MILWAUKEE, Jan. 16 /PRNewswire-FirstCall/ — Marshall & Ilsley Corporation (NYSE:MI) today reported 2006 fourth quarter core operating income of $218.4 million, or $0.84 per share, as compared to $177.5 million, or $0.74 per share, in the fourth quarter of 2005, an increase of 23.1%, or 13.5% on a per share basis. The Corporation reported 2006 fourth quarter net income of $205.4 million, or $0.79 per share. The $0.05 per share difference between core operating income and net income as reported reflects the charge for the termination of certain interest rate swaps due to a change in the interpretation of certain accounting rules as announced in October.
Core operating income for the year ended December 31, 2006, was $819.8 million, or $3.22 per share, as compared to $706.2 million, or $2.99 per share in 2005, which included a net increase of $.08 per share related to realized gains on venture capital investments. Without these items, earnings per share would have been $2.91 for the year ended December 31, 2005, representing an increase in 2006 of 10.7%. Net income for the year ended December 31, 2006, was $807.8 million, or $3.17 per share.
Return on average assets based on core operating income for the fourth quarter and full year of 2006 was 1.56 percent, respectively. By comparison, the return on average assets based on net income for the fourth quarter and full year of 2005 was 1.56 and 1.63 percent, respectively. Return on equity based on core operating income was 14.27 percent this quarter, as compared to 15.06 percent for the fourth quarter of 2005.
The Corporation’s provision for loan losses was $18.3 million in the fourth quarter of 2006, versus $13.0 million in the same period last year. Net charge-offs for the period were $15.0 million, or 0.14 percent of total average loans outstanding this quarter, and $11.5 million a year ago, or 0.14 percent of total average loans. At December 31, 2006, the allowance for loan losses was 1.00 percent of total loans, compared to 1.06 percent a year earlier. Nonperforming loans were 0.64 percent of total loans at December 31, 2006, and 0.41 percent at December 31, 2005.
Assets at year-end were $56.2 billion, compared to $46.2 billion at the end of 2005. Book value per share was $24.24 at December 31, 2006, compared to $20.27 for the same date a year ago. Total loans were $41.9 billion, compared to $34.2 billion at December 31, 2005.
All “per share” references in this press release are references to diluted earnings per share.
Marshall & Ilsley Corporation (NYSE:MI) is a diversified financial services corporation headquartered in Milwaukee, Wis., with $56.2 billion in assets. Founded in 1847, M&I Marshall & Ilsley Bank is the largest Wisconsin- based bank with 195 offices throughout the state. In addition, M&I has 46 locations throughout Arizona; 17 offices in Kansas City and nearby communities; 17 offices on Florida’s west coast; 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 15 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. 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, 2005 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 and year ended December 31, 2006 and for the year ended December 31, 2005, 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. 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 Standard Time Tuesday, January 16, regarding fourth quarter earnings. For those interested in listening, please call 1-800-967-7185 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 run will be available beginning at 2:30 p.m. on January 16 and will run through 5:00 p.m. January 23, by calling 1-888-203-1112 and entering pass code 487 53 06. Supplemental financial information referenced in the conference call can be found at http://www.micorp.com/ , Investor Relations, after 8:30 a.m. on January 16.
Marshall & Ilsley Corporation
Financial Information
(unaudited)Three Months Ended Twelve Months Ended
December December December December
31, 31, Percent 31, 31, Percent
2006 2005 Change 2006 2005 Change
PER SHARE DATA
Diluted:
Core Operating
Income $0.84 $0.74 13.5% $3.22 $2.99 7.7%
Net Income 0.79 0.74 6.8 3.17 2.99 6.0Basic:
Core Operating
Income 0.86 0.76 13.2 3.29 3.06 7.5
Net Income 0.81 0.76 6.6 3.24 3.06 5.9Dividend Declared 0.27 0.24 12.5 1.05 0.93 12.9
Book Value 24.24 20.27 19.6 24.24 20.27 19.6
Shares Outstanding
(millions):
Average –
Diluted 260.5 239.6 8.7 254.6 236.0 7.9
End of Period 255.5 235.4 8.5 255.5 235.4 8.5INCOME STATEMENT ($millions)
Net Interest
Income (FTE) $402.3 $339.8 18.4% $1,520.4 $1,298.6 17.1%
Provision for
Loan and Lease
Losses 18.3 13.0 40.8 50.6 44.8 12.9Data Processing
Services 355.2 323.8 9.7 1,382.7 1,185.1 16.7
Wealth Management 57.9 48.2 20.1 221.6 191.7 15.6
Service Charge on
Deposits 26.3 23.3 12.9 99.6 94.0 6.0
Mortgage Banking 12.1 14.6 -17.1 52.4 50.5 3.8
Net Investment
Securities Gains 3.1 2.9 6.9 9.7 45.5 -78.7
All Other 48.1 36.5 31.8 167.9 149.5 12.3
Total Non-Interest
Revenues (Core
Operating 2006) 502.7 449.3 11.9 1,933.9 1,716.3 12.7Salaries and
Employee
Benefits 311.3 282.7 10.1 1,210.1 1,074.7 12.6
Occupancy and
Equipment 60.6 56.8 6.7 244.0 215.6 13.2
Intangible
Amortization 12.3 8.8 39.8 45.4 31.1 46.0
Other 179.3 157.3 14.0 660.0 557.7 18.3
Total Non-Interest
Expenses 563.5 505.6 11.5 2,159.5 1,879.1 14.9Tax Equivalent
Adjustment 7.1 8.2 -13.4 30.1 33.3 -9.6
Pre-Tax Core
Operating
Earnings 316.1 262.3 20.5 1,214.1 1,057.7 14.8
Income Taxes (Core
Operating Income
2006) 97.7 84.8 15.2 394.3 351.5 12.2Core Operating
Income $218.4 $177.5 23.1% $819.8 $706.2 16.1%Derivative Loss
– Discontinued
Hedges, net of
tax (13.0) 0.0 n.m. (12.0) 0.0 n.m.Net Income $205.4 $177.5 15.7% $807.8 $706.2 14.4%
KEY RATIOS
Net Interest
Margin (FTE) /
Avg. Earning
Assets 3.25% 3.38% 3.27% 3.40%
Interest Spread
(FTE) 2.61 2.82 2.66 2.93Based on Core
Operating
Activities (2006)
Efficiency Ratio 62.2 64.1 62.6 62.6
Efficiency Ratio
without Metavante 50.6 51.5 50.8 50.7
Return on Assets 1.56 1.56 1.56 1.63
Return on Equity 14.27 15.06 14.58 16.21Equity / Assets
(End of Period) 10.94 10.25 10.94 10.25Marshall & Ilsley Corporation
Financial Information
(unaudited)As of
December December
31, 31, Percent
2006 2005 Change
ASSETS ($millions)
Cash & Due From
Banks $1,248 $1,155 8.1%
Trading Securities 36 30 20.0
Short – Term
Investments 256 300 -14.7
Investment
Securities 7,473 6,320 18.2
Loans and Leases:
Commercial Loans
& Leases 12,587 10,066 25.0
Commercial Real
Estate 14,351 10,421 37.7
Residential
Real Estate 9,032 7,096 27.3
Home Equity
Loans & Lines 4,342 4,834 -10.2
Personal Loans
and Leases 1,623 1,750 -7.3
Total Loans and
Leases 41,935 34,167 22.7
Reserve for Loan
& Leases Losses (421) (364) 15.7
Premises and
Equipment, net 572 491 16.5
Goodwill and
Intangibles 3,212 2,461 30.5
Other Assets 1,919 1,653 16.1
Total Assets $56,230 $46,213 21.7%LIABILITIES & SHAREHOLDERS’ EQUITY ($millions)
Deposits:
Noninterest
Bearing $6,113 $5,525 10.6%
Bank Issued
Interest
Bearing
Activity 12,924 10,530 22.7
Bank Issued
Time 8,108 5,279 53.6
Total Bank
Issued
Deposits 27,145 21,334 27.2
Wholesale
Deposits 6,939 6,340 9.4
Total Deposits 34,084 27,674 23.2
Short – Term
Borrowings 6,425 5,627 14.2
Long – Term
Borrowings 8,026 6,669 20.3
Other Liabilities 1,544 1,508 2.4
Shareholders’
Equity 6,151 4,735 29.9
Total Liabilities
& Shareholders’
Equity $56,230 $46,213 21.7%Three Months Ended Twelve Months Ended
December December December December
31, 31, Percent 31, 31, Percent
2006 2005 Change 2006 2005 Change
AVERAGE ASSETS ($millions)
Cash & Due
From Banks $1,045 $1,012 3.3% $1,024 $966 6.0%
Trading Securities 44 33 33.3 46 27 70.4
Short – Term
Investments 223 216 3.2 303 237 27.8
Investment
Securities 7,333 6,256 17.2 6,992 6,183 13.1
Loans and Leases:
Commercial Loans
& Leases 12,338 9,761 26.4 11,691 9,394 24.5
Commercial Real
Estate 14,278 10,414 37.1 13,139 9,989 31.5
Residential Real
Estate 8,844 6,717 31.7 8,130 5,752 41.3
Home Equity
Loans and Lines 4,387 4,822 -9.0 4,540 4,988 -9.0
Personal Loans
and Leases 1,591 1,688 -5.7 1,628 1,653 -1.5
Total Loans and
Leases 41,438 33,402 24.1 39,128 31,776 23.1
Reserve for Loan
& Leases Losses (420) (365) 15.1 (406) (363) 11.8
Premises and
Equipment, net 570 478 19.2 551 458 20.3
Goodwill and
Intangibles 3,216 2,425 32.6 3,008 2,261 33.0
Other Assets 2,053 1,792 14.6 2,005 1,739 15.3
Total Assets $55,502 $45,249 22.7% $52,651 $43,284 21.6%Memo:
Average Earning
Assets $49,038 $39,907 $46,469 $38,223
Average Earning
Assets Excluding
Investment
Securities
Unrealized
Gains/Losses $49,094 $39,945 $46,555 $38,218AVG LIABILITIES & SHAREHOLDERS’ EQUITY ($millions)
Deposits:
Noninterest
Bearing $5,526 $5,195 6.4% $5,336 $4,943 8.0%
Bank Issued
Interest Bearing
Activity 12,516 10,349 20.9 11,668 10,027 16.4
Bank Issued
Time 8,111 5,057 60.4 7,329 4,410 66.2
Total Bank
Issued
Deposits 26,153 20,601 26.9 24,333 19,380 25.6
Wholesale
Deposits 6,984 6,723 3.9 7,256 6,721 8.0
Total Deposits 33,137 27,324 21.3 31,589 26,101 21.0
Short – Term
Borrowings 4,091 2,563 59.6 3,638 2,926 24.3
Long – Term
Borrowings 10,452 8,936 17.0 10,072 8,193 22.9
Other Liabilities 1,772 1,751 1.2 1,751 1,707 2.6
Shareholders’
Equity 6,050 4,675 29.4 5,601 4,357 28.6
Total Liabilities
& Shareholders’
Equity $55,502 $45,249 22.7% $52,651 $43,284 21.6%Memo:
Average Interest
Bearing
Liabilities $42,154 $33,628 $39,963 $32,277Marshall & Ilsley Corporation
Financial Information
(unaudited)Three Months Ended Twelve Months Ended
December December December December
31, 31, Percent 31, 31, Percent
2006 2005 Change 2006 2005 Change
CREDIT QUALITY (a)
Net Charge-Offs
($millions) $15.0 $11.5 30.4% $39.0 $39.1 -0.3%
Net Charge-Offs /
Average Loans &
Leases 0.14% 0.14% 0.10% 0.12%
Loan and Lease
Loss Reserve
($millions) $420.6 $363.8 15.6% $420.6 $363.8 15.6%
Loan and Lease
Loss Reserve /
Period-End Loans
& Leases 1.00% 1.06% 1.00% 1.06%
Non-Performing
Loans & Leases
(NPL) ($millions) $268.0 $140.6 90.6% $268.0 $140.6 90.6%
NPL’s / Period-End
Loans & Leases 0.64% 0.41% 0.64% 0.41%
Loan and Lease
Loss Reserve /
Non-Performing
Loans & Leases 157% 259% 157% 259%MARGIN ANALYSIS (b)
Loans and Leases:
Commercial Loans
& Leases 7.58% 6.62% 7.38% 6.06%
Commercial Real
Estate 7.60 6.65 7.41 6.27
Residential Real
Estate 7.19 6.47 7.05 6.13
Home Equity Loans
and Lines 7.47 6.64 7.28 6.28
Personal Loans
and Leases 7.57 6.44 7.22 6.05
Total Loans
and Leases 7.49 6.59 7.30 6.17
Investment
Securities 5.21 5.00 5.20 5.01
Short – Term
Investments 4.95 3.89 4.81 3.38
Interest Income
(FTE) / Avg.
Interest Earning
Assets 7.13% 6.33% 6.97% 5.97%
Interest Bearing
Deposits:
Bank Issued
Interest Bearing
Activity 3.55% 2.49% 3.31% 1.92%
Bank Issued Time 4.72 3.65 4.40 3.21
Total Bank Issued
Deposits 4.01 2.87 3.73 2.31
Wholesale
Deposits 5.07 3.64 4.82 3.14
Total Interest
Bearing Deposits 4.28 3.10 4.03 2.58
Short – Term
Borrowings 5.30 4.34 5.14 3.63
Long – Term
Borrowings 4.86 4.26 4.73 4.03
Interest Expense /
Avg. Interest
Bearing
Liabilities 4.52% 3.51% 4.31% 3.04%
Net Interest Margin
(FTE) / Avg.
Earning Assets 3.25% 3.38% 3.27% 3.40%
Interest Spread
(FTE) 2.61% 2.82% 2.66% 2.93%Notes:
(a) Includes Loans past due 90 days or more.
(b) Based on average balances excluding fair value adjustments for
available for sale securities.Reconciliation of Core
Operating Income to
Net IncomeThree Months Ended Twelve Months Ended
December 31, 2006 December 31, 2006
Per Per
Amount Diluted Amount Diluted
($ in millions) Share ($ in millions) ShareTotal Non-Interest
Revenues (Core
Operating) $502.7 $1,933.9
Derivative Loss
– Discontinued
Hedges (20.2) (18.5)
Total Non-Interest
Revenues (GAAP) $482.5 $1,915.4Pre-Tax Core
Operating
Earnings $316.1 $1,214.1
Derivative Loss
– Discontinued
Hedges (20.2) (18.5)
Pre-Tax Earnings
(GAAP) $295.9 $1,195.6Income Taxes – Core
Operating Income $97.7 $394.3
Tax Benefit on
Derivative Loss
– Discontinued
Hedges (7.2) (6.5)
Income Taxes (GAAP) $90.5 $387.8Core Operating
Income $218.4 $0.84 $819.8 $3.22
Derivative Loss
– Discontinued
Hedges, net of
tax (13.0) (0.05) (12.0) (0.05)
Net Income (GAAP) $205.4 $0.79 $807.8 $3.17Average
Shareholders’
Equity Core
Operating
Activities $6,074 $5,624
Cumulative
Derivative
Adjustments –
Discontinued
Hedges, net of
tax (24) (23)
Average
Shareholders’
Equity (GAAP) $6,050 $5,601Based on GAAP
Efficiency Ratio 63.6% 62.9%
Efficiency Ratio
without Metavante 52.5 51.3
Return on Assets 1.47 1.53
Return on Equity 13.47 14.42Reconciliation of Net Income
to Income as Adjusted
Twelve Months Ended
December 31, 2005
Per
Amount Diluted
($ in millions) Share
Net Income $706.2 $2.99
Adjustments (Net of Tax)
Realized Gain
Venture Capital
Investments 18.2 0.07
Cash Tender – Equity
Investment 3.9 0.02
Related Compensation
Expense (1.7) (0.01)
Total Adjustments 20.4 0.08
Income as Adjusted $685.8 $2.91
