
"Corporation").
ARTICLE II
The Corporation may engage in any lawful activity within the purpose
for which corporations may be organized under the Wisconsin Business
Corporation Law; provided, however, that the Corporation shall not engage in
any activities prohibited by the United States Bank Holding Company Act of
1956.
ARTICLE III
The aggregate number of shares which the Corporation shall have the
authority to issue, the designation of each class of shares, the authorized
number of shares of each class of par value and the par value thereof per
share, shall be as follows:
Designation Par Value Authorized
of Class per Share Number of Shares
----------- --------- ----------------
Preferred Stock $1.00 5,000,000
Common Stock $1.00 160,000,000
Any and all such shares of Common Stock and Preferred Stock may be
issued for such consideration, not less than the par value thereof, as shall
be fixed from time to time by the Board of Directors. Any and all such
shares so issued, the full consideration for which has been paid or
delivered, shall be deemed fully paid stock and shall not be liable to any
further call or assessment thereon, and the holders of such shares shall not
be liable for any further payments except as otherwise provided by the laws
of the State of Wisconsin.
The preferences, limitations and relative rights of such classes shall
be as follows:
(1) DESIGNATION OF SERIES. The Preferred Stock may from time to time
as hereinafter provided, be divided into and issued in one or more series,
and the Board of Directors is hereby expressly authorized to establish one
or more series, to fix and determine the variations as among series and to
fix and determine, prior to the issuance of any shares of a particular
series, the following designations, terms, limitations and relative rights
and preferences of such series:
<PAGE>
(a) The designations of such series and the number of shares
which shall constitute such series, which number may at any time, or
from time to time, be increased or decreased (but not below the number
of shares thereof then outstanding) by the Board of Directors unless
the Board of Directors shall have otherwise provided in establishing
such series;
(b) The voting rights to which the holders of the shares of
such series are entitled, if any;
(c) The yearly rate of dividends on the shares of such series,
the dates in each year upon which such dividend shall be payable and,
if such dividend shall be cumulative, the date or dates from which such
dividend shall be cumulative;
(d) The amount per share payable on the shares of such series
in the event of the liquidation or dissolution or winding up of the
Corporation (whether voluntary or involuntary);
(e) The terms, if any, on which the shares of such series shall
be redeemable, and, if redeemable, the amount per share payable thereon
in the case of the redemption thereof (which amount may vary with
regard to (i) shares redeemed on different dates; and (ii) shares
redeemed through the operation of a sinking fund, if any, applicable
to such shares, from the amount payable with respect to shares
otherwise redeemed);
(f) The extent to and manner in which a sinking fund, if any,
shall be applied to the redemption or purchase of the shares of such
series, and the terms and provisions relative to the operation of such
fund;
(g) The terms, if any, on which the shares of such series shall
be convertible into shares of any other class or of any other series
of the same or any other class and, if so convertible, the price or
prices or the rate or rates of conversion, including the method, if
any, for adjustments of such prices or rates, and any other terms and
conditions applicable thereto; and
(h) Such other terms, limitations and relative rights and
preferences, if any, of such series as the Board of Directors may
lawfully fix and determine and as shall not be inconsistent with the
laws of the State of Wisconsin or these Amended and Restated Articles
of Incorporation.
All shares of the same series of Preferred Stock shall be identical in
all respects, except that shares of any one series issued at different times
may differ as to dates from which any cumulative dividends thereon shall be
cumulative. All shares of the Preferred Stock of all series shall be equal
and shall be identical in all respects, except as permitted by the foregoing
provisions of this paragraph (1).
<PAGE>
(2) DIVIDENDS. The holders of Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of funds
legally available therefor, dividends at the annual rate fixed by the Board
of Directors with respect to each series of shares and no more. Such
dividends shall be payable on such dates and in respect of such periods in
such year as may be fixed by the Board of Directors to the holders of record
thereof on such date as may be determined by the Board of Directors. Such
dividends shall be paid or declared and set apart for payment for each
dividend period before any dividend (other than a dividend payable solely in
Common Stock) for the same period shall be paid upon or set apart for payment
on the Common Stock, and, if dividends on the Preferred Stock shall be
cumulative, all unpaid dividends thereon for any past dividend period shall
be fully paid or declared and set apart for payment, but without interest,
before any dividend (other than a dividend payable solely in Common Stock)
shall be paid upon or set apart for payment on the Common Stock. The holders
of Preferred Stock shall not, however, be entitled to participate in any
other or additional earnings or profits of the Corporation, except for such
premiums, if any, as may be payable in case of redemption, liquidation,
dissolution or winding up.
(3) REDEMPTION. In the event that the shares of any series of the
Preferred Stock shall be made redeemable as provided in subparagraph (e) of
paragraph (1), above, the Corporation may, at its option, redeem at any time
or from time to time all or any part of such shares, upon notice duly given
as hereinafter provided, by paying for each share the redemption price then
applicable thereto fixed by the Board of Directors as provided in
subparagraph (e) of paragraph (1), above.
Notice of every such redemption shall be mailed at least thirty (30)
days prior to the date fixed for such redemption to the holders of record of
the shares called for redemption at their respective addresses as shown on
the stock records of the Corporation. In case of a redemption of a part of
a series of Preferred Stock at the time outstanding, the Corporation shall
select by lot, in such manner as the Board of Directors may determine, the
shares so to be redeemed.
On or before the date fixed for a redemption specified therein, the
Corporation shall deposit funds sufficient to redeem such shares with a bank
or trust company in good standing, as designated in such notice, organized
under the laws of the United States or of the State of Wisconsin, doing
business in the City of Milwaukee, Wisconsin, and having a capital, surplus
and undivided profit aggregating at least $50,000,000.00, according to its
last published statement of condition, in trust for the pro rata benefit of
the holders of the shares called for redemption, and if the name and address
of such bank or trust company and the deposit or intent to deposit the
redemption funds in such trust account shall have been stated in such notice
of redemption, and the Corporation shall have given such bank or trust
company irrevocable instructions and authorization to pay the amount payable
upon redemption to the proper holders upon surrender of certificates
representing such shares, then, from and after the mailing of such notice and
the making of such deposit, all shares so called for redemption shall no
longer be deemed to be outstanding for any purpose whatsoever and the right
to receive dividends thereon and all rights of the holders of such shares in
or with respect to such shares of the Corporation shall forthwith cease and
terminate, except only the right of the holders thereof to receive from such
bank or trust company the amount payable upon redemption together with all
accrued but unpaid dividends to the date fixed for redemption, without
interest, upon the surrender of the certificates representing the shares to
be redeemed, and the right to exercise privileges of conversion, if any, on
or before the date fixed for redemption or such earlier date as may be fixed
for the expiration thereof.
<PAGE>
Any funds so deposited by the Corporation which shall not be required
for such redemption because of the exercise of any right of conversion
subsequent to the time of such deposit shall be released and repaid to the
Corporation upon its request. Any funds so deposited and unclaimed at the
end of five (5) years (or such shorter period as shall be provided by law)
after the date fixed for redemption shall be released and repaid to the
Corporation, after which holders of the shares called for redemption shall
no longer look to the said bank or trust company but shall look only to the
Corporation, or to others, as the case may be, for payment of any lawful
claim for such funds which the holders of said shares may still have. Any
interest accrued on funds so deposited shall be paid to the Corporation from
time to time.
(4) REISSUE OF SHARES. Shares of the Preferred Stock which shall have
been converted, redeemed, purchased or otherwise acquired by the Corporation,
whether through the operation of a sinking fund or otherwise, shall be
retired and restored to the status of authorized but unissued shares, but may
be reissued only as a part of the Preferred Stock other than the series of
which they were originally a part.
(5) LIQUIDATION. In the event of liquidation, dissolution or winding
up (whether voluntary or involuntary) of the Corporation, the holders of
shares of Preferred Stock shall be entitled to be paid the full amount
payable on such shares upon the liquidation, dissolution or winding up of the
Corporation fixed by the Board of Directors with respect to such shares as
provided in subparagraph (d) of paragraph (1), above, before any amount shall
be paid to the holders of the Common Stock. After payment to holders of the
Preferred Stock of the full preferential amounts to which they are entitled,
the remaining assets of the Corporation shall be distributed ratably among
the holders of the Common Stock.
(6) DESIGNATION OF RIGHTS AND PREFERENCES SERIES A CONVERTIBLE
PREFERRED STOCK.
(a) DESIGNATION OF SERIES. There is hereby established
effective February 14, 1986 from the authorized preferred stock a
series of preferred stock to be designated as Series A Convertible
Preferred Stock, consisting of 500,000 shares, and having the powers,
rights, limitations, restrictions and preferences set forth herein.
The number of shares designated as Series A Convertible Preferred Stock
may at any time, or from time to time, be increased or decreased (but
not below the number of shares thereof then outstanding or then
reserved for issuance in connection with the conversion of any
securities of the Company) by the Board of Directors.
(b) VOTING RIGHTS. The holders of Series A Convertible
Preferred Stock shall have only such right to vote as provided by
Sections 180.64(2) and 180.52 of the Wisconsin Statutes or by other
applicable law.
<PAGE>
(c) DIVIDENDS. The holders of all issued and outstanding shares
of Series A Convertible Preferred Stock shall be entitled to receive
cash dividends when and as cash dividends are declared and become
payable with respect to the Common Stock of the Corporation, in an
amount, in the case of each holder of shares of Series A Convertible
Preferred Stock with respect to each cash dividend declared with
respect to the Common Stock, equal to the amount of the cash dividend
that such holder would have received with respect to the resulting
shares of Common Stock had he converted such shares of Preferred Stock
into Common Stock immediately before the declaration of such dividend
with respect to the Common Stock. Dividends on the Series A
Convertible Preferred Stock shall be noncumulative. The holders of
Series A Convertible Preferred Stock shall not be entitled to
participate in any other or additional earnings or profits of the
Corporation, except for such premiums, if any, as may be payable in
case of liquidation, dissolution or winding up.
(d) LIQUIDATION PREFERENCE. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, before any payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or set apart
for the holders of the Common Stock or any other series or class of
stock of the Corporation ranking junior to the Series A Convertible
Preferred Stock upon liquidation, dissolution or winding up, the
holders of the shares of the Series A Convertible Preferred Stock shall
be entitled to receive $100 per share plus an amount equal to all
dividends, if any, which have accrued thereon as the result of the
declaration of dividends on the Common Stock but which remain unpaid
to the date of final distribution to such holders; but such holders
shall not be entitled to any further payment. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation to be paid or distributed to the holders of the
shares of the Series A Convertible Preferred Stock shall be
insufficient to pay in full the preferential amount aforesaid and the
preferential amount, if any, to be paid or distributed to the holders
of any other preferred stock ranking as to liquidation, dissolution or
winding up, on a parity with the Series A Convertible Preferred Stock,
then such assets shall be distributed among the holders of Series A
Convertible Preferred Stock and such other preferred stock, if any,
ratably in accordance with the respective amounts that would be payable
upon liquidation, dissolution or winding up to such holders with
respect to such shares of Series A Convertible Preferred Stock and such
other preferred stock, if any, if all preferential amounts payable
thereon were paid in full. For the purposes of this subparagraph (d),
a consolidation or merger of the Corporation with one or more
corporations shall not be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary.
Subject to the rights of the holders of shares of any series or
class of stock ranking on a parity with or prior to the Series A
Convertible Preferred Stock upon liquidation, dissolution or winding
up, upon any liquidation, dissolution or winding up of the Corporation,
after payment shall have been made in full to the Series A Convertible
Preferred Stock as provided in this subparagraph d, but not prior
thereto, the holders of the Common Stock or any other series or class
of stock ranking junior to the Series A Convertible Preferred Stock
upon liquidation, dissolution or winding up shall, subject to the
respective terms and provisions (if any) applying thereto, be entitled
to receive any and all assets remaining to be paid or distributed, and
the Series A Convertible Preferred Stock shall not be entitled to share
therein.
<PAGE>
(e) CONVERSION RIGHTS. The holders of shares of Series A
Convertible Preferred Stock shall have the right, at their option, to
convert such shares into shares of Common Stock of the Corporation at
any time on and subject to the following terms and conditions:
(i) The shares of Series A Convertible Preferred Stock
shall be convertible at the offices of the transfer agent or
agents for the Series A Convertible Preferred Stock and at such
other office or offices, if any, as the Board of Directors may
designate, into fully paid and nonassessable shares (except as
provided in Section 180.40(6) of the Wisconsin Statutes) of
Common Stock of the Corporation, at the conversion price,
determined as hereinafter provided, in effect at the time of
conversion, each share of Series A Convertible Preferred Stock
being valued at $100 for the purpose of such conversion. The
price at which shares of Common Stock shall be delivered upon
conversion (herein called the "Conversion Price") shall be
initially $78.75 per share of Common Stock, except that the
initial Conversion Price applicable to shares of Series A
Convertible Preferred Stock issued in exchange for Common Stock
shall be the weighted average purchase price paid for such
Common Shares as determined in good faith by the Board of
Directors of the Company. The Conversion Price shall be
adjusted in certain instances as provided in subparagraph
(e)(iii), (iv), (v), (vi), (ix), (x) and (xi) below.
(ii) In order to convert shares of Series A Convertible
Preferred Stock into Common Stock, the holder thereof shall
surrender at any office hereinabove mentioned the certificate or
certificates therefor, duly endorsed or assigned to the
Corporation or in blank, and give written notice to the
Corporation at said office that such holder elects to convert
such shares. Any such notice shall be irrevocable. No payment
or adjustment shall be made upon conversion on account of any
dividends, if any, which have accrued as the result of the
declaration of dividends on the Common Stock on the shares of
Series A Convertible Preferred Stock surrendered for conversion,
but which remain unpaid, but payment or adjustment shall be made
on account of any dividends payable with respect to the Common
Stock issued upon conversion.
Shares of Series A Convertible Preferred Stock shall be
deemed to have been converted immediately prior to the close of
business on the day of the surrender of such shares for
conversion in accordance with the foregoing provisions, and the
person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes
as the record holder or holders of Common Stock at such time.
As promptly as practicable on or after the conversion date, the
Corporation shall issue and shall deliver at said office a
certificate or certificates for the number of full shares of
Common Stock issued upon such conversion, together with payment
in lieu of any fraction of a share, as hereinafter provided, to
the person or persons entitled to receive the same.
<PAGE>
(iii) In case the Corporation shall pay or make a
dividend or other distribution on any class of Capital Stock of
the Corporation in Common Stock, the Conversion Price shall be
reduced by multiplying such Conversion Price by a fraction of
which the numerator shall be the number of shares of Common
Stock outstanding at the close of business on the day fixed for
the determination of shareholders entitled to receive such
dividend or other distribution and of which the denominator
shall be the sum of such number of shares plus the total number
of shares constituting such dividend or other distribution, such
reduction to become effective immediately after the opening of
business on the day following the date fixed for such
determination. For purposes of this subparagraph (e)(iii), the
number of shares of Common Stock at any time outstanding shall
not include shares held in the treasury of the Corporation. The
Corporation will not pay any dividend or make any distribution
on shares of Common Stock held in the treasury of the
Corporation.
(iv) In case the Corporation shall issue rights or
warrants to all holders of its Common Stock, entitling them to
subscribe for or purchase shares of Common Stock at a price per
share less than the current market price per share (determined
as provided in subparagraph (e)(viii) below) of the Common Stock
on the date fixed for the determination of shareholders entitled
to receive such rights or warrants, the Conversion Price shall
be reduced by multiplying such Conversion Price by a fraction of
which the numerator shall be the sum of the number of shares of
Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Common
Stock which the aggregate offering price for all of the shares
of Common Stock so offered for subscription or purchase would
purchase at such current market price and of which the
denominator shall be the sum of the number of shares of Common
Stock outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock so
offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day
following the date fixed for such determination. For the
purposes of this subparagraph (e)(iv), the number of shares of
Common Stock at any time outstanding shall not include shares
held in the treasury of the Corporation. The Corporation will
not issue any rights or warrants in respect of shares of Common
Stock held in the treasury of the Corporation.
(v) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares, the Conversion Price
shall be proportionately reduced, and, conversely, in case
outstanding shares of Common Stock shall be combined into a
smaller number of shares, the Conversion Price shall be
proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening
of business on the day following the date upon which such
subdivision or combination becomes effective.
<PAGE>
(vi) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its Common Stock,
evidences of its indebtedness or assets (including securities,
but excluding any rights or warrants referred to in subparagraph
(e)(iv) above, any dividend or distribution paid in cash out of
earned surplus of the Corporation and any dividend or
distribution referred to in subparagraph (e)(iii) above), the
Conversion Price shall be adjusted by multiplying such
Conversion Price by a fraction of which the numerator shall be
the difference of the current market price per share (determined
as provided in subparagraph (e)(viii) below) of the Common Stock
on the date fixed for the determination of the shareholders
entitled to receive such distribution less the then fair market
value (as determined by the Board of Directors, whose good faith
determination shall be conclusive) of the portion of the assets
or evidences of indebtedness so distributed applicable to one
share of the then outstanding Common Stock, and of which the
denominator shall be such current market price per share of the
Common Stock, such adjustment to become effective immediately
after the opening of business on the day following the date
fixed for such determination. For purposes of this subparagraph
(e)(vi), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the
Corporation. The Corporation will not distribute any evidences
of its indebtedness or assets with respect to shares of Common
Stock held in the treasury of the Corporation.
(vii) A reclassification (including any reclassification
upon a consolidation or merger of which the Corporation is the
continuing corporation) of the Common Stock into securities
including securities other than the Common Stock shall be deemed
to involve (aa) a distribution of such securities other than
Common Stock into which the Common Stock is reclassified to all
holders of Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the
determination of shareholders entitled to receive such
distribution" within the meaning of subparagraph (e)(vi) above)
and (bb) a subdivision or combination, as the case may be, of
the number of shares of Common Stock outstanding immediately
prior to such reclassification into the number of shares of
Common Stock outstanding immediately thereafter (and the
effective date of such reclassification shall be deemed to be
"the date upon which such subdivision or combination becomes
effective" within the meaning of subparagraph (e)(v), above).
<PAGE>
(viii) For the purpose of any computation under
subparagraph (e)(iv), (vi), and (x), the current market price
per share of Common Stock on any date shall be deemed to be 90%
(100%, in the case of subparagraph (e)(xvi) of (aa) the average
of the daily closing prices for the five (5) consecutive
business days commencing ten (10) business days before the date
in question. The closing price for each day shall be the last
reported sales price regular way or, in case no such reported
sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in either case on any
exchange on which the Common Stock is listed or admitted to
trading selected by the Board of Directors, or (bb) if the
Common Stock is not listed or admitted to trading on any such
exchange, the closing sale price in the over-the-counter market,
or (cc) in case no such reported sale takes place or such data
is not reported on such day, the average of the closing bid and
asked prices in the over-the-counter market, as furnished by the
National Association of Securities Dealers, Inc. through NASDAQ
or a similar organization if NASDAQ is no longer reporting such
information. If on any such day the Common Stock is not quoted
by any such organization, the closing price for such day shall
be the fair value of such Common Stock on such day, as
determined by the Board of Directors in good faith.
(ix) In case of any capital reorganization of the
Corporation (other than any reorganization referred to in
subparagraph (e)(iii), (iv), (v), (vi), or (vii), above), any
reclassification of the Common Stock (other than any
reclassification of the Common Stock referred to in subparagraph
(e)(ii), (v) or (vii) above), the consolidation or merger of the
Corporation with or into any other corporation or of the sale of
all or substantially all of the properties and assets of the
Corporation to any other corporation, each share of Series A
Convertible Preferred Stock shall immediately thereafter be
convertible into the number of shares of stock, other
securities, assets and/or cash to which a holder of the number
of shares of Common Stock into which such share was convertible
immediately prior thereto would have been entitled to receive
upon such reorganization, reclassification, consolidation,
merger or sale. In case of any such reorganization,
reclassification, consolidation, merger or sale, the provisions
set forth in this subparagraph (e)(ix) with respect to the
rights and interests of the holders of the Series A Convertible
Preferred Stock shall automatically be appropriately adjusted so
as to be applicable as nearly as possible to the shares of
stock, other securities, assets and/or cash into which the
Series A Convertible Preferred Stock thereby becomes
convertible, and effective provision shall be made in the
Articles of Incorporation of the resulting or surviving
corporation or otherwise, so that such provisions shall
thereafter be applicable, as nearly as possible, to any such
shares of stock, other securities, assets and/or cash. The
Corporation shall not effect any such consolidation, merger or
sale, unless before the consummation thereof the successor
corporation (if other than the Corporation) resulting from such
consolidation or merger, the corporation purchasing such assets,
or other appropriate corporation or entity shall expressly
assume in writing the obligation to deliver to the holder of
each share of Series A Convertible Preferred Stock, upon
conversion thereof, such shares of stock, other securities,
assets and/or cash as such holder shall be entitled to receive
pursuant to the provisions hereof, and to make provisions for
the protection of such conversion right as above provided. The
provisions of this subparagraph (e)(ix) shall similarly apply to
successive reorganizations, reclassifications, consolidations,
mergers or sales.
<PAGE>
(x) In the event that the Corporation shall (except as
hereinafter provided) issue any additional shares of Common
Stock for cash at a price less than the Current Market Price per
share of Common Stock then in effect, then the Conversion Price
upon each such issuance shall be adjusted to that price
determined by multiplying the Conversion Price in effect
immediately prior to such event by a fraction:
(aa) the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to
the issuance of such additional shares of Common Stock
plus the number of full shares of Common Stock which the
aggregate consideration for the total number of such
additional shares of Common Stock so issued would purchase
at the Current Market Price per share, and
(bb) the denominator of which shall be the number
of shares of Common Stock outstanding immediately prior to
the issuance of such additional shares of Common Stock
plus the number of such additional shares of Common Stock
to issued;
For purposes of clauses (aa) and (bb) the date as of which
the Current Market Price per share of Common Stock shall be
computed shall be the earlier of (xx) the date on which the
Corporation shall enter into a firm contract for the issuance of
such additional shares of Common Stock or (zz) the date of
actual issuance of such additional shares of Common Stock;
(xi) The Corporation may make such reductions in the
Conversion Price, so as to increase the number of Common Shares
into which the Series A Convertible Preferred Stock may be
converted, in addition to those required by subparagraph
(e)(iii), (iv), (v), (vi) and (ix), as it considers to be
advisable in order that any event treated for federal income tax
purposes as a dividend of stock or stock rights shall not be
taxable to the recipients.
(xii) No adjustments to the Conversion Price will be made
for the issuance of options or securities to employees of the
Corporation or its subsidiaries pursuant to any stock option,
restricted stock, thrift, stock purchase, savings or other
employee benefit plan or to shareholders of the Corporation
pursuant to any dividend reinvestment plan. No adjustment will
be required to be made in the Conversion Price until
accumulative adjustments require an adjustment of at least $.25,
with any smaller adjustments not made hereunder cumulated with
future adjustments.
<PAGE>
(xiii) The Corporation shall mail to each holder of
Series A Convertible Preferred Stock notice of the proposed
effective date of any action which would result in an adjustment
in the Conversion Price determined as provided in this
subparagraph (e) at least twenty (20) days prior to the record
date thereof. Whenever the Conversion Price is adjusted as
herein provided, the Corporation shall forthwith file with any
transfer agent for the Series A Convertible Preferred Stock a
certificate signed by the Chairman of the Board or one of the
Vice Presidents of the Corporation and by its Treasurer or an
Assistant Treasurer, stating the adjusted Conversion Price
determined as provided in this subparagraph (e), and setting
forth the facts requiring such adjustment. Any such transfer
agent shall be under no duty to make any inquiry or
investigation as to the statements contained in any such
certificate or as to the manner in which any computation was
made, but may accept such certificate as conclusive evidence of
the statements therein contained, and any such transfer agent
shall be fully protected with respect to any and all acts done
or action taken or suffered by it in reliance thereon. No
transfer agent in its capacity as transfer agent shall be deemed
to have any knowledge with respect to any change of capital
structure of the Corporation unless and until it receives a
notice thereof pursuant to the provisions hereof, and, in the
absence of any such notice, each transfer agent may conclusively
assume that there has been no such change. Whenever the
Conversion Price is adjusted, the Corporation shall forthwith
cause a notice stating the adjustment, and describing the events
requiring such adjustments and the Conversion Price to be mailed
to the holders of record of Series A Convertible Preferred
Stock.
(xiv) The Corporation shall at all times reserve and keep
available out of its authorized and unissued Common Stock,
solely for the purpose of effecting the conversion of Series A
Convertible Preferred Stock, such number of shares as shall from
time to time be sufficient to effect the conversion of all
Series A Convertible Preferred Stock from time to time
outstanding. The Corporation shall from time to time, in
accordance with the laws of Wisconsin, increase the authorized
amount of Common Stock if at any time the number of shares of
Common Stock remaining unissued shah not be sufficient to permit
the conversion of all the then outstanding shares of Series A
Convertible Preferred Stock.
(xv) The Corporation will pay any and all issue and other
taxes (other than taxes based on income) that may be payable in
respect of any issue or delivery of Common Stock on conversion
of Series A Convertible Preferred Stock pursuant hereto. The
Corporation shall not, however, be required to pay any tax which
may be payable in respect of any transfer involved in the issue
and delivery of Common Stock in a name other than that in which
the Series A Convertible Preferred Stock so converted was
registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the
Corporation the amount of any such tax, or has established, to
the satisfaction of the Corporation, that such tax has been
paid.
<PAGE>
(xvi) No fractional shares of Common Stock will be issued
upon conversion of the Series A Convertible Preferred Stock, and
in lieu of any fractional shares that would otherwise be
issuable, the Corporation will pay cash on the basis of the
current market price per share of the Common Stock on the
business day immediately preceding the day of conversion
determined in accordance with subparagraph (e)(viii) above.
(xvii) The Board of Directors of the Corporation shall
not authorize for issuance any class of capital stock ranking
prior to the Series A Convertible Preferred Stock without the
consent of holders of two-thirds of the outstanding shares of
Series A Convertible Preferred Stock. For purposes of this
Agreement, any class or classes of stock of the Corporation
shall be deemed to rank:
(aa) Prior to the Series A Convertible Preferred
Stock as to dividends or as to distribution of assets upon
liquidation, dissolution or winding up if the holders of
such class shall be entitled to the receipt of dividends
or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or
priority to the holders of the Series A Convertible
Preferred Stock; and
(bb) On a parity with the Series A Convertible
Preferred Stock as to dividends or as to distributions of
assets upon liquidation, dissolution or winding up,
whether or not the dividend rates, dividend payment dates,
or liquidation amounts per share thereof be different from
those of the Series A Convertible Preferred Stock, if the
holders of such class and the Series A Convertible
Preferred Stock shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in
proportion to their respective dividend rates or
liquidation amounts, without preference or priority of one
over the other.
ARTICLE IV
PRE-EMPTIVE RIGHTS. No holder of any stock of the corporation shall
have any pre-emptive or other subscription rights nor be entitled, as of
right, to purchase or subscribe for any part of the unissued stock of this
corporation or any of additional stock issued by reason of any increase of
authorized capital stock of this corporation or other securities whether or
not convertible into stock of this corporation.
ARTICLE V
The address of the registered office of the Corporation is 770 North
Water Street, Milwaukee, Wisconsin 53202 and its registered agent at such
address is Michael A. Hatfield.
ARTICLE VI
The business and affairs of the Corporation shall be managed by a Board
of Directors. The number of directors (exclusive of directors, if any,
elected by the holders of one or more series of Preferred Stock, voting
separately as a series pursuant to the provisions of these Restated Articles
of Incorporation applicable thereto) shall be not less than 3 directors, the
exact number of directors to be determined from time to time by resolution
adopted by affirmative vote of a majority of the entire Board of Directors
then in office. The directors shall be divided into three classes,
designated Class I, Class II, and Class III, and the term of office of
directors of each class shall be three years. Each class shall consist, as
nearly as possible, of one-third of the total number of directors
constituting the entire Board of Directors. If the number of directors is
changed by resolution of the Board of Directors pursuant to this Article VI,
any increase or decrease shall be apportioned among the classes so as to
maintain the number of directors in each class as nearly equal as possible,
but in no case shall a decrease in the number of directors shorten the term
of any incumbent director.
<PAGE>
A director shall hold office until the annual meeting for the year in
which his term expires and until his successor shall be elected and shall
qualify. Any newly created directorship resulting from an increase in the
number of directors and any other vacancy on the Board of Directors, however
caused, shall be filled by the vote of a majority of the directors then in
office, although less than a quorum, or by a sole remaining director. Any
director so elected to fill any vacancy in the Board of Directors, including
a vacancy created by an increase in the number of directors, shall hold
office for the remaining term of directors of the class to which he has been
elected and until his successor shall be elected and shall qualify.
Exclusive of directors, if any, elected by the holders of one or more
series of Preferred Stock, no director of the Corporation may be removed from
office, except for Cause and by the affirmative vote of two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote at
a meeting of shareholders duly called for such purpose. As used in this
Article VI, the term "Cause" shall mean solely malfeasance arising from the
performance of a director's duties which has a materially adverse affect on
the business of the Corporation.
No person, except those nominated by or at the direction of the Board
of Directors, shall be eligible for election as a director at any annual or
special meeting of shareholders unless a written request, in the form
established by the Corporation's By-laws, that his or her name be placed in
nomination is received from a shareholder of record by the Secretary of the
Corporation not less than 30 days prior to the date fixed for such meeting,
together with the written consent of such person to serve as a director.
Where such a request for nomination and such consent have been timely
received, but such nominee is unable or declines to serve, the person who
placed the individual's name in nomination may request that an alternative
name be placed in nomination at the meeting.
Notwithstanding the foregoing, whenever the holders of any one or more
series of Preferred Stock issued by the Corporation shall have the right,
voting separately by series, to elect directors at an annual or special
meeting of shareholders, the election, term of office, filling of vacancies
and other features of such directorships shall be governed by the terms of
these Restated Articles of Incorporation applicable thereto. Directors so
elected shall not be divided into classes unless expressly provided by such
terms, and during the prescribed terms of office of such directors the Board
of Directors shall consist of such directors in addition to the number of
directors determined as provided in the first paragraph of this Article VI.
<PAGE>
ARTICLE VII
The period of existence of the Corporation shall be perpetual.
ARTICLE VIII
ACQUISITION AND DISPOSITION OF OWN SHARES. The Corporation shall have
the right to purchase, take, receive or otherwise acquire, hold, own, pledge,
transfer or otherwise dispose of its own shares; provided that no such
acquisition, directly or indirectly, of its own shares of equal or
subordinate rank shall be made unless:
(a) At the time of such acquisition the Corporation is not and
would not thereby be rendered insolvent; and
(b) The net assets of the Corporation remaining after such
acquisition would be not less than the aggregate preferential amount
payable in the event of voluntary liquidation to the holders of shares
having preferential rights to the assets of the corporation in the
event of liquidation.
ARTICLE IX
Notwithstanding any other provision of these Restated Articles of
Incorporation or the Corporation's By-Laws (and notwithstanding the fact that
some lesser percentage may be specified by law, these Restated Articles of
Incorporation or the Corporation's By-Laws), the Corporation's By-Laws may
be amended, altered or repealed, and new By-Laws may be enacted, only by the
affirmative vote of not less than two-thirds of the outstanding shares of
capital stock of the Corporation entitled to vote at a meeting of
shareholders duly called for such purpose, or by a vote of not less than
three-quarters of the entire Board of Directors then in office.
ARTICLE X
Except as otherwise specified herein, the "requisite affirmative
votes," and the recitals of votes which are "requisite for adoption" or
"requisite for approval" under Section 180.25 of the Wisconsin Statutes for
the approval or authorization of any (i) plan of merger or consolidation of
the Corporation with or into any other corporation, (ii) sale, lease,
exchange or disposition of all or substantially all the property and assets
of the Corporation to or with any other person, corporation or entity not
made in the ordinary course of business, or (iii) voluntary dissolution of
the Corporation or revocation of voluntary dissolution proceedings, shall be
the affirmative vote of the holders of two-thirds of the outstanding shares
of capital stock of the Corporation entitled to vote at a meeting called for
such purpose (unless any class or series of shares is entitled to vote
thereon as a class, in which event the "requisite affirmative votes" shall
be the affirmative votes of the holders of two-thirds of the outstanding
shares of each class of shares and of each series entitled to vote thereon
as a class and of the total shares entitled to vote thereon), provided,
however, if the Board of Directors shall have approved any transaction
described in clauses (i), (ii) or (iii) above by a resolution adopted by
three-quarters of the Board of Directors then in office and entitled to vote
thereon, the "requisite affirmative votes," and the recitals of votes which
are "requisite for adoption" or "requisite for approval," shall be the
affirmative vote of the holders of a majority of the outstanding shares of
capital stock of the Corporation entitled to vote at a meeting called for
such purpose (unless any class or series of shares is entitled to vote
thereon as a class, in which event the "requisite affirmative votes" shall
be the affirmative votes of the holders of a majority of the outstanding
shares of each class of shares and of each series entitled to vote thereon
as a class and of the total shares entitled to vote thereon).
<PAGE>
ARTICLE XI
A. In addition to any affirmative vote required by law or these
Restated Articles of Incorporation or the By-Laws of the Corporation, and
except as otherwise expressly provided in Section (B) of this Article XI, a
Business Combination (as hereinafter defined) shall require the affirmative
vote of not less than:
(1) Eighty percent (80%) of the votes entitled to be cast by the
holders of all then outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(hereinafter referred to in this Article XI as "Voting Stock"), voting
together as a single class (it being understood that, for purposes of
this Article XI, each share of the Voting Stock shall have the number
of votes granted to it pursuant to the Wisconsin Business Corporation
Law or as otherwise provided pursuant to Article III of these Restated
Articles of Incorporation); or
(2) Two-thirds of the votes entitled to be cast by holders of
Voting Stock, voting together as a single class, other than Voting
Stock beneficially owned by an Interested Stockholder (as defined
below) who is a party to the Business Combination or an Affiliate or
Associate of such Interested Stockholder.
Such affirmative vote shall be required notwithstanding the fact that
no vote may be required, or that a lesser percentage may be specified by law
or in any agreement with any national securities exchange or otherwise, but
such affirmative separate class vote shall be required in addition to any
affirmative vote of the holders of any particular class or series of the
Voting Stock required by law or pursuant to Article III of these Restated
Articles of Incorporation.
B. The provisions of Section (A) of this Article XI shall not be
applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative separate class vote as is
required by law and any other provision of these Restated Articles of
Incorporation, and any resolution or resolutions adopted by the Board of
Directors pursuant to these Restated Articles of Incorporation, as amended,
if the conditions specified in either of the following paragraphs (1) or (2)
are met:
1. The Business Combination shall have been approved by a
majority of the Disinterested Directors (as hereinafter defined), it
being understood that this condition shall not be capable of
satisfaction unless there is at least one Disinterested Director; or
<PAGE>
2. All of the following conditions are met:
(a) the aggregate amount of cash and the Fair Market Value (as
hereinafter defined) as of the date of the consummation of any Business
Combination (the "Consummation Date") of consideration other than cash
to be received per share of Common Stock as a result of such Business
Combination shall be at least equal to the higher of the following:
(i) (If applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by or on behalf of the Interested
Stockholder for any shares of Common Stock acquired by it (aa)
within the two-year period immediately prior to the first public
announcement of the proposed Business Combination (the
"Announcement Date"), or (bb) in the transaction in which it
became an Interested Stockholder, whichever is higher, PLUS
interest compounded annually from the date on which the
Interested Stockholder became an Interested Stockholder (the
"Determination Date") through the Consummation Date at the base
rate for interest rate determinations of M&I Marshall & Ilsley
Bank in effect from time to time, LESS the aggregate amount of
any cash dividends paid, and the Fair Market Value of any
dividends paid other than in cash, per share of Common Stock
from the Determination Date through the Consummation Date (but
not exceeding the amount of such interest payable per share of
Common Stock); and
(ii) The Fair Market Value per share of Common Stock on
the Announcement Date or on the Determination Date, whichever is
higher.
The provisions of this Paragraph B(2)(a) of this Article XI shall
be required to be met with respect to all shares of Common Stock
outstanding whether or not the Interested Stockholder has previously
acquired any shares of Common Stock.
(b) The aggregate amount of cash and the Fair Market Value as
of the Consummation Date of consideration other than cash to be
received per share of any class or series of outstanding Capital Stock,
other than Common Stock, shall be at least equal to the highest of the
following (such requirement being applicable to each such class or
series of outstanding Capital Stock, whether or not the Interested
Stockholder has previously acquired beneficial ownership of any shares
of such class or series):
(i) (If applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by or on behalf of the Interested
Stockholder for any share of such class or series of Capital
Stock acquired by it (aa) within the two-year period immediately
prior to the Announcement Date, or (bb) in the transaction in
which it became an Interested Stockholder, whichever is higher,
PLUS interest compounded annually from the Determination Date
through the Consummation Date at the base rate for interest rate
determinations of M&I Marshall & Ilsley Bank in effect from time
to time, LESS the aggregate amount of any cash dividends paid,
and the Fair Market Value of any dividends paid other than in
cash, per share of such class or series of Capital Stock from
the Determination Date through the Consummation Date (but not
exceeding the amount of such interest payable per share of such
class of Capital Stock);
<PAGE>
(ii) (If applicable) the highest preferential amount per
share to which the holders of shares of such class or series of
Capital Stock are entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation; and
(iii) The Fair Market Value per share of such class or
series of Capital Stock on the Announcement Date or on the
Determination Date, whichever is higher.
(c) The consideration to be received by holders of a particular
class or series of outstanding Capital Stock (including Common Stock)
in such Business Combination shall be in cash or in the same form as
the Interested Stockholder has previously paid for shares of such class
or series of Capital Stock. If the Interested Stockholder has paid for
shares of any class or series of Capital Stock with varying forms of
consideration, the form of consideration of such class or series of
Capital Stock shall be either cash or the form used to acquire the
largest number of shares of such class or series of Capital Stock
previously acquired by it.
(d) After such Interested Stockholder has become an Interested
Stockholder and prior to the consummation of such Business Combination:
(a) except as approved by a majority of the Disinterested Directors,
there shall have been no failure to declare and pay at the regular date
therefor any full quarterly dividends (whether or not cumulative) on
the outstanding stock having a preference over the Common Stock as to
dividends or upon liquidations; (b) there shall have been (1) no
reduction in the annual rate of dividends paid on the Common Stock
(except as necessary to reflect any subdivision of the Common Stock),
except as approved by a majority of the Disinterested Directors, and
(2) an increase in such annual rate of dividends (as necessary to
prevent any reduction) in the event of any reclassification (including
any reverse stock split), recapitalization, reorganization or any
similar transaction which has the effect of reducing the number of
outstanding shares of the Common Stock, unless the failure so to
increase such annual rate is approved by a majority of the
Disinterested Directors; and (c) such Interested Stockholder shall have
not become the beneficial owner of any additional shares of Voting
Stock except as part of the transaction which resulted in such
Interested Stockholder becoming an Interested Stockholder.
(e) After such Interested Stockholder has become an Interested
Stockholder, such Interested Stockholder shall not have received the
benefit, directly or indirectly (except proportionately, solely in such
Interested Stockholder's capacity as a stockholder of the Corporation),
of any loans, advances, guaranties, pledges or other financial
assistance or any tax credits or other tax advantageous provided by the
Corporation, whether in anticipation of or in connection with such
Business Combination or otherwise.
<PAGE>
(f) A proxy or information statement describing the proposed
Business Combination in accordance with the requirements of the 1934
Act (or any subsequent provisions replacing such Act) shall be mailed
to all Stockholders of the Corporation at least thirty (30) days prior
to the consummation of such Business Combination (whether or not such
proxy or information statement is required to be mailed pursuant to
such Act or subsequent provisions). The first page of such proxy or
information statement shall prominently display the recommendation, if
any, which a majority of the Disinterested Directors then in office may
choose to make to the holders of Capital Stock regarding the proposed
Business Combination. Such proxy or information statement shall also
contain, if a majority of the Disinterested Directors then in office
so request, an opinion of a reputable investment banking firm of
recognized national standing (which firm shall be selected by a
majority of the Disinterested Directors then in office, furnished with
all information it reasonably requests, and paid a reasonable fee for
its services by the Corporation upon the Corporation's receipt of such
opinion) as to the fairness (or lack of fairness) of the terms of the
proposed Business Combination from the point of view of the holders of
Capital Stock other than the Interested Stockholder.
(g) For purposes of this Article XI, the following definitions
shall apply:
(i) The term "Business Combination" shall mean any
transaction referred to any one or more of the following
clauses:
(aa) Any merger or consolidation of the Corporation
or any Subsidiary, with (1) any Interested Stockholder or
(2) any other corporation (whether or not itself an
Interested Stockholder) which is, or after such merger or
consolidation would be, an Affiliate or an Associate of
any Interested Stockholder; or
(bb) Any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a
series of transactions) to or with any Interested
Stockholder or any Affiliate or Associate of any
Interested Stockholder of any assets of the Corporation or
any Subsidiary having an aggregate Fair Market Value of
$25,000,000 or more; or
(cc) The issuance or transfer by the Corporation or
any Subsidiary (in any one transaction or a series of
transactions) of any Securities of the Corporation or any
Subsidiary having an aggregate Fair Market Value of
$25,000,000 or more to any Interested Stockholder or any
Affiliate or Associate of any Interested Stockholder; or
(dd) The adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by
or on behalf of any Interested Stockholder or any
Affiliate or Associate of any Interested Stockholder; or
<PAGE>
(ee) Any reclassification of Securities (including
any reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries of any other
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or
convertible Securities of the Corporation or any
Subsidiary which is directly or indirectly owned by any
Interested Stockholder or an Affiliate of any Interested
Stockholder; or
(ff) Any series or combination of transactions
directly or indirectly having the same effect as any of
the foregoing.
(ii) "Interested Stockholder" shall mean any person
(other than the Corporation, any Subsidiary, or any pension,
savings or other employee benefit plan for the benefit of
employees of the Corporation and/or any Subsidiary) who or
which: (aa) is the beneficial owner, directly or indirectly, of
more than 10% of the Corporation's outstanding Voting Stock; or
(bb) is an Affiliate or Associate of the Corporation and at any
time within the two-year period immediately prior to the date in
question was a beneficial owner, directly or indirectly, of 10%
or more of the Corporation's then outstanding Voting Stock; or
(cc) is an assignee of or has otherwise succeeded to any shares
of Voting Stock which were at any time within the two-year
period immediately prior to the date in question beneficially
owned by any other Interested Stockholder, if such assignment or
succession shall have occurred in the course of a transaction or
series of transactions not involving a public offering within
the meaning of the 1933 Act.
(iii) A person shall be deemed the "beneficial owner" of
any Voting Stock; (aa) which such person or any of its
Affiliates or Associates owns, directly or indirectly; or (bb)
which such person or any of its Affiliates or Associates has (y)
the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or
otherwise, or (z) the right to vote pursuant to any agreement,
arrangement or understanding; or (cc) which is beneficially
owned, directly or indirectly, by any other person with which
such person or any of its Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of Capital
Stock.
(iv) In determining whether a person is an Interested
Stockholder pursuant to Subparagraph (g)(ii) of this Article XI,
the number of shares of Voting Securities deemed to be
outstanding shall include shares deemed owned through
application of Subparagraph (g)(iii) of this Article XI, but
shall not include any other shares of Voting Stock which may be
issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants
or options, or otherwise.
<PAGE>
(v) "Subsidiary" means any corporation of which a
majority of any class of equity security is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purpose of the definition of Interested Stockholder set forth in
Subparagraph (g)(ii) of this Article XI, the term "Subsidiary"
shall mean only a corporation of which a majority of each class
of Voting Securities is owned, directly or indirectly, by the
Corporation.
(vi) "Disinterested Director" means any member of the
Board of Directors of the Corporation who is not affiliated with
the Interested Stockholder and who either was a member of the
Board of Directors prior to the Determination Date or was
elected or recommended for election by majority of the
Disinterested Directors in office at the time such Director was
nominated for election.
(vii) "Fair Market Value" means: (aa) in the case of
stock, the highest closing sale price during the 30-day period
immediately preceding the date in question of a share of such
stock on the composite tape for the New York Stock Exchange
listed stocks, or, if such stock is not quoted on the composite
tape, on the New York Stock Exchange, or, if such stock is not
listed or admitted for trading on such exchange, on the
principal United States Securities Exchange registered under the
1934 Act on which such stock is listed or admitted for trading,
or, if such stock is not listed or admitted for trading on any
such exchange, the highest closing sale price (if applicable) or
bid quotation with respect to a share of such stock during the
30-day period preceding the date in question on the National
Association of Securities Dealers, Inc. automated quotations
system or any system then in use, or if no such quotations are
available, the Fair Market Value on the date in question of a
share of such stock as determined in good faith by a majority of
the Disinterested Directors then in office, in each case with
respect to any class or series of stock, appropriately adjusted
for any dividend or distribution in shares of such stock or any
stock split or reclassification of outstanding shares of such
stock into a greater number of shares of such stock or any
combination or reclassification of outstanding shares of such
stock into a smaller number of shares of such stock; and (bb) in
the case of property other than cash or stock, the Fair Market
Value of such property on the date in question as determined in
good faith by a majority of the Disinterested Directors then in
office.
(viii) Reference to "highest per share price" shall in
each case with respect to any class or series of stock reflect
an appropriate adjustment for any dividend or distribution in
shares of such stock or any stock split or reclassification of
outstanding shares of such stock into a greater number of shares
of such stock or any combination or reclassification of
outstanding shares of such stock into a smaller number of shares
of such stock.
<PAGE>
(ix) In the event of any Business Combination in which
the Corporation survives, the phrase "consideration other than
cash to be received" as used in Paragraphs B(2)(a) and (b) of
this Article XI, shall include the shares of Common Stock and/or
shares of any other class or series of Capital Stock retained by
the holders of such shares.
(x) "Capital Stock" shall mean all capital stock of the
Corporation issued from time to time under Article III of the
Corporation's Restated Articles of Incorporation.
ARTICLE XII
These Restated Articles of Incorporation supersede and take the place
of the heretofore existing Articles of Incorporation of the Corporation and
amendments thereto.
Executed in duplicate this 25th day of March, 1994.
MARSHALL & ILSLEY CORPORATION
By: /s/ James B. Wigdale
-----------------------------
James B. Wigdale, Chairman
Attest: /s/ M.A. Hatfield
---------------------------------
M.A. Hatfield, Secretary
This instrument was drafted by:
Scott A. Moehrke
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202-3590
MW415898_1.DOC
<PAGE>
EXHIBIT 3(b)(i)
<PAGE>
CERTIFICATE OF SECRETARY
OF
MARSHALL & ILSLEY CORPORATION
The undersigned, Michael A. Hatfield, on behalf of Marshall & Ilsley
Corporation, a Wisconsin corporation (the "Corporation"), hereby certifies
that he is the duly elected and acting Secretary of the Corporation and
certifies that attached hereto as EXHIBIT A is a true and correct copy of an
Amendment to the By-Laws of Marshall & Ilsley Corporation that was adopted
by the Board of Directors of the Corporation on April 25, 2000.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of the 8th day of May, 2000.
/s/ Michael A. Hatfield
----------------------------
Michael A. Hatfield,
Secretary
<PAGE>
EXHIBIT A
-----------
Resolutions Approving Amendment to By-Laws
RESOLVED, that Sections 2.4, 2.10 and 3.5 of the Corporation's By-Laws
shall be amended to read as follows:
2.4. NOTICE OF MEETING. The Corporation shall notify
shareholders of the date, time and place of each annual and special
shareholders' meeting not less than ten nor more than sixty days before
the date of the meeting. Notice of a special meeting shall include a
description of each purpose for which the meeting is called. Notice
of the meeting shall be given only to those shareholders entitled to
vote at the meeting, unless otherwise required by the law. Notice may
be communicated in person, by telephone, telegraph, teletype, facsimile
or other forms of wire or wireless communication, by mail or private
carrier, or by electronic transmission. Written notice, which includes
notice by electronic transmission, to a shareholder shall be deemed to
be effective on the earlier of: (a) the date received; (b) the date
it is deposited in the United States mail when addressed to the
shareholder's address shown in the Corporation's current record of
shareholders, with postage prepaid; (c) on the date shown on the return
receipt, if sent by registered or certified mail, return receipt
requested, and the receipt is signed by or on behalf of the addressee;
(d) the date sent, if transmitted by telegraph, teletype, facsimile or
other form of wire or wireless communication; (e) the date delivered
to a courier or deposited in a designated receptacle, if sent by
private carrier, when addressed to the shareholder's address shown in
the Corporation's current record of shareholders; or (f) when
electronically transmitted to the shareholder in a manner authorized
by the shareholder.
2.10.PROXIES. At all meetings of shareholders, a shareholder
entitled to vote may authorize another person to act for the
shareholder by appointing the person as proxy. A shareholder or the
shareholder's authorized officer, director, employee, agent, or
attorney-in-fact may use any of the following means to appoint a proxy:
(a) In writing by signing or causing the shareholder's
signature to be affixed to an appointment form by any
reasonable means, including, but not limited to, by
facsimile signature.
(b) By transmitting or authorizing the transmission of an
electronic transmission of the appointment to the person
who will be appointed as proxy or to a proxy solicitation
firm, proxy support service organization or like agent
authorized to receive the transmission by the person who
will be appointed as proxy.
(c) By any other means permitted by the WBCL.
<PAGE>
Such proxy shall be filed with the Secretary of the Corporation,
in the form of a signed appointment form or an electronic transmission
of the appointment, before or at the time of the meeting. No proxy
shall be valid after eleven months from the date of its execution,
unless otherwise provided in the proxy.
3.5. NOTICE. Notice of meetings of the Board of Directors may
be communicated in person, by telephone, telegraph, teletype, facsimile
or other form of wire or wireless communication, or by mail or private
carrier. Notice of meetings, except the regular annual meeting, shall
be given at least 48 hours prior to the time set for the meeting if
communicated orally or by telegraph, teletype, facsimile, other form
of wire or wireless communication or by electronic transmission, and
at least 5 days prior to the date set for the meeting if communicated
by any other means. Written notice, which includes notice by
electronic transmission, shall be deemed effective and given on the
earlier of: (a) when received; (b) 2 days after the date it is
deposited in the United States mail, with postage prepaid, when
addressed to the director at an address designated by him or her to
receive such notice or, in the absence of such designation, at his or
her business or home address as they appear in the Corporation's
records; (c) the date and time sent, if transmitted by telegraph,
teletype, facsimile or other form of wire or wireless communication
when sent to the director at a location designated by the director to
receive such notice or, in the absence of such designation, at his or
her business or home as those locations appear in the Corporation's
records; (d) the date delivered to a courier or deposited in a
designated receptacle, if sent by private carrier, when addressed to
the director at an address designated by him or her to receive such
notice or, in the absence of such designation, at his or her business
or home address as it appears in the Corporation's records; or (e) when
electronically transmitted. Oral notice shall be deemed effective when
communicated. Whenever any notice whatever is required to be given to
any director of the Corporation under these By-laws, the Articles or
under the provisions of any statute, a waiver thereof in writing,
signed at any time whether before or after the time of meeting, by the
director entitled to such notice, shall be deemed equivalent to timely
notice. A director's attendance at, or participation in, a meeting
waives any required notice unless the director at the beginning of the
meeting or promptly upon his or her arrival objects to holding the
meeting or transacting business at the meeting and does not thereafter
vote for or assent to action taken at the meeting. Neither the
business to be transacted at, nor the purpose of, any regular or
special meeting of the Board of Directors need be specified in the
notice or waiver of such meeting.
MW416442_1.DOC
<PAGE>
EXHIBIT 3(b)(ii)
<PAGE>
BY-LAWS
MARSHALL & ILSLEY CORPORATION
1. OFFICES
1.1. Principal and Other Offices. The principal office of the
Corporation shall be located at any place either within or outside the State
of Wisconsin as shall be designated in the Corporation's most recent annual
report filed with the Wisconsin Secretary of State. The executive offices
of the Corporation shall be located at its principal office. The Corporation
may have such other offices, either within or without the State of Wisconsin,
as the Board of Directors may designate or as the business of the Corporation
may require from time to time.
1.2. Registered Office. The registered office of the
Corporation required by the Wisconsin Business Corporation Law (the "WBCL")
to be maintained in the State of Wisconsin may be, but need not be, the same
as any of its places of business within the State of Wisconsin. The
registered office may be changed from time to time as provided in Section
180.0502 of the WBCL or any successor thereto.
2. SHAREHOLDERS
2.1. Annual Meeting. The annual meeting of shareholders shall
be held on the fourth Tuesday in the month of April in each year at 10 A.M.,
or at such other time and/or date as shall be fixed by the Secretary of the
Corporation or the Board of Directors, for the purposes of electing directors
and for the transaction of such other business as may have been properly
brought before the meeting in compliance with the provisions of Section 2.5
of the By-laws. If the day fixed for the annual meeting shall be a legal
holiday in the State of Wisconsin, such meeting shall be held on the next
succeeding business day.
2.2. Special Meetings. Except as otherwise provided by the WBCL
and subject to the rights of the holders of any class of series of capital
stock having a preference over the common stock as to dividends or upon
liquidation, special meetings of shareholders of the Corporation may be
called only by the Chief Executive Officer or the President of the
Corporation pursuant to a resolution approved by not less than three-quarters
of the Board of Directors.
2.3. Place of Meeting. The Board of Directors, Chief Executive
Officer or President may designate any place, within or without the State of
Wisconsin, as the place of meeting for the annual meeting or for any special
meeting. If no designation is made, the place of meeting shall be the
principal office of the Corporation. Any meeting may be adjourned to
reconvene at any place designated by vote of a majority of the shares
represented at the meeting.
<PAGE>
2.4. Notice of Meeting. The Corporation shall notify
shareholders of the date, time and place of each annual and special
shareholders' meeting not less than ten nor more than sixty days before the
date of the meeting. Notice of a special meeting shall include a description
of each purpose for which the meeting is called. Notice of the meeting shall
be given only to those shareholders entitled to vote at the meeting, unless
otherwise required by the law. Notice may be communicated in person, by
telephone, telegraph, teletype, facsimile or other forms of wire or wireless
communication, by mail or private carrier, or by electronic transmission.
Written notice, which includes notice by electronic transmission, to a
shareholder shall be deemed to be effective on the earlier of: (a) the date
received; (b) the date it is deposited in the United States mail when
addressed to the shareholder's address shown in the Corporation's current
record of shareholders, with postage prepaid; (c) on the date shown on the
return receipt, if sent by registered or certified mail, return receipt
requested, and the receipt is signed by or on behalf of the addressee; (d)
the date sent, if transmitted by telegraph, teletype, facsimile or other form
of wire or wireless communication;(e) the date delivered to a courier or
deposited in a designated receptacle, if sent by private carrier, when
addressed to the shareholder's address shown in the Corporation's current
record of shareholders; or (f) when electronically transmitted to the
shareholder in a manner authorized by the shareholder.
2.5. Advance Notice of Shareholder-Proposed Business at Annual
Meetings. At an annual meeting of shareholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be either (a)
specified in the notice of meeting (or any supplement thereto) given in
accordance with Section 2.4 of these By-laws, (b) otherwise properly brought
before the meeting by or at the direction of the Board of Directors, the
Chief Executive Officer or the President, or (c) otherwise properly brought
before the meeting by a shareholder. In addition to any other applicable
requirements for business to be properly brought before an annual meeting by
a shareholder, the shareholder must have given timely notice of such business
in writing to the Secretary of the Corporation. To be timely, a
shareholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation, not less than 90 days prior
to the anniversary date of the annual meeting of shareholders in the
immediately preceding year. A shareholder's notice to the Secretary of the
Corporation shall set forth as to each matter the shareholder proposes to
bring before the annual meeting (i) a brief description of the business
desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and record
address of the shareholder proposing such business, and the beneficial owner
or owners, if any, on whose behalf the proposal is made, (iii) a
representation that the shareholder is a shareholder of record and will
remain such through the record date for the meeting and that the shareholder
intends to appear in person or by proxy at such meeting to move the
consideration of the business set forth in the notice, (iv) the class and
number of shares of the Corporation which are beneficially owned by the
shareholder and the beneficial owner or owners on whose behalf the proposal
is made, and (v) any material interest of the shareholder in such business.
In addition, any such shareholders shall be required to provide such further
information as may be requested by the Corporation in order to comply with
federal securities laws, rules and regulations.
<PAGE>
Notwithstanding anything contained in these By-laws to the
contrary, no business shall be conducted at the annual meeting except in
accordance with the procedures set forth in this Section 2.5; provided,
however, that nothing in this Section 2.5 shall be deemed to preclude
discussion by any shareholder of any business properly brought before the
annual meeting in accordance with said procedure.
The chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 2.5, and
if he should so determine, he shall so declare to the meeting and any such
business not properly brought before the meeting shall not be transacted.
2.6. Procedure for Nomination of Directors. Only persons
nominated in accordance with the following procedures shall be eligible for
election as directors, except as may otherwise be provided by the terms of
the Corporation's Amended and Restated Articles of Incorporation (the
"Articles") with respect to the rights of holders of any class or series of
preferred stock to elect directors under specified circumstances.
Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of shareholders by or at the direction
of the Board of Directors, by any nominating committee or persons appointed
by the Board, or by any shareholder of the Corporation entitled to vote for
election of directors at the meeting who complies with the notice procedures
set forth in this Section 2.6.
<PAGE>
Nominations other than those made by or at the direction of the
Board of Directors or any nominating committee or person appointed by the
Board shall be made pursuant to timely notice in proper written form to the
Secretary of the Corporation. To be timely, a shareholder's request to
nominate a person for election to the Board of Directors, together with the
written consent of such person to serve as a director, must be received by
the Secretary of the Corporation not less than 90 days prior to the
anniversary date of the annual meeting of shareholders in the immediately
preceding year. To be in proper written form, such shareholder's notice
shall set forth in writing (a) as to each person whom the shareholder
proposes to nominate for election or re-election as a director, (i) the name,
age, business address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the class and number
of shares of capital stock of the Corporation which are beneficially owned
by such person, (iv) a description of all arrangements and understandings
between the shareholder or beneficial owner or owners on whose behalf the
nomination is made and each proposed nominee and any person or persons
(naming such person or persons) pursuant to which the intended nomination or
nominations are to be made by the shareholder, and (v) such other information
relating to such person as is required to be disclosed in solicitations of
proxies for election of directors, or as otherwise required, in each case
pursuant to Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended; and (b) as to the shareholder giving the notice, (i) the
name and address, as they appear on the Corporation's books, of such
shareholder and the beneficial owner or owners, if any, on whose behalf the
nomination is made, (ii) a representation that the shareholder is a
shareholder of record and will remain such through the record date for the
meeting and that the shareholder intends to appear in person or by proxy at
such meeting to make the nomination(s) set forth in the notice, and (iii) the
class and number of shares of capital stock of the Corporation which are
beneficially owned by such shareholder and the beneficial owner or owners on
whose behalf the nomination is made. The Corporation may require any
proposed nominee to furnish such other information as may reasonably be
required by the Corporation to determine the eligibility of such proposed
nominee to serve as a director of the Corporation. No persons shall be
eligible for election as a director of the Corporation unless nominated in
accordance with the procedures set forth herein and in the Articles. The
Chairman of any meeting of shareholders shall, if the facts so warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by the Articles and these By-laws;
and if he should so determine, he shall so declare to the meeting and the
defective nomination(s) shall be disregarded.
<PAGE>
2.7. Fixing of Record Date. For the purpose of determining any
voting group entitled to notice of or to vote at any meeting of shareholders,
or shareholders entitled to receive any distribution or dividend from the
Corporation, or in order to determine those shareholders entitled to take any
other action authorized by these By-laws or the WBCL, the Board of Directors
may fix in advance a date as the record date for any such determination of
shareholders. Such record date shall not be more than 70 days prior to the
date on which the particular action, requiring such determination of
shareholders, is to be taken. If no record date is so fixed for the
determination of shareholders entitled to notice of, or to vote at a meeting
of shareholders, or shareholders entitled to receive a dividend or any other
distribution, the record date for determination of such shareholders shall
be at the close of business on:
(a) with respect to an annual shareholders' meeting or any
special shareholders' meeting called by the Board of Directors or any
person specifically authorized by these By-laws to call a meeting, the
day before the first notice is given to shareholders;
(b) with respect to a special shareholders' meeting
demanded by one or more shareholders, the date the first shareholder
signs a demand for the special meeting;
(c) with respect to the payment of a dividend, the date
the Board of Directors authorizes the dividend; and
(d) with respect to any other distribution to
shareholders, other than one involving a repurchase or reacquisition
of shares, the date the Board of Directors authorizes the distribution.
When a determination of shareholders entitled to notice of or to
vote at any meeting of shareholders has been made as provided in this
section, such determination shall be applied to any adjournment thereof
unless the Board of Directors fixes a new record date, which it shall do if
the meeting is adjourned to a date more than 120 days after the date fixed
for the original meeting.
<PAGE>
2.8. Shareholders' List. After fixing a record date for a
meeting of shareholders, the Corporation shall prepare a list of the names
of all its shareholders who are entitled to notice of a shareholders'
meeting. The list shall be arranged by class or series of shares and show
the address of and the number of shares held by each shareholder. The
shareholder list shall be available for inspection by any shareholder
beginning two business days after notice of the meeting is given for which
the list was prepared and continuing through the meeting. The list shall be
available at the Corporation's principal office or at a place identified in
the meeting notice in the city where the meeting is to be held. A
shareholder, or his or her agent or attorney, is entitled, on written demand,
to inspect and to copy the list during regular business hours and at his
expense, during the period it is available for inspection, provided the
shareholder, or his or her agent or attorney, demonstrates to the
satisfaction of the Corporation he or she satisfies the requirements of the
WBCL. The Corporation shall make the shareholders' list available at the
meeting and shall be subject to the inspection of any shareholder, or his or
her agent or attorney, during the time of the meeting or any adjournment
thereof. Refusal or failure to prepare or make available the shareholders'
list shall not affect the validity of any action taken at such meeting.
2.9. Quorum; Votes. Shares entitled to vote as a separate
voting group may take action on a matter at a meeting only if a quorum of
those shares exists with respect to that matter. Unless the Articles or the
WBCL provides otherwise, a majority of the votes entitled to be cast on the
matter by the voting group constitutes a quorum of that voting group for
action on that matter.
If the Articles or the WBCL provide for voting by two or more
voting groups on a matter, action on that matter is taken only when voted
upon by each of those voting groups counted separately. Action may be taken
by one voting group on a matter even though no action is taken by another
voting group entitled to vote on the matter.
Once a share is represented for any purpose at a meeting, other
than for the purpose of objecting to holding the meeting or transacting
business at the meeting, it is deemed present for purposes of determining
whether a quorum exists for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for
that adjourned meeting. If a quorum exists, action on a matter by a voting
group is approved if the votes cast within the voting group favoring the
action exceed the votes cast opposing the action, unless the Articles or the
WBCL requires a greater number of affirmative votes, provided, however, that
unless otherwise provided in the Articles, directors are elected by a
plurality of the votes cast by the shares entitled to vote in the election
at a meeting at which a quorum is present.
<PAGE>
2.10. Proxies. At all meetings of shareholders, a shareholder
entitled to vote may authorize another person to act for the shareholder by
appointing the person as proxy. A shareholder or the shareholder's
authorized officer, director, employee, agent, or attorney-in-fact may use
any of the following means to appoint a proxy:
(a) In writing by signing or causing the
shareholder's signature to be affixed to an appointment form by any
reasonable means, including, but not limited to, by facsimile
signature.
(b) By transmitting or authorizing the transmission
of an electronic transmission of the appointment to the person who will
be appointed as proxy or to a proxy solicitation firm, proxy support
service organization or like agent authorized to receive the
transmission by the person who will be appointed as proxy.
(c) By any other means permitted by the WBCL.
Such proxy shall be filed with the Secretary of the
Corporation, in the form of a signed appointment form or an electronic
transmission of the appointment, before or at the time of the meeting. No
proxy shall be valid after eleven months from the date of its execution,
unless otherwise provided in the proxy.
2.11. Voting Shares Owned by the Corporation. Shares of the
Corporation belonging to it shall not be voted directly or indirectly at any
meeting of shareholders and shall not be considered in determining whether
a quorum exists or for any other purpose relating to the voting of shares.
Notwithstanding the foregoing, shares held by the Corporation in a fiduciary
capacity are outstanding shares and may be voted and shall be considered in
any such determination.
2.12. Shares in the Name of Another Corporation or a Trustee.
Shares issued in the name of another corporation may be voted by the
president of such corporation, or any other officer or proxy appointed by
such president in the absence of express written notice to the Corporation
of the designation of some other person by the board of directors or by-laws
of such other corporation. Shares in the name of a trustee shall be voted
in the manner designated by a majority of the trustees or their proxy unless
a greater concurrence of trustees is required by the trust, of which the
Corporation shall have actual notice.
<PAGE>
2.13. Adjournments. An annual or special meeting of
shareholders may be adjourned by a vote of a majority of the shares
represented at the meeting entitled to vote in the election of directors,
even if less than a quorum. Upon being reconvened, the adjourned meeting
shall be deemed to be a continuation of the initial meeting. A quorum will
be deemed present if a quorum of shares was represented at the initial
meeting and any business that could be conducted at the initial meeting may
be considered at the adjourned meeting. A meeting may be adjourned at any
time, including after action on one or more matters, and for any purpose,
including, but not limited to, allowing additional time to solicit votes on
one or more matters, to disseminate additional information to shareholders
or to count votes. Notice is not required for an adjourned meeting if the
date, time and place of the adjournment are announced at the meeting before
adjournment. If a new record date for an adjourned meeting is fixed, notice
of the adjourned meeting must be given to persons who are shareholders as of
the new record date. Only those shares entitled to vote at the initial
meeting will be entitled to vote at the adjourned meeting.
2.14. Polling. In the discretion of the chairman of an annual
or special meeting of shareholders, polls may be closed at any time after
commencement of the meeting. When there are several matters to be considered
at a meeting, the polls may remain open during the meeting as to any or all
matters to be considered, as the chairman may declare. Polls will remain
open as to matters to be considered at any adjournment of the meeting unless
the chairman declares otherwise. At the discretion of the chairman, the
polls may remain open after adjournment of a meeting for not more than 72
hours for the purpose of collecting proxies and counting votes. All votes
submitted prior to the announcement of the results of the balloting shall be
valid and counted. The results of balloting shall be final and binding after
announcement of such results.
2.15 Chairman of Meetings. The Chairman of the Board or, in his
absence or inability or refusal to act, the Chairman of the Executive
Committee, shall preside at all meetings of the shareholders.
3. BOARD OF DIRECTORS
3.1. General Powers. All corporate powers shall be exercised
by or under the authority of, and the business and affairs of the Corporation
managed under the direction of, its Board of Directors, subject to any
limitations set forth in the Articles.
<PAGE>
3.2. Number, Tenure and Qualifications. The number of directors
(exclusive of directors, if any, elected by the holders of one or more series
of preferred stock, voting separately as a series pursuant to the provisions
of the Articles applicable thereto) shall not be less than three directors,
the exact number of directors to be determined from time to time by
resolution adopted by affirmative vote of a majority of the entire Board of
Directors then in office. The directors shall be divided into three classes,
designated Class I, Class II and Class III, and the term of directors of each
class shall be three years. Each class shall consist, as nearly as possible,
of one-third of the total number of directors constituting the entire Board
of Directors. If the number of directors is changed by resolution of the
Board of Directors pursuant to this Section 3.2, any increase or decrease
shall be apportioned among the various classes of directors so as to maintain
the number of directors in each class as nearly equal as possible, but in no
case shall a decrease in the number of directors shorten the term of any
incumbent director. A director shall hold office until the annual meeting
for the year in which his term expires and until his successor shall be duly
elected and shall qualify. Directors need not be residents of the State of
Wisconsin or shareholders of the Corporation. No person shall be eligible
to be elected a director at any meeting of shareholders held on or after the
date he attains age seventy-two (72). The Board of Directors, at its
discretion, may waive the age limitation or establish a greater age from time
to time. The Board of Directors, at its discretion, may designate a person
who has served as a director of the Corporation as a "Director Emeritus" upon
such terms and conditions and at such compensation as may be fixed by
resolution of the Board from time to time. A Director Emeritus shall have
the right to attend meetings of the Board of Directors but shall have no vote
and shall not be counted in determining the presence of a quorum.
Notwithstanding the foregoing, whenever the holders of any one
or more classes or series of preferred stock issued by the Corporation shall
have the right, voting separately by class or series, to elect directors at
an annual or special meeting of shareholders, the election, term of office,
filling of vacancies and other features of such directorships shall be
governed by the terms of the Articles applicable thereto. Directors so
elected shall not be divided into classes unless expressly provided by such
Articles, and during the prescribed terms of office of such directors, the
Board of Directors shall consist of such directors in addition to the number
of directors determined as provided in the first paragraph of this Section
3.2.
<PAGE>
3.3. Regular Meeting. A regular meeting of the Board of
Directors shall be held, without other notice, immediately after and at the
same place as the annual meeting of shareholders, and each adjourned session
thereof. The Board of Directors may provide, by resolution, the time and
place for the holding of additional regular meetings without other notice
than such resolution.
3.4. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the Chairman of the Board,
President, Secretary or three-quarters of the members of the Board of
Directors. The person or persons authorized to call special meetings of the
Board of Directors may fix any place either within or without the State of
Wisconsin as the place for holding any special meeting of the Board of
Directors called by them.
3.5. Notice. Notice of meetings of the Board of Directors may
be communicated in person, by telephone, telegraph, teletype, facsimile or
other form of wire or wireless communication or by mail or private carrier.
Notice of meetings, except the regular annual meeting, shall be given at
least 48 hours prior to the time set for the meeting if communicated orally
or by telegraph, teletype, facsimile, other form of wire or wireless
communication or by electronic transmission, and at least 5 days prior to the
date set for the meeting if communicated by any other means. Written notice,
which includes notice by electronic transmission, shall be deemed effective
and given on the earlier of: (a) when received; (b) 2 days after the date
it is deposited in the United States mail, with postage prepaid, when
addressed to the director at an address designated by him or her to receive
such notice or, in the absence of such designation, at his or her business
or home address as they appear in the Corporation's records; (c) the date and
time sent, if transmitted by telegraph, teletype, facsimile or other form of
wire or wireless communication when sent to the director at a location
designated by the director to receive such notice or, in the absence of such
designation, at his or her business or home as those locations appear in the
Corporation's records; (d) the date delivered to a courier or deposited in
a designated receptacle, if sent by private carrier, when addressed to the
director at an address designated by him or her to receive such notice or,
in the absence of such designation, at his or her business or home address
as it appears in the Corporation's records; or (e) when electronically
transmitted. Oral notice shall be deemed effective when communicated.
Whenever any notice whatever is required to be given to any director of the
Corporation under these By-laws, the Articles or under the provisions of any
statute, a waiver thereof in writing, signed at any time whether before or
after the time of meeting, by the director entitled to such notice, shall be
deemed equivalent to timely notice. A director's attendance at, or
participation in, a meeting waives any required notice unless the director
at the beginning of the meeting or promptly upon his or her arrival objects
to holding the meeting or transacting business at the meeting and does not
thereafter vote for or assent to action taken at the meeting. Neither the
business to be transacted at, nor the purpose of, any regular or special
meeting of the Board of Directors need be specified in the notice or waiver
of such meeting.
<PAGE>
3.6. Quorum; Votes. A majority of the number of directors in
accordance with Section 3.2 shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors, but though less than such
quorum is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice. The
affirmative vote of a majority of directors present shall be the act of the
Board of Directors, or a committee of the Board of Directors created under
Section 3.11, unless the Articles or these By-laws require the vote of a
greater number of directors.
3.7. Removal and Resignation. Exclusive of directors, if any,
elected by the holders of one or more classes of preferred stock, no director
of the Corporation may be removed from office except for "Cause" and by the
affirmative vote of two-thirds of the outstanding shares of capital stock of
the Corporation entitled to vote at a meeting of shareholders duly called for
such purpose. As used in this Section 3.7, the term "Cause" shall mean
solely malfeasance arising from the performance of a director's duties which
has a materially adverse effect on the business of the Corporation. A
director may resign at any time by delivering written notice to the Board of
Directors, Chairman of the Board or to the Corporation.
3.8. Vacancies. Any vacancy on the Board of Directors, however
caused, including, without limitation, any vacancy resulting from an increase
in the number of directors, shall be filled by the vote of a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director. Any director so elected to fill any vacancy on the Board of
Directors, including a vacancy created by an increase in the size of the
Board of Directors, shall hold office for the remaining term of directors of
the class to which he has been elected and until his successor shall be
elected and shall qualify.
<PAGE>
3.9. Compensation. The Board of Directors, by affirmative vote
of a majority of the directors then in office, and irrespective of any
personal interest of any of its members, may establish reasonable
compensation of all directors for services to the Corporation as directors
or otherwise, or may delegate such authority to an appropriate committee.
3.10. Presumption of Assent. A director of the Corporation who
is present at a meeting of the Board of Directors or a committee thereof at
which action on any corporate matter is taken shall be presumed to have
assented to the action taken unless: (a) the director objects at the
beginning of the meeting (or promptly upon his arrival) to holding the
meeting or transacting business at the meeting; or (b) the director dissents
or abstains from an action taken and minutes of the meeting are prepared that
show the director's dissent or abstention from the action taken; or (c) the
director delivers written notice of his dissent or abstention to the
presiding officer of the meeting before its adjournment or to the Corporation
immediately after adjournment of the meeting; or (d) the director dissents
or abstains from an action taken, minutes of the meeting are prepared that
fail to show the director's dissent or abstention from the action taken and
the director delivers to the Corporation a written notice of that failure
promptly after receiving the minutes. Such right to dissent shall not apply
to a director who voted in favor of such action.
3.11. Committees. The Board of Directors, by resolution adopted
by the affirmative vote of a majority of the number of directors then in
office, may designate one or more committees, each committee to consist of
two or more directors elected by the Board of Directors. The Board of
Directors may elect one or more of its members as alternate members of any
such committee and such alternate member may take the place of any absent
member or members at any meeting of such committee upon request of the
Chairman of the Board or upon request of the chairman of such meeting.
Unless limited by the Articles, each committee may exercise those aspects of
the authority of the Board of Directors which are within the scope of the
committee's assigned responsibilities or which the Board of Directors
otherwise specifically confers upon such committee; provided, however, that
no committee of the Board may do any of the following:
(a) authorize distributions;
(b) approve or propose to shareholders action that the
WBCL requires be approved by shareholders;
(c) fill vacancies on the Board of Directors or on any of
its committees, unless the Board of Directors has specifically
granted such authority to the committee;
<PAGE>
(d) amend the Articles;
(e) adopt, amend, or repeal these By-laws;
(f) approve a plan of merger not requiring shareholder
approval;
(g) authorize or approve reacquisition of shares, except
according to a formula or method prescribed by the Board of
Directors; or
(h) authorize or approve the issuance or sale or contract
for sale of shares or determine the designation and relative
rights, preferences, and limitations of a class or series of
shares, except that the Board of Directors may authorize a
committee (or a senior executive officer of the Corporation) to
do so within limits specifically prescribed by the Board of
Directors.
3.12. Informal Action Without Meeting. Any action required or
permitted by the Articles or these By-laws or any provision of law to be
taken by the Board of Directors or a committee at a meeting may be taken
without a meeting if the action is taken by all members of the Board of
Directors. The action shall be evidenced by one or more written consents
describing the action taken, signed by each director and retained by the
Corporation.
3.13. Telephonic Meetings. Any or all directors may participate
in a regular or special meeting by, or conduct the meeting through the use
of, any means of communication which allows all directors participating to
simultaneously hear each other during the meeting. In the case of any such
meeting all participating directors must be informed that a meeting is taking
place at which official business may be transacted. A director participating
in a meeting by this means is deemed to be present in person at the meeting.
3.14 Chairman of Meetings. The Chairman of the Board or, in his
absence or inability or refusal to act, the Chairman of the Executive
Committee, shall preside at all meetings of the Board of Directors.
4. OFFICERS
4.1. Number. The principal officers of the Corporation shall
be a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive
Officer, a President, one or more Vice Presidents, any one of whom may be
designated as Executive Vice President, and a Secretary, each of whom shall
be elected by the Board of Directors. Such other officers and assistant
officers as may be deemed necessary may be elected or appointed by the Board
of Directors.
<PAGE>
4.2. Election and Term of Office. The officers of the
Corporation to be elected by the Board of Directors shall be elected annually
by the Board of Directors at the first meeting of the Board of Directors held
after the annual meeting of the shareholders. If the election of officers
shall not be held at such meeting, such election shall be held as soon
thereafter as convenient. Each officer shall hold office until his successor
shall have been duly elected or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided.
4.3. Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors whenever in its
judgment the best interests of the Corporation will be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of
the person so removed. Election or appointment shall not of itself create
contract rights.
4.4. Vacancies. A vacancy in any principal office occurring for
any reason shall be filled by the Board of Directors for the unexpired
portion of the term as soon as reasonably practicable at the convenience of
the Board.
4.5. Chairman of the Board. The Chairman of the Board shall
have such duties as the Board of Directors shall prescribe from time to time.
4.6. Vice Chairman of the Board. The Vice Chairman of the Board
shall be responsible for the administration and management of the areas of
the business and affairs of the Corporation assigned to him from time to time
by the Board of Directors or the Chief Executive Officer.
<PAGE>
4.7. Chief Executive Officer. The Chief Executive Officer shall
be the principal executive officer of the Corporation and, subject to the
control of the Board of Directors, shall have general supervision and control
of the business and affairs of the Corporation and its officers. The Chief
Executive Officer shall have the authority, subject to such rules as may be
prescribed by the Board of Directors, to appoint such agents and employees
of the Corporation as the Chief Executive Officer deems necessary, prescribe
their powers, duties and compensation, and delegate authority to them. Such
agents and employees shall hold offices at the discretion of the Chief
Executive Officer. The Chief Executive Officer shall have authority to sign,
execute and acknowledge, on behalf of the Corporation, all deeds, mortgages,
bonds, stock certificates, contracts, leases, reports and all other documents
or instruments necessary or proper to be executed in the course of the
Corporation's regular business or which shall be authorized by the Board of
Directors. Except as otherwise provided by the WBCL or the Board of
Directors, the Chief Executive Officer may authorize any other officer or
agent of the Corporation to sign, execute and acknowledge such documents or
instruments in his place and stead. In general, the Chief Executive Officer
shall have all authority and perform all duties incident to the office of the
chief executive officer and such other duties as may be prescribed by the
Board of Directors from time to time.
4.8. President. In the absence of the Chief Executive Officer
or in the event of his death, inability or refusal to act, the President
shall perform the duties of the Chief Executive Officer, and when so acting
shall have all the powers and duties of the Chief Executive Officer. In
addition, the President shall be responsible for the administration and
management of the areas of the business and affairs of the Corporation
assigned to him from time to time by the Board of Directors or the Chief
Executive Officer.
4.9. Vice Presidents. One or more of the Vice Presidents may
be designated as Executive Vice President. In the absence of the President
or in the event of his death, inability or refusal to act, the Vice
Presidents in the order designated at the time of their election (or in the
absence of any designation, then in the order of their appointment), shall
perform the duties of the President and when so acting shall have all the
powers of and be subject to all the restrictions upon the President. Any
Vice President may sign with the Secretary or Assistant Secretary
certificates for shares of the Corporation and shall perform such other
duties as from time to time may be assigned to him by the Chief Executive
Officer, the President or the Board of Directors.
<PAGE>
4.10. Secretary. The Secretary shall: (a) keep the minutes of
the shareholders' and of the Board of Directors' meetings in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these By-laws or as required by the WBCL;
(c) be custodian of the corporate records and of the seal of the Corporation
and see that the seal of the Corporation is affixed to all documents, the
execution of which on behalf of the Corporation under its seal is duly
authorized; (d) keep a register of the post office address of each
shareholder which shall be furnished to the Secretary by such shareholder or
delegate that responsibility to a stock transfer agent; (e) sign with the
President or a Vice President certificates for shares of the Corporation, the
issuance of which shall have been authorized by resolution of the Board of
Directors; and (f) in general have all authority and perform all duties
incident to the office of Secretary and such other duties as from time to
time may be assigned to him by the Chief Executive Officer or by the Board
of Directors.
4.11. Assistant Secretaries. The Assistant Secretaries, when
authorized by the Board of Directors, may sign with the President or a Vice
President certificates for shares of the Corporation, the issuance of which
shall have been authorized by a resolution of the Board of Directors. The
Assistant Secretaries, in general, shall have such authority and perform such
duties as shall be assigned to them by the Secretary, the President or the
Board of Directors.
4.12. Salaries. The salaries of the officers shall be fixed
from time to time by the Board of Directors or a committee authorized by the
Board to fix the same and no officer shall be prevented from receiving such
salary by reason of the fact that he is also a director of the Corporation
or a member of such a committee.
4.13. Voting of Stock in Other Corporations. The Board of
Directors by resolution shall from time to time designate one or more persons
who shall vote all stock held by this Corporation in any other corporation,
banking corporation or banking association. Such resolution may designate
such persons in the alternative and may empower them to execute proxies to
vote in their stead. Where time permits, however, the manner in which such
shares shall be voted shall be determined by the Board of Directors of this
Corporation or the appropriate committee thereof while the Board is not in
session.
5. CERTIFICATES FOR SHARES AND THEIR TRANSFER
5.1. Certificates for Shares. Subject to the requirements of
the WBCL, certificates representing shares of the Corporation shall be in
such form as shall be determined by the Board of Directors. Such
certificates shall be signed, either manually or by facsimile, by the
President or a Vice President and by the Secretary or an Assistant Secretary.
All certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be cancelled
and no new certificate shall be issued until the former certificate for a
like number of shares shall have been surrendered and cancelled, except that
in the case of a lost, destroyed or mutilated certificate a new one may be
issued therefor upon such terms and indemnity to the Corporation as the Board
of Directors or the Secretary may prescribe.
<PAGE>
5.2. Transfer of Shares. Transfer of shares of the Corporation
shall be made only on the stock transfer books of the Corporation by the
holder of record thereof or by his legal representative, who shall furnish
proper evidence of authority to transfer, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary
of the Corporation, and on surrender for cancellation of the certificate for
such shares.
5.3. Stock Regulations. The Board of Directors shall have the
power and authority to make all such further rules and regulations not
inconsistent with the WBCL as they may deem expedient concerning the issue,
transfer and registration of certificates representing shares of the
Corporation, including the appointment or designation of one or more stock
transfer agents and one or more stock registrars.
6. EMERGENCY BY-LAWS
Unless the Articles provide otherwise, the following provisions
of this Article 6 shall be effective during an "emergency" which is defined
as a catastrophic event that prevents a quorum of the Corporation's directors
from being readily assembled.
During such emergency:
(a) Any one member of the Board of Directors or any one
of the following officers: Chief Executive Officer, President, any
Vice-President or Secretary, may call a meeting of the Board of
Directors. Notice of such meeting need be given only to those
directors whom it is practicable to reach, and may be given in any
practical manner, including by publication or radio. Such notice shall
be given at least six hours prior to the commencement of the meeting.
(b) One or more officers of the corporation present at the
emergency meeting of the Board of Directors, as is necessary to achieve
a quorum, shall be considered to be directors for the meeting, and
shall so serve in order of rank, and within the same rank, in order of
seniority. In the event that less than a quorum of the directors are
present (including any officers who are to serve as directors for the
meeting), those directors present (including the officers serving as
directors) shall constitute a quorum.
(c) The Board of Directors as constituted in paragraph
(b), and after notice as set forth in paragraph (a), may:
(1) prescribe emergency powers to any officer of
the corporation;
(2) delegate to any officer or director, any of the
powers of the Board of Directors;
<PAGE>
(3) designate lines of succession of officers and
agents, in the event that any of them are unable to
discharge their duties;
(4) relocate the principal place of business, or
designate successive or simultaneous principal places of
business; and
(5) take any other action, convenient, helpful, or
necessary to carry on the business of the corporation.
Corporate action taken in good faith in accordance with this
Article 6 binds the Corporation and may not be used to impose liability on
a corporate director, officer, employee or agent.
7. GENERAL
7.1. Indemnify of Officers and Directors.
(a) Definitions to Indemnification and Insurance
Provisions.
(1) "Director, Officer, Employee or Agent" means
any of the following: (i) a natural person who, is or was a
director, officer, employee or agent of the Corporation; (ii) a
natural person who, while a director, officer, employee or agent
of the Corporation, is or was serving either pursuant to the
Corporation's specific request or as a result of the nature of
such person's duties to the Corporation as a director, officer,
partner, trustee, member of any governing or decision making
committee, employee or agent of another corporation or foreign
corporation, partnership, joint venture, trust or other
enterprise; (iii) a natural person who, while a director,
officer, employee or agent of the Corporation, is or was serving
an employee benefit plan because his or her duties to the
Corporation also impose duties on, or otherwise involve services
by, the person to the plan or to participants in or
beneficiaries of the plan; or (iv) unless the context requires
otherwise, the estate or personal representative of a director,
officer, employee or agent.
(2) "Liability" means the obligation to pay a
judgment, penalty, assessment, forfeiture or fine, including an
excise tax assessed with respect to an employee benefit plan,
the agreement to pay any amount in settlement of a Proceeding
(whether or not approved by a court order), and reasonable
expenses and interest related to the foregoing.
<PAGE>
(3) "Party" means a natural person who was or is,
or who is threatened to be made, a named defendant or respondent
in a Proceeding.
(4) "Proceeding" means any threatened, pending or
completed civil, criminal, administrative or investigative
action, suit, arbitration or other proceeding, whether formal or
informal (including but not limited to any act or failure to act
alleged or determined to have been negligent, to have violated
the Employee Retirement Income Security Act of 1974, or to have
violated Section 180.40 [180.0826, 180.0832 and 180.0833] of the
Wisconsin Statutes, or any successor thereto, regarding improper
dividends, distributions of assets, purchases of shares of the
Corporation, or loans to officers), which involves foreign,
federal, state or local law and which is brought by or in the
right of the Corporation or by any other person or entity, to
which the Director, Officer, Employee or Agent was a party
because he or she is a Director, Officer, Employee or Agent.
(5) "Expenses" means all reasonable fees, costs,
charges, disbursements, attorneys' fees and any other expenses
incurred in connection with the Proceeding.
(b) Indemnification of Officers, Directors, Employees and
Agents.
(1) The Corporation shall indemnify a Director,
Officer, Employee or Agent to the extent he or she has been
successful on the merits or otherwise in the defense of any
Proceeding, for all reasonable Expenses.
(2) In cases not included under subsection (1), the
Corporation shall indemnify a Director, Officer, Employee or
Agent against Liability and Expenses incurred by such person in
a Proceeding unless it shall have been proven by final judicial
adjudication that such person breached or failed to perform a
duty owned to the Corporation which constituted:
<PAGE>
(i) A willful failure to deal fairly with the
Corporation or its shareholders in connection with a
matter in which the Director, Officer, Employee or Agent
has a material conflict of interest;
(ii) A violation of criminal law, unless the
Director, Officer, Employee or Agent had reasonable cause
to believe his or her conduct was lawful or no reasonable
cause to believe his or her conduct was unlawful;
(iii) A transaction from which the Director,
Officer, Employee or Agent derived an improper personal
profit; or
(iv) Willful misconduct.
(c) Determination that Indemnification is Proper.
(1) Unless provided otherwise by a written
agreement between the Director, Officer, Employee or Agent and
the Corporation, determination of whether indemnification is
required under Section (b) shall be made by any method set forth
in Section 180.046 [180.0855] of the Wisconsin Statutes.
(2) A Director, Officer, Employee or Agent who
seeks indemnification under this section shall make a written
request to the Corporation. As a further pre-condition to any
right to receive indemnification, the writing shall contain a
declaration that the Corporation shall have the right to
exercise all rights and remedies available to such Director,
Officer, Employee or Agent against any other person,
corporation, foreign corporation, partnership, joint venture,
trust or other enterprise, arising out of, or related to, the
Proceeding which resulted in the Liability and the Expense for
which such Director, Officer, Employee or Agent is seeking
indemnification, and that the Director, Officer, Employee or
Agent is hereby deemed to have assigned to the Corporation all
such rights and remedies.
(3) Indemnification under subsection (b)(1) shall
be made within 10 days of receipt of a written demand for
indemnification. Indemnification required under subsection
(b)(2) shall be made within 30 days of receipt of a written
demand for indemnification.
<PAGE>
(4) Indemnification under this section is not
required to the extent the Director, Officer, Employee or Agent
has previously received indemnification or allowance of expenses
from any person or entity, including the Corporation, in
connection with the same Proceeding.
(5) Upon written request by a Director, Officer,
Employee or Agent who is a Party to a Proceeding, the
Corporation shall pay or reimburse his or her reasonable
Expenses as incurred if the Director, Officer, Employee or Agent
provides the Corporation with all of the following:
(i) A written affirmation of his or her good
faith belief that he or she is entitled to indemnification
under Article 7.1; and
(ii) A written undertaking, executed
personally or on his or her behalf, to repay all amounts
advanced without interest to the extent that it is
ultimately determined that indemnification under 7.1(b)(2)
is prohibited.
The undertaking under this subsection shall be
accepted without reference to the Director's, Officer's,
Employee's or Agent's ability to repay the allowance. The
undertaking shall be unsecured.
(6) The right to indemnification under this Article
may be amended only by a subsequent vote of not less than two-
thirds of the Corporation's outstanding capital stock entitled
to vote on such matters. Any reduction in the right to
indemnification may only be prospective from the date of such
vote.
(d) Insurance. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is a
Director, Officer, Employee or Agent against any Liability asserted
against or incurred by the individual in any such capacity or arising
out of his status as such, regardless of whether the Corporation is
required or authorized to indemnify or allow Expenses to the individual
under this section.
<PAGE>
(e) Severability. The provisions of this Article shall
not apply in any circumstance where a court of competent jurisdiction
determines that indemnification would be invalid as against public
policy.
8. AMENDMENT
These By-laws may be amended, altered or repealed, and new
By-laws may be enacted, only by the affirmative vote of not less than two-
thirds of the outstanding shares of capital stock of the Corporation entitled
to vote at a meeting of shareholders duly called for such purpose, upon a
proposal adopted by the Board of Directors, or by a vote of not less than
three-quarters of the entire Board of Directors then in office; provided,
however, that no By-law hereafter adopted, amended or repealed by the
shareholders as provided herein shall thereafter be enacted, amended or
repealed by the directors unless such action by the shareholders shall
expressly confer upon the directors authority to thereafter enact, amend or
repeal such By-law as so amended, and; provided, further, that any By-law
adopted, repealed or amended by the Board of Directors as provided herein
shall be subject to reenactment, repeal or amendment by the shareholders
acting at any meeting of the shareholders in accordance with the terms
hereof.
Updated through 05/09/2000
<PAGE>
EXHIBIT 12
<PAGE>
MARSHALL & ILSLEY CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
($000's)
<TABLE>
<CAPTION>
Three
Months
Ended Years Ended December 31,
March 31, ---------------------------------------------------------------
2000 1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Earnings before income taxes, extraordinary
items and cumulative effect of changes
in accounting principles $ 136,499 $ 527,939 $ 465,285 $ 388,172 $ 317,949 $ 312,938
Fixed charges, excluding interest on deposits 77,109 222,172 206,546 175,609 126,261 119,412
----------- ----------- ----------- ----------- ----------- -----------
Earnings including fixed charges but
excluding interest on deposits 213,608 750,111 671,831 563,781 444,210 432,350
Interest on deposits 172,578 585,864 564,540 460,418 392,473 363,488
----------- ----------- ----------- ----------- ----------- -----------
Earnings including fixed charges and
interest on deposits $ 386,186 $ 1,335,975 $ 1,236,371 $ 1,024,199 $ 836,683 $ 795,838
=========== =========== =========== =========== =========== ===========
Fixed Charges:
Interest Expense:
Short-term borrowings $ 57,039 $ 142,294 $ 126,624 $ 111,193 $ 63,892 $ 48,390
Long-term borrowings 15,887 63,145 66,810 54,175 53,615 63,701
One-third of rental expense for all operating
leases (the amount deemed representative
of the interest factor) 4,183 16,733 13,112 10,241 8,754 7,321
----------- ----------- ----------- ----------- ----------- -----------
Fixed charges excluding interest on deposits 77,109 222,172 206,546 175,609 126,261 119,412
Interest on deposits 172,578 585,864 564,540 460,418 392,473 363,488
----------- ----------- ----------- ----------- ----------- -----------
Fixed charges including interest on deposits $ 249,687 $ 808,036 $ 771,086 $ 636,027 $ 518,734 $ 482,900
=========== =========== =========== =========== =========== ===========
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits 2.77 x 3.38 x 3.25 x 3.21 x 3.52 x 3.62 x
Including interest on deposits 1.55 x 1.65 x 1.60 x 1.61 x 1.61 x 1.65 x
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 674,604
<INT-BEARING-DEPOSITS> 170,034
<FED-FUNDS-SOLD> 64,655
<TRADING-ASSETS> 43,342
<INVESTMENTS-HELD-FOR-SALE> 4,306,051
<INVESTMENTS-CARRYING> 1,160,104
<INVESTMENTS-MARKET> 1,130,123
<LOANS> 16,965,521
<ALLOWANCE> 232,471
<TOTAL-ASSETS> 24,921,388
<DEPOSITS> 17,068,321
<SHORT-TERM> 4,169,689
<LIABILITIES-OTHER> 568,334
<LONG-TERM> 1,038,184
0
336
<COMMON> 112,757
<OTHER-SE> 1,963,768
<TOTAL-LIABILITIES-AND-EQUITY> 24,921,388
<INTEREST-LOAN> 326,478
<INTEREST-INVEST> 84,337
<INTEREST-OTHER> 3,810
<INTEREST-TOTAL> 414,625
<INTEREST-DEPOSIT> 172,578
<INTEREST-EXPENSE> 245,504
<INTEREST-INCOME-NET> 169,121
<LOAN-LOSSES> 5,819
<SECURITIES-GAINS> 14,765
<EXPENSE-OTHER> 257,106
<INCOME-PRETAX> 136,499
<INCOME-PRE-EXTRAORDINARY> 90,582
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 90,582
<EPS-BASIC> 0.86
<EPS-DILUTED> 0.83
<YIELD-ACTUAL> 3.17
<LOANS-NON> 111,642
<LOANS-PAST> 9,334
<LOANS-TROUBLED> 688
<LOANS-PROBLEM> 121,664
<ALLOWANCE-OPEN> 225,862
<CHARGE-OFFS> 2,844
<RECOVERIES> 3,634
<ALLOWANCE-CLOSE> 232,471
<ALLOWANCE-DOMESTIC> 232,471
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
