Marshall & Ilsley Corporation Reports 2009 Fourth Quarter and Year End Results

MILWAUKEE, Jan. 20  /PRNewswire-FirstCall/ -- 

  --  Net loss of $0.54 per share for fourth quarter 2009.
  --  Continued stabilization in credit quality.
      --  Nonperforming loans decreased $205 million, or 9 percent from
          third quarter 2009 - the second consecutive quarterly decline.
      --  Early stage delinquencies fell $134 million, or 16 percent, from
          third quarter 2009 - the third consecutive quarterly decline and
          at lowest level since December 2007.
  --  Increased allowance for loan and lease losses to 3.35 percent of total
      loans and leases.
  --  Net interest margin rose 13 basis points to 2.95 percent from prior
      quarter.




Marshall & Ilsley Corporation (NYSE:MI) (M&I) today reported a 2009 fourth quarter net loss of $259.5 million, or $0.54 per share, as compared to a net loss of $1,891.7 million, or $7.25 per share, in the fourth quarter of 2008. For the year ended December 31, 2009, M&I reported a net loss of $858.8 million, or $2.46 per share, as compared to a net loss of $2,056.2 million, or $7.92 per share, for the year ended December 31, 2008. The financial results for the fourth quarter of 2008 and the year ended December 31, 2008 included a goodwill impairment charge of $1,487.9 million after-tax.

"Our aggressive approach to managing credit continued to impact M&I's financial results during the fourth quarter of 2009," said Mark Furlong, president and CEO, Marshall & Ilsley Corporation. "Despite the loss, there are some encouraging signs that credit quality has stabilized and core earnings trends have improved. M&I remains committed to returning the Company to profitability as soon as possible."

Loan and Deposit Growth

M&I's average loans and leases totaled $45.3 billion for the fourth quarter of 2009, decreasing $4.9 billion or 10 percent compared to the fourth quarter of 2008. When adjusted for the targeted reduction in the Corporation's construction and development portfolio, loans fell $1.2 billion or 3 percent versus the same period last year.

The Corporation's average deposits totaled $41.6 billion for the fourth quarter of 2009, rising $1.0 billion or 2 percent versus the fourth quarter of 2008. M&I's core deposits posted strong growth over the past year, reflecting expanded product offerings. The Corporation's average noninterest bearing deposits totaled $8.0 billion for the fourth quarter of 2009, increasing $1.9 billion or 32 percent compared to the fourth quarter of 2008. M&I's average savings and NOW accounts totaled $6.5 billion for the fourth quarter of 2009, increasing $3.2 billion or 100 percent compared to the fourth quarter of 2008.

Net Interest Income

The Corporation's net interest income (FTE) was $406.1 million for the fourth quarter of 2009, up $11.6 million or 3 percent compared to the third quarter of 2009. The net interest margin was 2.95 percent, up 13 basis points from the previous quarter. During the fourth quarter of 2009, M&I's net interest margin benefited from credit quality improvement and the restructuring and/or retiring of certain debt instruments.

Asset Quality

M&I continued to proactively address credit quality in the fourth quarter of 2009 by identifying and writing down troubled assets, selling problem loans, reducing exposure to construction and development loans, and building loan loss reserves.

  --  Provision for loan and lease losses was $639.0 million in the fourth
      quarter of 2009 versus $578.7 million in the third quarter of 2009.
      Net charge-offs for the period were $572.3 million compared to $532.7
      million in the prior quarter.
  --  Construction and development (C&D) exposure declined from the third
      quarter of 2009 to 12.5 percent of total loans. Arizona C&D exposure
      fell 64 percent since the fourth quarter of 2007.
  --  Allowance for loan and lease losses increased 28 basis points to 3.35
      percent of total loans and leases from the prior quarter.




Asset quality trends demonstrated further stabilization through lower early stage delinquencies and nonperforming loans.

  --  Early stage delinquencies fell $134 million, or 16 percent, from the
      third quarter of 2009 - the third consecutive quarterly decline and at
      the lowest level since December 2007.
  --  Nonperforming loans decreased $205 million, or 9 percent from the
      third quarter of 2009 - the second consecutive quarterly decline.
  --  Nonperforming loans and leases were 4.62 percent (or 3.05 percent
      excluding nonperforming loans and leases less than ninety days past
      due) of total loans and leases at December 31, 2009, compared to 4.88
      percent at September 30, 2009.


  Non-Interest Income



The Corporation's non-interest income was $243.8 million for the fourth quarter of 2009 compared to $166.1 million for the fourth quarter of 2008. Net securities gains of $40.6 million, debt termination gains of $30.9 million, and losses on loans held for sale of $11.1 million were unique to the current quarter. Wealth Management revenue was $69.9 million for the current quarter, exceeding the same quarter last year by $5.7 million or 9 percent. Assets under Management and Assets under Administration were $32.9 billion and $122.3 billion, respectively, at December 31, 2009 (record highs), compared to $30.4 billion and $104.4 billion, respectively, at December 31, 2008.

Non-Interest Expense

M&I's non-interest expense was $409.4 million for the fourth quarter of 2009 compared to $402.8 million for the fourth quarter of 2008 (excluding the $1,535.1 million goodwill impairment charge). The Corporation's non-interest expense was unchanged versus the prior quarter. Credit-related expenses (meaning expenses associated with collection efforts and carrying nonperforming assets) were $69.1 million for the current quarter versus $45.2 million in the same period last year. Excluding these items and the goodwill impairment charge, non-interest expense declined $17.3 million or 5 percent versus the fourth quarter of 2008. After adjusting for certain net credit-related expenses and other one-time items, M&I's efficiency ratio was 56.7 percent in the current quarter.

Year End Results

M&I reported a net loss of $858.8 million, or $2.46 per share, for the year ended December 31, 2009, as compared to a net loss of $2,056.2 million, or $7.92 per share, for the year ended December 31, 2008. The financial results for the year ended December 31, 2008 included a goodwill impairment charge of $1,487.9 million after-tax. The Corporation's net interest income (FTE) was $1,608.0 million for the year ended December 31, 2009, a decrease of $200.6 million or 11 percent compared to the year ended December 31, 2008. M&I's non-interest income was $915.6 million for the year ended December 31, 2009, an increase of $167.5 million or 22 percent versus the year ended December 31, 2008. The Corporation's non-interest expense was $1,579.4 million for the year ended December 31, 2009, falling $1,414.7 million or 47 percent compared to the year ended December 31, 2008.

Balance Sheet and Capital Management

The Corporation's consolidated assets and total equity were $57.2 billion and $7.0 billion, respectively, at December 31, 2009, compared to $62.3 billion and $6.3 billion, respectively, at December 31, 2008. There were 525.4 million common shares outstanding at December 31, 2009, versus 265.3 million outstanding at December 31, 2008. In the fourth quarter of 2009, M&I paid $25 million or $0.05 per share for dividends on the Corporation's Senior Preferred Stock, Series B, owned by the U.S. Treasury under the Capital Purchase Program.

M&I's tangible common equity ratio was 8.2 percent at December 31, 2009, compared to 6.4 percent at December 31, 2008.

Conference Call

Marshall & Ilsley Corporation will hold a conference call at 11:00 a.m. (Central Standard Time) Wednesday, January 20, regarding fourth quarter results. For those interested in listening, please call 1-888-711-1825 and ask for M&I's quarterly results conference call. If you are unable to join us at this time, a replay of the call will be available beginning at 3:00 p.m. on January 20 and will run through 5:00 p.m. February 19, by calling 1-800-642-1687 and entering pass code 491 82 228. Supplemental financial information referenced in the conference call can be found at http://www.micorp.com/, Investor Relations, after 8:00 a.m. on January 20.

About Marshall & Ilsley Corporation

Marshall & Ilsley Corporation (NYSE:MI) is a diversified financial services corporation headquartered in Milwaukee, Wis., with $57.2 billion in assets. Founded in 1847, M&I Marshall & Ilsley Bank is the largest Wisconsin-based bank, with 192 offices throughout the state. In addition, M&I has 53 locations throughout Arizona; 33 offices in Indianapolis and nearby communities; 36 offices along Florida's west coast and in central Florida; 16 offices in Kansas City and nearby communities; 26 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 deterioration in the commercial and residential real estate markets, directly or indirectly through M&I's loans to other bank holding companies, along with the deterioration in the U.S. economy as a whole, which could result in increased charge-offs and increases in M&I's allowance for loan and lease losses,  (ii) various other factors, including changes in economic conditions affecting borrowers, new information regarding outstanding loans and identification of additional problem loans, which could require an increase in M&I's allowance for loan and lease losses, (iii) M&I's ability to maintain required levels of capital, (iv) the impact of recent and future legislative initiatives on the financial markets or on M&I, (v) M&I's exposure to the actions and potential failure of other financial institutions, (vi) volatility in M&I's stock price, and (vii) those factors referenced in Item 1A. Risk Factors in M&I's Annual Report on Form 10-K for the year ended December 31, 2008 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 press release.

  Marshall & Ilsley Corporation
  Financial Information
  (unaudited)

                  Three Months Ended         Twelve Months Ended
                     December 31,     Percent     December 31,       Percent
                   2009       2008    Change   2009          2008    Change
  PER COMMON
   SHARE DATA

  Diluted:
    Net Income
     (Loss)      ($0.54)     ($7.25)   n.m.%   ($2.46)     ($7.92)    n.m.%

  Basic:
    Net Income
     (Loss)       (0.54)      (7.25)    n.m.    (2.46)      (7.92)     n.m.

  Dividend
   Declared
   per Common
   Share            0.01        0.32   -96.9      0.04        1.27    -96.9
  Book Value
   per Common
   Share           10.21       17.58   -41.9     10.21       17.58    -41.9
  Common Shares
   Outstanding
   (millions):
    Average -
     Diluted       479.3       261.0    83.6     348.5       259.6     34.2
    End of
     Period        525.4       265.3    98.0     525.4       265.3     98.0

  INCOME STATEMENT
   ($millions)

  Net Interest
   Income (FTE)   $406.1      $469.0  -13.4%  $1,608.0    $1,808.6   -11.1%
  Provision for
   Loan and
   Lease Losses    639.0       850.4   -24.9   2,314.6     2,037.7     13.6

    Wealth
     Management     69.9        64.2     9.0     265.1       282.2     -6.0
    Service
     Charges on
     Deposits       33.6        35.9    -6.3     136.6       146.2     -6.6
    Mortgage
     Banking         6.7         4.5    48.4      48.3        26.0     85.6
    Net Investment
     Securities
     Gains (Losses) 40.6       (9.9)  -508.7     121.8        17.2    606.9
    Other           93.0        71.4    30.3     343.8       276.5     24.3
  Total Non-
   Interest
   Revenues        243.8       166.1    46.8     915.6       748.1     22.4

    Salaries and
     Employee
     Benefits      169.2       178.0    -4.9     690.8       723.2     -4.5
    Net Occupancy
     and Equipment  36.2        32.8    10.5     135.7       126.9      7.0
    FDIC
     Insurance      25.8         7.2   256.0     107.9        17.3    525.3
    Intangible
     Amortization    5.9         6.4    -7.3      23.4        24.3     -3.5
    Goodwill
     Impairment        -     1,535.1  -100.0         -     1,535.1   -100.0
    Other          172.3       178.4    -3.4     621.6       567.3      9.6
  Total Non-
   Interest
   Expenses        409.4     1,937.9   -78.9   1,579.4     2,994.1    -47.2

  Tax
   Equivalent
   Adjustment        5.8         7.0   -17.2      25.4        27.9     -8.9
  Pre-Tax
   Income
   (Loss)        (404.3)   (2,160.2)    n.m. (1,395.8)   (2,503.0)     n.m.
  Provision
   (Benefit)
   for Income
   Taxes         (170.0)     (281.2)    n.m.   (637.2)     (459.5)     n.m.
  Net Income
   (Loss)
   Attributable
   to M&I       ($234.3)  ($1,879.0)    n.m.  ($758.6)  ($2,043.5)     n.m.
  Preferred
   Dividends      (25.2)      (12.7)           (100.2)      (12.7)
  Net Income
   (Loss)
   Attributable
   to M&I
   Common
   Shareholders ($259.5)  ($1,891.7)   n.m.%  ($858.8)  ($2,056.2)    n.m.%


  KEY RATIOS

  Net Interest
   Margin (FTE) /
   Avg. Earning
   Assets          2.95%       3.18%             2.85%       3.12%
  Interest Spread
   (FTE)            2.55        2.77              2.46        2.67

  Efficiency
   Ratio           67.3%       n.m.%             65.8%       n.m.%

  Equity / Assets
   (End of
   Period)        12.21%      10.06%            12.21%      10.06%





  Marshall & Ilsley Corporation
  Financial Information
  (unaudited)

                   As of December 31,  Percent
                    2009        2008   Change
  ASSETS ($millions)
  Cash & Due
   From Banks       $769        $851   -9.7%
  Trading Assets     256         518   -50.7
  Short - Term
   Investments     1,192         231   416.7
  Investment
   Securities      7,177       7,668    -6.4
  Loans and
   Leases:
    Commercial Loans
     & Leases     12,950      15,442   -16.1
    Commercial
     Real Estate  13,646      12,542     8.8
    Residential
     Real Estate   4,969       5,734   -13.3
    Construction
     and
     Development   5,539       9,043   -38.8
    Home Equity
     Loans & Lines 4,715       5,082    -7.2
    Personal Loans
     and Leases    2,399       2,142    12.0
  Total Loans
   and Leases     44,218      49,985   -11.5
  Reserve for
   Loan & Lease
   Losses        (1,481)     (1,202)    23.2
  Premises and
   Equipment, net    566         565     0.2
  Goodwill and
   Other
   Intangibles       744         763    -2.6
  Other Assets     3,769       2,957    27.5
  Total Assets   $57,210     $62,336   -8.2%

  LIABILITIES &
   EQUITY ($millions)
  Deposits:
    Noninterest
     Bearing      $7,833      $6,880   13.8%
    Interest
     Bearing:
      Savings and
       NOW         6,938       3,454   100.9
      Money
       Market     11,315      10,753     5.2
      Time        15,306      18,072   -15.3
      Foreign        246       1,864   -86.8
    Total
     Interest
     Bearing      33,805      34,143    -1.0

  Total Deposits  41,638      41,023     1.5
  Short - Term
   Borrowings      1,120       4,058   -72.4
  Long - Term
   Borrowings      6,426       9,614   -33.2
  Other
   Liabilities     1,040       1,370   -24.1
  Total
   Liabilities    50,224      56,065   -10.4
  Equity:
      Marshall &
       Ilsley
       Corporation
       Shareholders'
       Equity      6,975       6,260    11.4
      Noncontrolling
       Interest in
       Subsidiaries   11          11     7.3
  Total Equity     6,986       6,271    11.4
  Total Liabilities
   & Equity      $57,210     $62,336   -8.2%



                   Three Months Ended          Twelve Months Ended
                      December 31,    Percent       December 31,     Percent
                    2009        2008  Change      2009        2008   Change
  AVERAGE  ASSETS
   ($millions)
  Cash & Due From
   Banks            $756        $867  -12.8%      $761        $898   -15.2%
  Trading Assets     261         304   -14.1       418         197    112.0
  Short - Term
   Investments     2,475         617   300.7     1,330         427    211.5
  Investment
   Securities      6,519       7,298   -10.7     6,939       7,612     -8.8
  Loans and
   Leases:
    Commercial
     Loans and
     Leases       13,202      15,422   -14.4    14,390      15,362     -6.3
    Commercial
     Real Estate  13,813      12,203    13.2    13,523      11,840     14.2
    Residential
     Real Estate   5,085       5,675   -10.4     5,450       5,504     -1.0
    Construction
     and
     Development   6,064       9,786   -38.0     7,235      10,165    -28.8
    Home Equity
     Loans and
     Lines         4,762       5,071    -6.1     4,909       4,902      0.2
    Personal Loans
     and Leases    2,405       2,089    15.1     2,269       1,934     17.3
  Total Loans
   and Leases     45,331      50,246    -9.8    47,776      49,707     -3.9
  Reserve for Loan
   & Lease
   Losses        (1,459)     (1,183)    23.4   (1,357)       (878)     54.6
  Premises and
   Equipment, net    570         552     3.3       571         529      8.0
  Goodwill and
   Other
   Intangibles       749       2,237   -66.5       755       2,240    -66.3
  Other Assets     3,277       2,671    22.8     3,070       2,398     28.0
  Total Assets   $58,479     $63,609   -8.1%   $60,263     $63,130    -4.5%

  Memo:
  Average
   Earning
   Assets        $54,586     $58,465           $56,463     $57,943
  Average
   Earning
   Assets
   Excluding
   Investment
   Securities
      Unrealized
       Gains/
       Losses    $54,548     $58,600           $56,456     $57,985

  AVG  LIABILITIES
   & EQUITY ($millions)
  Deposits:
    Noninterest
     Bearing      $7,998      $6,063   31.9%    $7,429      $5,858    26.8%
    Interest
     Bearing:
      Savings
     and NOW       6,468       3,228   100.4     4,947       3,249     52.3
      Money
       Market     10,721      10,641     0.7    10,463      11,016     -5.0
      Time        16,082      18,272   -12.0    17,212      16,392      5.0
      Foreign        302       2,406   -87.4       564       2,760    -79.6
    Total Interest
     Bearing      33,573      34,547    -2.8    33,186      33,417     -0.7

  Total Deposits  41,571      40,610     2.4    40,615      39,275      3.4
  Short - Term
   Borrowings      1,524       5,035   -69.7     3,317       6,163    -46.2
  Long - Term
   Borrowings      7,335       9,686   -24.3     8,676       9,749    -11.0
  Other
   Liabilities     1,031         978     5.3     1,047         981      6.7
  Total
   Liabilities    51,461      56,309    -8.6    53,655      56,168     -4.5
  Equity:
      Marshall &
       Ilsley
       Corporation
       Shareholders'
       Equity      7,007       7,290    -3.9     6,597       6,952     -5.1
      Noncontrolling
       Interest
       in
       Subsidiaries   11          10     9.6        11          10      7.4
  Total Equity     7,018       7,300    -3.9     6,608       6,962     -5.1
  Total
   Liabilities
   & Equity      $58,479     $63,609   -8.1%   $60,263     $63,130    -4.5%

  Memo:
  Average Interest
   Bearing
   Liabilities   $42,432     $49,268           $45,179      49,329




  Marshall & Ilsley Corporation
  Financial Information
  (unaudited)

                   Three Months Ended           Twelve Months Ended
                       December 31,   Percent       December 31,     Percent
                    2009        2008  Change      2009        2008  Change
  CREDIT QUALITY (a)

  Net Charge-Offs
   ($millions)    $572.3      $679.8  -15.8%  $2,036.3    $1,363.8   49.3%
    Net Charge-
     Offs / Average
     Loans and
     Leases        5.01%       5.38%             4.26%       2.74%

  Loan and Lease
   Loss Reserve
   ($millions)  $1,480.5    $1,202.2   23.2%  $1,480.5    $1,202.2   23.2%
    Loan and Lease
     Loss Reserve /
     Period-End
     Loans and
     Leases        3.35%       2.41%             3.35%       2.41%

  Nonperforming
   Loans & Leases
   ($millions)  $2,044.8    $1,527.0   33.9%  $2,044.8    $1,527.0   33.9%
    Nonperforming
     Loans & Leases /
     Period-End Loans
     and Leases    4.62%       3.05%             4.62%       3.05%

  Loan and Lease
   Loss Reserve /
   Nonperforming
   Loans and
   Leases*           75%         82%               75%         82%

  Nonperforming
   Assets (NPA)
   ($millions)  $2,475.6    $1,847.9   34.0%  $2,475.6    $1,847.9   34.0%
    NPA / Period-
     End Loans &
     Leases and Other
     Real Estate
     Owned         5.54%       3.67%             5.54%       3.67%

  Performing
   impaired loans:
    Renegotiated
     ($millions)  $793.5      $270.3  193.5%    $793.5      $270.3  193.5%

  Contractually
   past due credits:
    Loans past due
     90 days or
     more
     ($millions)    $8.8       $14.5  -39.7%      $8.8       $14.5  -39.7%

  *Excludes nonperforming loans held for sale.

  MARGIN ANALYSIS (b)

  Loans and Leases:
    Commercial Loans
     and Leases    4.43%       5.36%             4.12%       5.56%
    Commercial Real
     Estate         5.07        6.07              5.11        6.34
    Residential Real
     Estate         5.15        5.73              5.30        6.00
    Construction and
     Development    3.62        4.90              3.65        5.54
    Home Equity Loans
     and Lines      5.01        5.84              5.06        6.28
    Personal Loans
     and Leases     5.41        6.08              5.50        6.38
  Total Loans
   and Leases       4.71        5.56              4.63        5.89
  Investment
   Securities       3.57        4.63              3.95        4.77
  Short - Term
   Investments      0.26        1.37              0.49        1.92
  Interest Income
   (FTE) / Avg.
   Interest
   Earning Assets  4.35%       5.38%             4.42%       5.70%
  Interest
   Bearing
   Deposits:
    Savings and
     NOW           0.49%       0.32%             0.40%       0.57%
    Money Market    0.84        1.16              0.75        1.92
    Time            2.33        3.48              2.53        3.80
    Foreign         0.38        0.59              0.36        1.81
  Total Interest
   Bearing
   Deposits         1.48        2.27              1.61        2.70
  Short - Term
   Borrowings       0.29        1.06              0.29        2.27
  Long - Term
   Borrowings       3.55        4.64              3.92        4.66
  Interest Expense /
   Avg. Interest
   Bearing
   Liabilities     1.80%       2.61%             1.96%       3.03%
  Net Interest
   Margin (FTE) /
   Avg. Earning
   Assets          2.95%       3.18%             2.85%       3.12%
  Interest Spread
   (FTE)           2.55%       2.77%             2.46%       2.67%

  Notes:
  (a) Nonperforming assets are comprised of nonaccrual loans & leases and
      other real estate owned.
  (b) Based on average balances excluding fair value adjustments for
      available for sale securities.


DATASOURCE: Marshall & Ilsley Corporation



CONTACT:  Greg Smith, senior vice president, chief financial officer,

[phone], or Dave Urban, vice president, director of investor

relations, [phone], both of Marshall & Ilsley Corporation



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

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