Marshall & Ilsley Corporation Reports Net Income of $0.56 Per Diluted Share for 2008 First Quarter

– Net interest income increased 9 percent compared to the first quarter of 2007.


– Wealth Management total revenue rose 18 percent over the same period last year.


– First Indiana Corporation acquisition integrated successfully.


– Capital strength provides significant cushion in uncertain environment.


MILWAUKEE, April 15 /PRNewswire-FirstCall/ — Marshall & Ilsley Corporation (NYSE:MI) (M&I) today reported 2008 first quarter net income of $146.2 million, or $0.56 per share, as compared to income from continuing operations of $168.8 million, or $0.65 per share, in the first quarter of 2007.


During the first quarter of 2008, the Corporation realized two unusual events which contributed to M&I’s financial results for the quarter.

  — M&I recognized pre-tax income of $39 million due to the redemption of
39 percent of the Corporation’s VISA shares and a related litigation
reserve adjustment.
— M&I recorded a $20 million tax benefit related to positive developments
in the U.S. tax court.


Based on income from continuing operations, return on average assets for the first quarter was 0.94 percent, as compared to 1.24 percent for the same period in 2007. Return on average equity was 8.4 percent this quarter as compared to 10.9 percent for the first quarter of 2007.


The continued stress on M&I’s construction and development portfolio led to further elevated charge-offs and provisions. M&I posted first quarter net charge-offs of $131 million and a loan loss provision of $146 million.

  2008 First Quarter Key Performance Highlights

— On an acquisition-adjusted basis, average loans and leases increased
9 percent over the first quarter of 2007.
— Net interest income increased 9 percent compared to the same period
last year.
— Wealth Management total revenue increased 18 percent over the first
quarter of 2007.
— Efficiency ratio was 50.6 percent, up 0.1 percentage point from the
same period last year.
— Tangible equity ratio was 7.8 percent at March 31, 2008-up
1.7 percentage points from March 31, 2007.

Loan and Core Deposit Growth


On an acquisition-adjusted basis, M&I’s average loans and leases totaled $48.6 billion for the first quarter of 2008, reflecting an increase of $3.9 billion or 9 percent compared to the first quarter of 2007. More importantly, as an indicator of recent franchise strength and M&I’s ability to grow market share, the Corporation’s average loans grew by $1.6 billion compared to the linked fourth quarter, which equates to a 14 percent annualized growth rate. The Corporation’s average bank-issued deposits totaled $29.4 billion for the first quarter of 2008, essentially unchanged versus the first quarter of 2007.


Net Interest Income


The Corporation’s net interest income (FTE) rose $36.0 million to $437.5 million in the first quarter of 2008-up 9 percent compared to the first quarter of 2007. The net interest margin was 3.09 percent, down 4 basis points on a linked quarter basis, and down 11 basis points from the same period last year. During the current quarter, the Corporation’s net interest margin was negatively impacted by non-performing assets, the cash acquisition of First Indiana Corporation, and share repurchase activity.


Asset Quality


M&I’s construction and development portfolio continued to experience deterioration in the estimated collateral values and repayment abilities of some of the Corporation’s customers, particularly mid-sized local developers. M&I’s provision for loan and lease losses was $146.3 million in the first quarter of 2008, versus $17.1 million in the same period last year. Net charge-offs were $131.1 million for the period, or 1.08 percent of total average loans and leases outstanding this quarter, and $14.7 million a year ago or 0.14 percent of total average loans and leases. At March 31, 2008 and 2007, the allowance for loan and lease losses was 1.10 percent and 1.00 percent, respectively, of total loans and leases. Non-performing loans and leases were 1.60 percent of total loans and leases at March 31, 2008, compared to 2.00 percent at December 31, 2007, and 0.83 percent at March 31, 2007.


Wealth Management Revenue


M&I’s Wealth Management business produced solid results during the first quarter of 2008. Wealth Management total revenue was $71.9 million for the current quarter, an increase of $11.2 million or 18 percent over the first quarter of 2007. Assets Under Management finished the quarter at $25.8 billion and Assets Under Administration ended at $105.4 billion.


Non-Interest Expense


The Corporation’s non-interest expense was $315.8 million for the current quarter, a decrease of $130 million from the fourth quarter of 2007 which included a charitable contribution expense, a debt termination loss, and a VISA related litigation accrual that totaled approximately $125 million. The efficiency ratio was 50.6 percent, up 0.1 percentage point from the same period last year.


Balance Sheet and Capital Management


M&I’s consolidated assets and common shareholders’ equity were $63.4 billion and $7.0 billion, respectively, at March 31, 2008, compared to $56.5 billion and $6.4 billion, respectively, at March 31, 2007. There were 259.1 million common shares outstanding at March 31, 2008, compared to 256.8 million outstanding at March 31, 2007. The Corporation has a Stock Repurchase Program authorization under which up to 12 million shares of the Corporation’s common stock can be repurchased annually. In the first quarter of 2008, the Corporation repurchased 4.8 million shares. M&I’s tangible common equity ratio was 7.8 percent at March 31, 2008-up 1.7 percentage points from March 31, 2007.


Conference Call


Marshall & Ilsley Corporation will hold a conference call at 11:00 a.m. Central Daylight Time Tuesday, April 15, 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 15 and will run through 5:00 p.m. April 22, by calling 1-800-642-1687 and entering pass code 406 53 558 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 15.


About Marshall & Ilsley Corporation


Marshall & Ilsley Corporation (NYSE:MI) is a diversified financial services corporation headquartered in Milwaukee, Wis., with $63.4 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 51 locations throughout Arizona; 32 offices in Indianapolis and nearby communities; 31 offices along Florida’s west coast and in central Florida; 15 offices in Kansas City and nearby communities; 23 offices in metropolitan Minneapolis/St. Paul, and one in Duluth, Minn.; and one office in Las Vegas, Nev. M&I’s Southwest Bank subsidiary has 17 offices in the greater St. Louis area. 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.


Forward-Looking Statements


This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, without limitation, statements regarding expected financial and operating activities and results that are preceded by, followed by, or that include words such as “may,” “expects,” “anticipates,” “estimates” or “believes.” 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) M&I’s exposure to the volatile commercial and residential real estate markets, which could result in increased charge-offs and increases in M&I’s allowance for loan and lease losses to compensate for potential losses in its real estate loan portfolio, (ii) adverse changes in the financial performance and/or condition of M&I’s borrowers, which could impact repayment of such borrowers’ outstanding loans, (iii) those factors referenced in Item 1A. Risk Factors in M&I’s annual report on Form 10-K for the year ended December 31, 2007 and as may be described from time to time in M&I’s subsequent SEC filings, which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect only M&I’s belief as of the date of this press release. Except as required by federal securities law, M&I undertakes no obligation to update these forward-looking statements or reflect events or circumstances after the date of this report.

  Marshall & Ilsley Corporation
Financial Information
(unaudited)

Three Months Ended March 31, Percent
2008 2007 Change
PER SHARE DATA
Diluted:
Income from Continuing Operations $0.56 $0.65 -13.8 %
Net Income 0.56 0.83 -32.5

Basic:
Income from Continuing Operations 0.56 0.66 -15.2
Net Income 0.56 0.85 -34.1

Dividend Declared 0.31 0.27 14.8
Book Value 27.09 24.90 8.8
Shares Outstanding (millions):
Average – Diluted 262.3 261.3 0.4
End of Period 259.1 256.8 0.9

INCOME STATEMENT ($millions)

Net Interest Income (FTE) $437.5 $401.5 9.0 %
Provision for Loan and Lease Losses 146.3 17.1 753.3

Wealth Management 71.9 60.7 18.4
Service Charge on Deposits 35.7 27.7 29.0
Mortgage Banking 9.4 10.1 -7.7
Net Investment Securities Gains 25.7 1.6 n.m.
All Other 68.5 55.5 23.7
Total Non-Interest Revenues 211.2 155.6 35.8

Salaries and Employee Benefits 174.7 150.2 16.3
Occupancy and Equipment 31.2 27.4 13.9
Intangible Amortization 5.9 4.5 32.1
Other 104.0 98.9 5.1
Total Non-Interest Expenses 315.8 281.0 12.4

Tax Equivalent Adjustment 7.1 7.1 1.1
Pre-Tax Income 179.5 251.9 -28.7
Provision for Income Taxes 33.3 83.1 -59.9
Income from Continuing Operations 146.2 168.8 -13.4
Discontinued Operations, net of tax:
Transactions Costs – (1.3)
Metavante Earnings – 49.3
Discontinued Operations, net of tax – 48.0
Net Income $146.2 $216.8 -32.5 %

KEY RATIOS

Net Interest Margin (FTE) / Avg.
Earning Assets 3.09 % 3.20 %
Interest Spread (FTE) 2.53 2.55

Based on Income from Continuing
Operations
Efficiency Ratio 50.6 % 50.5 %
Return on Assets 0.94 1.24
Return on Equity 8.37 10.94

Based on Net Income
Return on Assets 0.94 % 1.56 %
Return on Equity 8.37 14.05

Equity / Assets (End of Period) 11.00 % 11.24 %

Marshall & Ilsley Corporation
Financial Information
(unaudited)

As of March 31, Percent
2008 2007 Change
ASSETS ($millions)
Cash & Due From Banks $1,360 $1,037 31.2 %
Trading Securities 195 117 66.4
Short – Term Investments 307 180 70.7
Investment Securities 7,853 7,452 5.4
Loan to Metavante – 982 n.m.
Loans and Leases:
Commercial Loans & Leases 15,414 12,818 20.2
Commercial Real Estate 16,957 14,391 17.8
Residential Real Estate 10,342 9,308 11.1
Home Equity Loans & Lines 4,722 4,213 12.1
Personal Loans and Leases 1,865 1,524 22.5
Total Loans and Leases 49,300 42,254 16.7
Reserve for Loan & Lease Losses (544) (423) 28.5
Premises and Equipment, net 514 443 15.8
Goodwill and Intangibles 2,246 1,566 43.5
Other Assets 2,167 1,546 40.1
Total Assets of Continuing
Operations 63,398 55,154 14.9
Assets of Discontinued Operations – 1,377 n.m.
Total Assets $63,398 $56,531 12.1 %

LIABILITIES & SHAREHOLDERS’ EQUITY ($millions)
Deposits:
Noninterest Bearing $6,138 $5,411 13.4 %
Bank Issued Interest Bearing
Activity 15,135 13,096 15.6
Bank Issued Time 8,736 8,403 4.0
Total Bank Issued Deposits 30,009 26,910 11.5
Wholesale Deposits 8,718 6,222 40.1
Total Deposits 38,727 33,132 16.9
Short – Term Borrowings 7,641 8,661 -11.8
Long – Term Borrowings 9,076 7,314 24.1
Other Liabilities 980 1,006 -2.6
Liabilities of Discontinued
Operations – 64 n.m.
Shareholders’ Equity 6,974 6,354 9.8
Total Liabilities & Shareholders’
Equity $63,398 $56,531 12.1 %

Three Months Ended March 31, Percent
2008 2007 Change
AVERAGE ASSETS ($millions)
Cash & Due From Banks $953 $995 -4.2 %
Trading Securities 179 41 331.7
Short – Term Investments 332 274 21.2
Investment Securities 7,911 7,372 7.3
Loan to Metavante – 982 n.m.
Loans and Leases:
Commercial Loans & Leases 14,911 12,677 17.6
Commercial Real Estate 16,943 14,416 17.5
Residential Real Estate 10,298 9,162 12.4
Home Equity Loans and Lines 4,670 4,295 8.7
Personal Loans and Leases 1,788 1,553 15.2
Total Loans and Leases 48,610 42,103 15.5
Reserve for Loan & Lease Losses (557) (424) 31.6
Premises and Equipment, net 509 441 15.7
Goodwill and Intangibles 2,242 1,570 42.7
Other Assets 2,174 1,649 31.9
Total Assets of Continuing
Operations 62,353 55,003 13.4
Assets of Discontinued Operations – 1,509 n.m.
Total Assets $62,353 $56,512 10.3 %

Memo:
Average Earning Assets $57,032 $50,772
Average Earning Assets Excluding
Investment Securities
Unrealized Gains/Losses $56,998 $50,821

AVG LIABILITIES & SHAREHOLDERS’ EQUITY ($millions)
Deposits:
Noninterest Bearing $5,629 $5,341 5.4 %
Bank Issued Interest Bearing
Activity 14,951 12,976 15.2
Bank Issued Time 8,858 8,400 5.5
Total Bank Issued Deposits 29,438 26,717 10.2
Wholesale Deposits 8,290 6,371 30.1
Total Deposits 37,728 33,088 14.0
Short – Term Borrowings 6,416 4,248 51.0
Long – Term Borrowings 10,020 11,624 -13.8
Other Liabilities 1,162 1,054 10.2
Liabilities of Discontinued
Operations – 240 n.m.
Shareholders’ Equity 7,027 6,258 12.3
Total Liabilities & Shareholders’
Equity $62,353 $56,512 10.3 %

Memo:
Average Interest Bearing
Liabilities $48,535 $43,619

Marshall & Ilsley Corporation
Financial Information
(unaudited)

Three Months Ended March 31, Percent
2008 2007 Change
CREDIT QUALITY

Net Charge-Offs ($millions) $131.1 $14.7 793.3 %
Net Charge-Offs / Average Loans &
Leases 1.08 % 0.14 %
Loan and Lease Loss Reserve
($millions) $543.5 $423.1 28.5 %
Loan and Lease Loss Reserve /
Period-End Loans & Leases 1.10 % 1.00 %
Nonaccrual Loans & Leases
($millions) $774.1 $340.7 127.2 %
Nonaccrual Loans & Leases / Period-
End Loans & Leases 1.57 % 0.81 %
Loan and Lease Loss Reserve /
Nonaccrual Loans & Leases 70 % 124 %
Non-Performing Loans & Leases (NPL)
($millions) (a) $787.0 $351.7 123.8 %
NPL’s / Period-End Loans & Leases (a) 1.60 % 0.83 %
Loan and Lease Loss Reserve / Non-
Performing Loans & Leases (a) 69 % 120 %

MARGIN ANALYSIS (b)

Loans and Leases:
Commercial Loans & Leases 6.25 % 7.62 %
Commercial Real Estate 6.56 7.60
Residential Real Estate 6.43 7.32
Home Equity Loans and Lines 6.89 7.55
Personal Loans and Leases 6.99 7.85
Total Loans and Leases 6.49 7.55
Loan to Metavante – 4.46
Investment Securities 5.03 5.39
Short – Term Investments 2.82 4.72
Interest Income (FTE) / Avg.
Interest Earning Assets 6.25 % 7.15 %
Interest Bearing Deposits:
Bank Issued Interest Bearing
Activity 2.43 % 3.62 %
Bank Issued Time 4.54 4.85
Total Bank Issued Deposits 3.22 4.10
Wholesale Deposits 4.00 5.10
Total Interest Bearing Deposits 3.42 4.33
Short – Term Borrowings 3.36 5.24
Long – Term Borrowings 4.91 5.02
Interest Expense / Avg. Interest
Bearing Liabilities 3.72 % 4.60 %
Net Interest Margin (FTE) / Avg.
Earning Assets 3.09 % 3.20 %
Interest Spread (FTE) 2.53 % 2.55 %

Notes:
(a) Includes Loans past due 90 days or more.
(b) Based on average balances excluding fair value adjustments for
available for sale securities.


First Call Analyst:
FCMN Contact: [email protected]


Source: Marshall & Ilsley Corporation


CONTACT: Greg Smith, senior vice president, chief financial officer,
+1-414-765-7727, or Dave Urban, vice president, director of investor
relations, +1-414-765-7853, both of Marshall & Ilsley Corporation


Web site: http://www.micorp.com/