MILWAUKEE, April 17 /PRNewswire-FirstCall/ — Marshall & Ilsley Corporation (NYSE:MI) today reported 2007 first quarter core operating income of $218.1 million, or $0.83 per share, as compared to $186.8 million, or $0.78 per share, in the first quarter of 2006, an increase of 16.8 percent. The Corporation reported 2007 first quarter net income of $216.8 million, or $0.83 per share, as compared to $173.1 million, or $0.72 per share, in the first quarter of 2006. The $1.3 million difference between core operating income and net income as reported for the first quarter of 2007 reflects the costs associated with the transaction to separate Metavante and M&I that was announced on April 3, 2007. The $13.7 million difference between core operating income and net income as reported for the first quarter of 2006 reflects the charge for certain interest rate swaps due to a change in the interpretation of certain accounting rules as announced in October 2006.
During the first quarter of 2007, the Corporation realized $9.6 million in pre-tax gains which includes $8.0 million related to Metavante’s investment in Firstsource. The impact of these gains was largely offset by a $9.5 million charge related to the Corporation’s 7.65% Trust Preferred Securities that were called during the first quarter.
Return on average assets based on core operating income for the first quarter was 1.56 percent, as compared to 1.62 percent for the same period in 2006. Return on average equity based on core operating income was 14.13 percent this quarter as compared to 15.67 percent for the first quarter of 2006.
The Corporation’s provision for loan and lease losses was $17.1 million in the first quarter of 2007, versus $11.0 million in the same period last year. Net charge-offs for the period were $14.7 million, or 0.14 percent of total average loans and leases outstanding this quarter, and $6.0 million a year ago or 0.07 percent of total average loans and leases. At March 31, 2007, the allowance for loan and lease losses was 1.00 percent of total loans and leases, compared to 1.05 percent a year earlier. Nonperforming loans and leases were 0.83 percent of total loans and leases at March 31, 2007, compared to 0.42 percent at March 31, 2006.
Assets at March 31, 2007 were $56.5 billion, compared to $47.4 billion at March 31, 2006. Book value per share was $24.90 at March 31, 2007, compared to $20.75 for the same date a year ago. Total loans and leases were $42.3 billion, compared to $35.2 billion at March 31, 2006.
Marshall & Ilsley Corporation (NYSE:MI) is a diversified financial services corporation headquartered in Milwaukee, Wis., with $56.5 billion in assets. Founded in 1847, M&I Marshall & Ilsley Bank is the largest Wisconsin- based bank, with 193 offices throughout the state. In addition, M&I has 47 locations throughout Arizona; 30 offices along Florida’s west coast and central Florida; 17 offices in Kansas City and nearby communities; 17 offices in metropolitan Minneapolis/St. Paul, and one in Duluth, Minn.; three offices in Tulsa, Okla.; and one office in Las Vegas, Nev. M&I’s Southwest Bank subsidiary has 16 offices in the greater St. Louis area. Metavante Corporation, a wholly owned subsidiary, provides a full array of technology products and services for the financial services industry. On April 3, 2007, Marshall & Ilsley Corporation announced its plans to split Metavante Corporation and Marshall & Ilsley Corporation into independent publicly traded companies. M&I also provides trust and investment management, equipment leasing, mortgage banking, asset-based lending, financial planning, investments, and insurance services from offices throughout the country and on the Internet ( http://www.mibank.com/ or http://www.micorp.com/ ). M&I’s customer-based approach, internal growth, and strategic acquisitions have made M&I a nationally recognized leader in the financial services industry.
This press release contains forward-looking statements concerning M&I’s future operations and financial results. Such statements are subject to important factors that could cause M&I’s actual results to differ materially from those anticipated by the forward-looking statements. These factors include (i) the factors identified in M&I’s Annual Report on Form 10-K for the year ended December 31, 2006 under the heading “Forward-Looking Statements” which factors are incorporated herein by reference, and (ii) such other factors as may be described from time to time in M&I’s SEC filings.
This press release contains non-GAAP financial measures for the three months ended March 31, 2007 and 2006, as a supplement to the Corporation’s GAAP financial results. The Corporation believes that these non-GAAP financial measures are useful because they allow investors to assess, on a consistent basis, the Corporation’s core operating performance, exclusive of items which management believes are not indicative of the operations of the Corporation such as the change in the accounting for derivatives and the costs associated with the transaction to separate Metavante and M&I that was announced on April 3, 2007. Management uses such non-GAAP financial measures to evaluate financial results and to establish operational goals. These non-GAAP financial measures should be considered a supplement to, and not as a substitute for, financial measures prepared in accordance with GAAP. For a reconciliation of non-GAAP financial measures to the comparable financial measures calculated in accordance with GAAP, please see the reconciliation table included in the attachment to this press release.
Note:
Marshall & Ilsley Corporation will hold a conference call at 11:00 a.m. Central Daylight Time Tuesday, April 17, regarding first quarter earnings. For those interested in listening, please call 1-888-711-1825 and ask for M&I’s quarterly earnings release conference call. If you are unable to join us at this time, a replay of the call will be available beginning at 2:30 p.m. on April 17 and will run through 5:00 p.m. April 24, by calling 1-800-642-1687 and entering pass code 138 09 19 to listen.
Supplemental financial information referenced in the conference call can be found at http://www.micorp.com/ , Investor Relations, after 8:00 a.m. on April 17.
Marshall & Ilsley Corporation
Financial Information
(unaudited)Three Months Ended
March 31, Percent
2007 2006 Change
PER SHARE DATA
Diluted:
Core Operating Income $0.83 $0.78 6.4 %
Net Income 0.83 0.72 15.3Basic:
Core Operating Income 0.85 0.79 7.6
Net Income 0.85 0.74 14.9Dividend Declared 0.27 0.24 12.5
Book Value 24.90 20.75 20.0
Shares Outstanding (millions):
Average – Diluted 261.3 240.3 8.7
End of Period 256.8 236.1 8.8INCOME STATEMENT ($millions)
Net Interest Income (FTE) $397.4 $333.0 19.3 %
Provision for Loan and Lease
Losses 17.1 11.0 56.0Data Processing Services 356.4 343.0 3.9
Wealth Management 60.7 52.8 15.0
Service Charge on Deposits 25.9 22.5 14.8
Mortgage Banking 10.1 12.9 -21.6
Net Investment Securities Gains 1.6 1.1 40.2
Net Gains Related to
Firstsource 8.0 – n.m.
All Other 44.4 39.9 11.6
Total Non-Interest Revenues 507.1 472.2 7.4Salaries and Employee
Benefits 297.1 277.4 7.1
Occupancy and Equipment 59.3 57.8 2.6
Intangible Amortization 11.3 8.9 27.1
Other 183.8 161.0 14.1
Total Non-Interest Expenses 551.5 505.1 9.2Tax Equivalent Adjustment 7.1 7.9 -11.0
Pre-Tax Core Operating Earnings 328.8 281.2 16.9
Income Taxes 110.7 94.4 17.3Core Operating Income $218.1 $186.8 16.8 %
Metavante Transaction Costs, net
of tax (1.3) – n.m.
Derivative Loss – Discontinued
Hedges, net of tax – (13.7) n.m.Net Income $216.8 $173.1 25.2 %
KEY RATIOS
Net Interest Margin (FTE) / Avg.
Earning Assets 3.23 % 3.26 %
Interest Spread (FTE) 2.60 2.68Based on Core Operating Activities
Efficiency Ratio 61.0 62.8
Efficiency Ratio without
Metavante 50.5 48.8
Return on Assets 1.56 1.62
Return on Equity 14.13 15.67Equity / Assets (End of Period) 11.24 10.27
Marshall & Ilsley Corporation
Financial Information
(unaudited)
As of March 31, Percent
2007 2006 Change
ASSETS ($millions)
Cash & Due From Banks $1,085 $1,017 6.7 %
Trading Securities 117 40 190.5
Short – Term Investments 182 159 14.2
Investment Securities 7,530 6,627 13.6
Loans and Leases:
Commercial Loans & Leases 12,818 10,734 19.4
Commercial Real Estate 14,391 10,736 34.0
Residential Real Estate 9,308 7,508 24.0
Home Equity Loans & Lines 4,213 4,606 -8.5
Personal Loans and Leases 1,525 1,652 -7.7
Total Loans and Leases 42,255 35,236 19.9
Reserve for Loan & Leases Losses (423) (369) 14.7
Premises and Equipment, net 576 500 15.1
Goodwill and Intangibles 3,245 2,484 30.7
Other Assets 1,964 1,671 17.7
Total Assets $56,531 $47,365 19.4 %LIABILITIES & SHAREHOLDERS’ EQUITY
($millions)
Deposits:
Noninterest Bearing $5,392 $5,000 7.8 %
Bank Issued Interest Bearing
Activity 12,798 10,577 21.0
Bank Issued Time 8,223 5,774 42.4
Total Bank Issued Deposits 26,413 21,351 23.7
Wholesale Deposits 6,222 6,748 -7.8
Total Deposits 32,635 28,099 16.1
Short – Term Borrowings 8,661 5,553 56.0
Long – Term Borrowings 7,314 7,186 1.8
Other Liabilities 1,567 1,664 -5.8
Shareholders’ Equity 6,354 4,863 30.7
Total Liabilities &
Shareholders’ Equity $56,531 $47,365 19.4 %Three Months Ended
March 31, Percent
2007 2006 Change
AVERAGE ASSETS ($millions)
Cash & Due From Banks $1,042 $980 6.3 %
Trading Securities 41 34 20.8
Short – Term Investments 277 316 -12.2
Investment Securities 7,441 6,320 17.7
Loans and Leases:
Commercial Loans & Leases 12,677 10,370 22.2
Commercial Real Estate 14,416 10,581 36.3
Residential Real Estate 9,162 7,275 25.9
Home Equity Loans and Lines 4,295 4,706 -8.7
Personal Loans and Leases 1,557 1,747 -10.9
Total Loans and Leases 42,107 34,679 21.4
Reserve for Loan & Leases
Losses (424) (368) 15.0
Premises and Equipment, net 575 496 15.8
Goodwill and Intangibles 3,244 2,496 30.0
Other Assets 2,209 1,827 20.8
Total Assets $56,512 $46,780 20.8 %Memo:
Average Earning Assets $49,866 $41,349
Average Earning Assets Excluding
Investment Securities
Unrealized Gains/Losses $49,915 $41,403AVG LIABILITIES & SHAREHOLDERS’
EQUITY ($millions)
Deposits:
Noninterest Bearing $5,319 $4,942 7.6 %
Bank Issued Interest Bearing
Activity 12,635 10,464 20.7
Bank Issued Time 8,233 5,544 48.5
Total Bank Issued Deposits 26,187 20,950 25.0
Wholesale Deposits 6,371 6,529 -2.4
Total Deposits 32,558 27,479 18.5
Short – Term Borrowings 4,249 3,371 26.0
Long – Term Borrowings 11,624 9,404 23.6
Other Liabilities 1,823 1,712 6.5
Shareholders’ Equity 6,258 4,814 30.0
Total Liabilities &
Shareholders’ Equity $56,512 $46,780 20.8 %Memo:
Average Interest Bearing
Liabilities $43,112 $35,312Marshall & Ilsley Corporation
Financial Information
(unaudited)
Three Months Ended
March 31, Percent
2007 2006 Change
CREDIT QUALITY (a)Net Charge-Offs ($millions) $14.7 $6.0 144.4 %
Net Charge-Offs / Average Loans &
Leases 0.14 % 0.07 %
Loan and Lease Loss Reserve
($millions) $423.1 $368.8 14.7 %
Loan and Lease Loss Reserve /
Period-End Loans & Leases 1.00 % 1.05 %
Non-Performing Loans & Leases (NPL)
($millions) $351.7 $149.1 135.8 %
NPL’s / Period-End Loans & Leases 0.83 % 0.42 %
Loan and Lease Loss Reserve / Non-
Performing Loans & Leases 120 % 247 %MARGIN ANALYSIS (b)
Loans and Leases:
Commercial Loans & Leases 7.62 % 6.91 %
Commercial Real Estate 7.60 6.94
Residential Real Estate 7.32 6.85
Home Equity Loans and Lines 7.55 6.98
Personal Loans and Leases 7.83 6.77
Total Loans and Leases 7.55 6.91
Investment Securities 5.34 5.17
Short – Term Investments 5.03 4.22
Interest Income (FTE) / Avg.
Interest Earning Assets 7.20 % 6.62 %
Interest Bearing Deposits:
Bank Issued Interest Bearing
Activity 3.58 % 2.89 %
Bank Issued Time 4.84 3.90
Total Bank Issued Deposits 4.08 3.24
Wholesale Deposits 5.10 4.40
Total Interest Bearing Deposits 4.32 3.58
Short – Term Borrowings 5.24 4.73
Long – Term Borrowings 5.02 4.51
Interest Expense / Avg. Interest
Bearing Liabilities 4.60 % 3.94 %
Net Interest Margin(FTE) / Avg.
Earning Assets 3.23 % 3.26 %
Interest Spread (FTE) 2.60 % 2.68 %Notes:
(a) Includes Loans past due 90 days or more.
(b) Based on average balances excluding fair value adjustments for
available for sale securities.Reconciliation of Core Operating
Income to Net IncomeThree Months Ended
March 31, 2007 March 31, 2006
Amount Per Amount Per
($ in Diluted ($ in Diluted
millions) Share millions) Share
Total Non-Interest Revenues
(Core Operating) $472.2
Derivative Loss –
Discontinued Hedges (21.3)
Total Non-Interest Revenues
(GAAP) $450.9Total Non-Interest Expenses
(Core Operating) $551.5
Metavante Transaction Costs 1.5
Total Non-Interest Expenses
(GAAP) $553.0Pre-Tax Core Operating Earnings $328.8 $281.2
Metavante Transaction Costs (1.5) –
Derivative Loss –
Discontinued Hedges – (21.3)
Pre-Tax Earnings (GAAP) $327.3 $259.9Income Taxes – Core Operating
Income $110.7 $94.4
Tax Benefit on Metavante
Transaction Costs (0.2) –
Tax Benefit on Derivative
Loss – Discontinued Hedges – (7.6)
Income Taxes (GAAP) $110.5 $86.8Core Operating Income $218.1 $0.83 $186.8 $0.78
Metavante Transaction
Costs, net of tax (1.3) – – –
Derivative Loss –
Discontinued Hedges, net
of tax – – (13.7) (0.06)
Net Income (GAAP) $216.8 $0.83 $173.1 $0.72Average Shareholders’ Equity
Core Operating Activities $4,833
Cumulative Derivative
Adjustments – Discontinued
Hedges, net of tax (19)
Average Shareholders’ Equity
(GAAP) $4,814Based on GAAP
Efficiency Ratio 61.1 % 64.5 %
Efficiency Ratio without
Metavante 50.7 51.1
Return on Assets 1.56 1.50
Return on Equity 14.05 14.58
First Call Analyst:
FCMN Contact: sara.schmitz@micorp.com
Source: Marshall & Ilsley Corporation
