QUOTE AND NEWS
CANOE.ca  Feb 28  Comment 
Bank of Montreal reported a better-than-expected rise in quarterly earnings, driven by lower losses for bad loans and its acquisition of Wisconsin lender Marshall & Ilsley last year.
The Globe and Mail  Feb 28  Comment 
Canada.com  Dec 6  Comment 
Helped by the recent acquisition of Marshall & Ilsley, Bank of Montreal reported a 21% increase in fourth-quarter net income
The Globe and Mail  Aug 20  Comment 
BMOs’ expansion strategy has been ‘slow-and-steady-wins-the-race.’ But with its big-time deal for Marshall & Ilsley, it is bulking up in America at a perilous time
Stock Blog Hub  Jul 6  Comment 
The acquisition of Marshall & Ilsley Corporation (MI) by Bank of Montreal (BMO) finally drew to a close on Tuesday, following BMO’s repayment of $1.715 billion of Troubled Asset Relief Program (TARP) money that M&I had borrowed from the U.S....
Wall Street Journal  Jul 6  Comment 
Deal Journal doesn't typically comment much on deal closings. But the closing of the Bank of Montreal's $4.1 acquisition of Marshall & Ilsley on July 5 is creating a stir north of the border. The Globe & Mail reports that "seventeen of the...
Reuters  Jul 6  Comment 
* BMO to boost lending to small, mid-sized U.S. companies (Figures in U.S. dollars, unless noted)
Benzinga  Jun 27  Comment 
Below are the top regional-midwest banks stocks on the NYSE in terms of dividend yield. Old National Bancorp (NYSE: ONB) has a dividend yield of 2.70%. ONB's shares closed at $10.30 on Friday. US Bancorp (NYSE: USB) has a dividend yield of...
Stock Blog Hub  Jun 22  Comment 
Marshall & Ilsley Corporation (MI) and Bank of Montreal (BMO) merger deal is right on track for completion, following the final regulatory approval on Tuesday. With this regulatory nod, the parties have finally garnered all necessary approvals...
Reuters  Jun 21  Comment 
June 21 (Reuters - Bank of Montreal got all key bank regulatory approvals for its $4.1 billion acquisition of Marshall & Ilsley Corp and said it will not proceed with an equity offering to fund...
Reuters  Jun 21  Comment 
The U.S. Federal Reserve said on Tuesday it had approved the application of Bank of Montreal to acquire Marshall & Ilsley Corp .




 
TOP CONTRIBUTORS

Marshall & Ilsley (MI) is the country’s 19th largest bank in terms of assets, with over $56 billion in assets, and 20th in terms of market capitalization. M&I still operates primarily as a regional bank, with over more than half of its 300+ branches operating in Wisconsin (giving it the largest presence in the state of any bank). The bank has recently been expanding into other areas with high growth rates, like St. Louis, Minneapolis, and Phoenix. As a smaller bank, M&I has traditionally relied on its customer service and small-town-bank feel in cases where it cannot compete with the Interest Rates of larger banks. To this end, the company’s management has suggested it will attempt to broaden its exposure in the high-growth areas instead of trying to expand beyond the nine states in which it currently operates branches. While some banks were hard hit during the July '07 credit crunch, Marshall & Ilsley emerged relatively unscathed. Although the increased their provisions for loan and lease foreclosures to just over 1 % of total loans (about double from the previous year), M&I's net interest income was still up 2 % in the third quarter of '07 compared to the same quarter of the year before. Additionally, more than 60% of M&I's outstanding loans are commercial, meaning that the plight of individuals with overstretched credit forced to foreclose would not affect M&I as drastically as other regional banks that cater more towards individuals. A final factor affecting the performance of M%I in the near future is the result of spinning off Metavante, the segment of the bank (comprising approximately 20% of total revenue) in charge of data processing services. Despite the previous success of the Metavante segment, M&I could use the cash from the transaction to increase its other acquisitions and offset the lost revenue. [1]


Business Financials

M&I's net annual income has continued to rise at a fairly steady rate over the past five years (14.4% in 2006) as the company expands its branch operations to other states.

image:MI_1.jpg

image:MI_2.jpg


Key Trends and Forces

  • M&I's performance is sensitive to a small economy:

Although M&I is taking further steps to expand beyond its Wisconsin roots, the bank still operates approximately 60% of its branch offices in its home state. As a big supplier of small business loans, any event or long-term trend that would adversely affect the economy of Wisconsin would have an overly large effect on M&I compared to its competitors.


  • Credit Market risk is inherent with any bank stock:

The stock market as a whole has suffered some drastic shocks due to an overdrawn credit market and increased rate of mortgage foreclosures. While M&I has traditionally been known for a relatively risk-averse credit team and balanced credit portfolio, another stretch of market uncertainty like the one seen at the end of summer 2007 would hurt their earnings, along with those of the industry as a whole.


  • Interest Rate fluctuations can drastically affect a bank's revenue:

The federal funds rate is the interest rate at which banks lend money to each other. It is set by the Federal Reserve Bank in response to various economic factors. A higher federal funds rate would correspond to a higher saving/lending rate for a bank, meaning that more people would be willing to save but fewer willing to borrow, whereas a lower rate would lead to more borrowing but less money being deposited for savings. The Fed has not changed the federal funds rate as often lately, but changes have big effects on banks.


image:FedFundsRate.jpg


  • Online banking may supplant the small-town banks:

As online-only banks like Capital One gain greater prominence in an increasingly-digital world, banks that rely on customer service and friendly bank tellers at local branches will have a harder time competing with the larger banks because of higher capital costs.

Competition

Marshall & Ilsley ranked in the top 20 in income ($808 million) in 2006 among "regional" banks in the United States.

The top 5 regional banks, by income:

  • Wachovia (WB) (Headquartered in North Carolina, annual income of $7.4 billion)
  • PNC Bank (PNC) (Headquartered in Pennsylvania, annual income of $2.6 billion)
  • BB&T (BBT) (Headquartered in North Carolina, annual income of $1.5 billion)

Other competitors:




Notes

  1. http://www.mibank.com/mibank/centers.cfm?ObjectID=09A9D496-7222-4ED5-A745220FE86B5064
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