marshall & llsley corp annual reports 2008

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marshall & llsley corp annual reports 2008

  1. 1. 08 Marshall & Ilsley CorporatIon annual report to shareholders
  2. 2. To Our Shareholders March 13, 2009 2008 was a very disappointing and extremely difficult year. We were not satisfied with our results and recognize they were also unacceptable to you, our shareholders. As we reported in our letter to you dated January 15, 2009, our year-end results reflected losses we incurred due to the collapse of the housing market, which, in combination with our over-concentration in construction and development loans in high-growth areas, were further compounded by the rapidly deteriorating economy. This aspect of M&I’s loan portfolio – particularly the portion originated in communities outside of the Midwest that are susceptible to steep rises and declines in real estate values – became too significant a component of our balance sheet. When the housing market began its steep decline in advance of the nation’s deepening recession, too many of our customers, both contractors and individual homeowners, were unable to meet their outstanding loan obligations to M&I, resulting in significant loan charge-offs. Despite the similarity of the makeup of customers and projects throughout our franchise, a disproportionate share of these losses occurred in our markets outside of Wisconsin and the other Midwest markets we serve. At year end, we had $1.5 billion in non-performing loans directly related to the Dennis Kuester, Chairman housing industry, representing approximately 81 percent of total non-performing Mark Furlong, President and CEO loans, $1 billion of which were construction and development loans on non- performing status, or 53 percent of total non-performing loans. Two-thirds of all commercial and development non-performing loans are in the Arizona and Florida regions and within our correspondent businesses. Clearly, our issues remain concentrated in these businesses, though future losses in Florida are expected to be much smaller in 2009. Stresses in the national housing markets will continue to affect us and we will continue to address them proactively. We have acted aggressively to contain these issues, making numerous changes to risk management in 2007 and 2008, including definitive steps to reduce our concentration in our construction portfolio. While our construction concentration was 23 percent in the third quarter of 2007, we reduced it to 18 percent in the fourth quarter of 2008, with a goal of 10 percent. We have implemented concentration limits on our exposure to the volatile construction sector so we can have a more diversified and stable loan portfolio in the future. Annual Report to Shareholders | 1
  3. 3. In 2008, two of our most senior executives relocated to Arizona to help anticipate and address non-performing loans. We also formed a Special Assets Division in each market devoted solely to addressing problem loans. We analyzed the entire loan portfolio, including loans that are not in the construction industry, to assess the likelihood of future loss and to design action steps to reduce risk. We also sold loans that we did not feel would improve over time. The unpaid principal balance of these loans sold in 2008 was $780 million. In spite of some of these challenges, we experienced several very positive results, including loan growth of 9 percent for the year and the highest core deposit growth among our peers. In addition, M&I Wealth Management, faced with significant market volatility, finished the year with a 10 percent increase in revenues compared to 2007. As we communicated to you in January, M&I has undertaken a series of initiatives designed to preserve its strong capital position – saving your Corporation approximately $100 million – or $0.23 per share after-tax – on an annual basis. We announced expense reductions including a reduction in force of 830 positions (8 percent of the workforce), the elimination of all 2008 bonuses for proxy officers and executive officers, the reduction of the cash retainer for the board of directors by 25 percent, and other expense reductions. In addition, we have implemented a salary freeze for senior managers. (Over many years, salary has become a smaller component of overall compensation as incentive payments more effectively recognize employees’ accomplishments as they align to creating shareholder value; however, with new federal guidelines in place, our compensation structure may be further amended to align with these new requirements.) As a last resort, we also reduced the quarterly cash dividend to $0.01 per share, saving approximately $330 million in capital on an annual basis. It is our intent to increase the dividend as soon as our financial performance and the economic outlook permit. These were agonizingly difficult decisions to make; however, they were necessary steps to take and we firmly believe they will enable us to not only preserve our strong capital base, but position us well to emerge from this recession in a position of strength. Not surprisingly, financial stocks reacted negatively to economic uncertainty throughout 2008 and into 2009. Overall, bank stocks declined dramatically at the beginning of 2009 in reaction to poor fourth quarter 2008 earnings and uncertainty 2 | Marshall & Ilsley Corporation
  4. 4. regarding how governmental actions will impact the banking industry. It was particularly frustrating to watch M&I’s stock price decline, given M&I’s position of relative strength. We realize our shareholders have already paid a steep price. It is our hope that as the economy normalizes and speculation about government initiatives turns to specific proposals, the financial services industry, and specifically M&I, will return to its historic levels of profitability and that our stock price will more accurately reflect our position of strength. As M&I moves into the second year of the recession, we do so with a large loan loss reserve, a strong capital base, and excess liquidity to meet the funding needs of our customers. Our strength in these three important areas is highlighted by a $1.2 billion loan loss reserve (2.41 percent of total loans), the third highest among our peers; $2 billion of capital in excess of the well-capitalized requirements; and a 6.4 percent tangible common equity ratio, among the highest in our peer group. In addition, we have numerous sources of liquidity, including a high quality, liquid investment portfolio. The strength of M&I’s capital base was enhanced in November when M&I received $1.7 billion from the U.S. Treasury through its Capital Purchase Program, underscoring M&I’s strength as a financial institution. The funds have enabled M&I to further increase its already substantial lending activity to invest in the needs of our current and future customers across all our markets. This capital also enabled us to more quickly return to our strategic growth plan for the benefit of our customers, employees, shareholders, and our communities. Since receiving the funds, M&I has extended approximately $1.8 billion of new credit to new and existing customers throughout the communities we serve. As we write this letter, the recession has taken its toll on virtually every industry and has also touched every aspect of our business. In the last half of the year, the Treasury Department and the Federal Reserve provided liquidity to financial institutions through loans and preferred stock, both of which we took advantage of. As the economic recession began to severely deepen, with unemployment rising and leading economic indicators falling on a daily basis, the federal government, through the Emergency Economic Stabilization Act and American Recovery and Reinvestment Act, took significant steps to reverse these trends. Annual Report to Shareholders | 3
  5. 5. While we don’t yet know the full impact of these moves by the government, if the stimulus plans have the intended effect, they should have a positive impact on our economy. Our core goals are to return to our standing as an industry leader with regard to credit quality; to focus on maintaining excess liquidity to fund the needs of our customers through loan growth; and to maintain a strong capital base, all of which will result in increased shareholder value. To that end, we have established a strategy of prudent growth, with realistic earnings targets tailored to each of our markets based on the economy and circumstances within those markets. We expect continued economic uncertainty and our success going forward will depend on our ability to adapt in this constantly changing environment. While many economic factors are out of our control, there are also many factors within our control. Even in today’s economy, we will continue to find areas of growth and to differentiate ourselves through our unparalleled customer service. We will do everything necessary to restore our good record for credit quality, remain efficient, and – very importantly – return to consistent profitability. We are not immune to the impact on the consumer of a deteriorating economy; however, we believe our consumer portfolios will continue to perform better than the industry as a whole, particularly with regard to our minimal exposure to credit cards. We have taken and will continue to take definitive steps to resolve our nonperforming loans, including implementing strengthened risk management procedures that will help us mitigate our concentration of risk; however, as the economy continues to deteriorate, we expect additional losses. We will continue to define new, effective strategies to drive deposit growth and further enhance our award-winning sales and service model to ensure we are meeting and exceeding our customers’ expectations. In 2008, M&I was recognized with seven national awards and two regional awards for Excellence in Middle Market Banking, Commercial Banking, and Treasury Management in a survey conducted by Greenwich Associates; the Best of Wisconsin Business Award as best bank for business for the fourth year in a row; and 81 Best in Class awards from PLANSPONSOR magazine, a magazine for pension retirement fund administrators, ranking in the top quartile across 23 different service categories and four market segments. 4 | Marshall & Ilsley Corporation
  6. 6. As the economy continues to affect our customers, we will continue to provide the exemplary level of service for which we are known, understanding that many of our customers have been significantly affected by the recession. These efforts include working actively with not only our commercial banking customers, but also individuals and families who are finding it difficult to make ends meet. M&I’s Homeowner’s Assistance Program, which includes a 90-day foreclosure moratorium on all owner-occupied residential loans, a foreclosure abatement program, and streamlined assistance programs for struggling homeowners, is keeping families in their homes throughout the communities we serve. As the leaders of your company, we understand the meaning of accountability and responsibility. We are accountable for the decisions we make – decisions that are always based on the principles of honesty, integrity, and respect. Our responsibility to our shareholders is to restore the company to its historic level of performance and tradition of success. In the meantime, we are grateful for your patience. The men and women at M&I are hard at work to return our company’s performance to its position of strength. Though the progress we have made is significant, the amount of work ahead of us is substantial. There is no limit to our resolve regarding our commitment to see the company through this economic cycle. Our strong capital position allows us to continue to aggressively address problem loans, which means we expect some level of continued losses, although not approaching the level of losses in the fourth quarter of 2008. We remain confident that the initiatives we have undertaken will successfully address our current challenges. While there may be great uncertainty in the world around us, there is no uncertainty about M&I’s strong future. Sincerely, Mark Furlong Dennis Kuester President and CEO Chairman Annual Report to Shareholders | 5
  7. 7. 2008 At a Glance Homeowner’s Assistance Program Homeowner’s Assistance Group In December, Marshall & Ilsley Corporation announced the introduction of the system-wide Homeowner’s Assistance Program designed to keep families in their homes by helping homeowners avoid delinquency and foreclosure, including a 90-day foreclosure moratorium on all owner-occupied residential loans. Potentially distressed homeowners are identified in advance and proactively offered assistance through a variety of financial programs and resources. Services Enhanced for Business and Commercial Customers M&I Treasury Management Services enhanced its remittance processing platform to streamline the collection of incoming payments for business and commercial customers, saving them time and money. Customers can also track deposits and view check images using online tools. We worked closely with our business clients to help them identify strategies for managing their deposits through the turbulence in the financial markets, offering them a wide range of automated investment options and helping them take advantage of increased FDIC coverage. Customer Sales and Service Awards M&I Bank received seven national awards and two regional awards for Excellence in Middle Market Banking in a survey conducted by Greenwich Associates. At the national level, M&I Bank’s Commercial Banking and Treasury Management teams received awards for excellence in overall satisfaction, online services, personal banking-overall satisfaction, relationship manager performance, overall satisfaction- Treasury Management, accuracy of operations-Treasury Management, and customer service-Treasury Management. At the regional level, M&I Bank received awards for excellence in overall satisfaction and overall satisfaction-Treasury Management. M&I Recognized by PLANSPONSOR Magazine M&I received 81 Best in Class awards from PLANSPONSOR magazine’s Defined Contribution Survey, ranking in the top quartile across 23 different service categories and four market segments. Of the 81 awards, M&I received top honors in 58 categories. 6 | Marshall & Ilsley Corporation
  8. 8. Our Commitment to the Environment Marshall & Ilsley Corporation has launched MiPlanet, a corporate-level initiative dedicated to helping preserve the environment through the ongoing implementation of cost-effective and responsible “green” practices at M&I. The program encourages employee participation through the submission of suggestions that will not only help preserve the environment but also contribute to the bottom line. M&I Mobile Banking M&I Mobile, a free mobile banking product that enables customers to conduct many of their banking transactions on the go, was introduced in fall and since then the popularity of this service has increased significantly. Customers are using M&I Mobile to not only check their account balances and verify transactions, but also to pay bills and make account transfers. M&I Community Day 2008 More than 3,100 employees from 365 locations throughout the M&I system helped M&I Community Day 2008 make a difference in the communities we serve. Local M&I Community Day projects throughout communities served by M&I included food drives, homebuilding, and community clean-ups for the benefit of those who need it most. Their efforts as part of this nationwide employee mobilization represent only a fraction of the impor- tant community service work our employees do on an annual basis. Financial Literacy M&I’s reputation as an advocate for financial literacy education continues to grow throughout M&I’s footprint. In 2008, M&I organized 400 formal financial literacy seminars and trained more than 6,000 participants. In recognition of its efforts, M&I received the Governor’s Financial Literacy Award from the Office of the Governor for the state of Wisconsin, the Youth Partnership Award from the City of Milwaukee, and the Personal Economics Program Bank Award from the Wisconsin Bankers Association. Annual Report to Shareholders | 7
  9. 9. Cedar Street Advisors Increases Assets Cedar Street Advisors, a provider of services to ultra-high-net-worth individuals and families, increased its assets under management by 14 percent for the year despite significant turmoil in the markets throughout the year. M&I Not-for-Profit Services M&I Not-for-Profit Services (NFPS), with assets under servicing of $13 billion, provides comprehensive investment management, trust, custody, and administrative services to over 700 organizations. Clients include foundations, health care organi- zations, educational institutions, faith-based organizations, social service agencies, municipalities, and arts organizations. In 2008, M&I NFPS created a new suite of value-added services for its clients including donor advised fund administration and online access, grant and scholarship program administration, and specialized fund accounting that can be provided in an insourced, outsourced, or co-sourced envi- ronment. Business line revenue increased 108% over the prior year through strong sales, exceptional client service, and a realignment of key relationships. 401kExchange Plan Sponsor Ratings Survey 2008 The 2008 401kExchange industry ratings survey placed M&I first in mid-market ($10-$100 million) retirement plan providers in both Investment Related services and Record Keeper and Administrative services, based on a client poll of more than 3,000 plan sponsors nationwide. The Marshall Funds The Marshall Funds family of mutual funds introduced three new strategies: Emerging Markets Equity Fund, Corporate Income Fund, and Core Plus Bond Fund. The Marshall Tax-Free Money Market Fund ranked No. 1 in its Lipper peer group for one- and three- year performance, and was recognized as the top performing national institutional fund for 2008 by the Money Fund Report. The Large-Cap Value Fund and Mid-Cap Growth Fund achieved top decile three-year performance among their peers. 8 | Marshall & Ilsley Corporation
  10. 10. Our Commitment to Diversity and Inclusion Marshall & Ilsley Corporation has further enhanced its focus on diversity through the formation of regional diversity/inclusion councils dedicated to enhancing awareness of diversity topics that impact M&I’s workplace, workforce, marketplace, and community. The regional councils’ efforts include grassroots initiatives based on the interests and needs of employees in each region. New CD Introductions M&I introduced four new FDIC-insured time deposit products including the Smart Money Loves Smart Saver CD, a CD option for individuals seeking higher yields for a longer term. M&I also introduced the Liquid CD, designed to compete with high-yielding money market accounts for customers seeking competitive yields and liquidity; M&I’s High Yield CD, a callable CD that offers a higher yielding alternative to conventional CDs, particularly in a low-interest rate environment; and M&I’s MiSelect CD, a bank deposit linked to an equity index and designed to give clients an option to enjoy the security of an FDIC-insured investment with higher potential stock market-based returns. Online Banking Services Enhanced M&I’s business online product offering was enhanced to provide comprehensive online banking, business online banking, and treasury online solutions. In addition, next day payments were introduced for retail and micro-business online banking customers and online statements are now available on all deposit accounts, saving customers time and money. Miretirement.com was also launched, featuring home page sign-on, retirement planning information, and interactive calculators. Our Commitment to Our Employees Marshall & Ilsley Corporation was recognized as one of the Best Places to Work by Milwaukee Magazine and MRA – The Management Association. M&I received the award based on feedback received through an anonymous employee survey and an evaluation of M&I’s efforts in key areas of focus. M&I also received top honors for multi-generational hiring and training employees. Annual Report to Shareholders | 9
  11. 11. Marshall & Ilsley Corporation Board of Directors Dennis J. Kuester Mark F. Furlong Andrew N. Baur Jon F. Chait John W. Daniels, Ted D. Kellner, Jr. CFA Chairman of the Board, President and Chairman of the Board, Chairman of the Board Marshall & Ilsley Chief Executive Officer, Southwest Bank, an and Chief Executive Chairman and Partner, Chairman of the Board Corporation Marshall & Ilsley M&I Bank Officer, Hudson Highland Quarles & Brady LLP, and Chief Executive Corporation Group, Inc., a global a law firm Officer, Fiduciary Chairman of the Board, provider of professional Management, Inc., M&I Marshall & Ilsley President and staffing, retained an investment Bank Chief Executive Officer, executive search, and management firm M&I Marshall & Ilsley human capital solutions Bank David J. Lubar Katharine C. John A. Mellowes San W. Orr, Jr. Robert J. O’Toole Peter M. Marshall & Ilsley Corporation Lyall Platten III President, Lubar & Co. Chairman of the Board Chairman of the Board, Chairman of the Board 770 North Water Street Incorporated, a private and Chief Executive Wausau Paper Corp. and Chief Executive President, retired, Vice Chairman of the Milwaukee, WI 53202 investment firm Officer, Charter Officer, retired, A.O. University of Wisconsin Board, retired, Marshall Manufacturing Company, Smith Corporation, (414) 765-7700 System & Ilsley Corporation Inc., a producer of bar, a manufacturer www.micorp.com rod, wire, and wire parts of electric motors for the auto industry and and water systems other industries technologies Directors Emeriti Oscar C. Boldt Glenn A. Francke Burleigh E. Jacobs James F. Kress Don R. O’Hare Stuart W. Tisdale Gus A. Zuehlke John S. Shiely Debra S. Waller George E. James B. Wigdale Wardeberg Chairman of the Board, Chairman of the Board Chairman Emeritus, and Chief Executive and Chief Executive Marshall & Ilsley Vice Chairman of the Officer, Briggs & Officer, Jockey Corporation Board, retired, Wisconsin Stratton Corporation, International, Inc., Energy Corporation, a manufacturer of a manufacturer a holding company with gasoline engines for of undergarments subsidiaries in utility and outdoor power equipment non-utility businesses 10 | Marshall & Ilsley Corporation
  12. 12. Marshall & Ilsley Corporation Officers Mark F. Furlong Gregory A. Smith Ann M. Walt A. Patricia M. Ryan R. Deneen Thomas R. Ellis Benschoter Buckhanan Cadorin President and Senior Vice President Senior Vice President and Senior Vice President, Chief Executive Officer, and Chief Financial Director of Corporate Tax, Marshall & Ilsley Senior Vice President, Vice President and Vice President and Marshall & Ilsley Officer, Marshall & Ilsley Corporation Marshall & Ilsley Director of Corporate Director of Corporate Corporation Marshall & Ilsley Corporation Corporation Diversity, Communications Executive Vice President, Corporation Marshall & Ilsley President and M&I Marshall & Ilsley Executive Vice President, Senior Vice President, Corporation Chief Executive Officer, Chief Financial Officer, Bank M&I Marshall & Ilsley M&I Marshall & Ilsley M&I Marshall & Ilsley M&I Marshall & Ilsley Bank Senior Vice President, Bank Bank Bank M&I Marshall & Ilsley Vice President, Bank M&I Foundation Randall J. Mark R. Hogan Patricia R. Brent J. Kelly Beth D. Kenneth C. Krei Thomas J. O’Neill Erickson Justiliano Knickerbocker Senior Vice President Senior Vice President Senior Vice President, Senior Vice President, and Chief Credit Officer, and Director of Corporate Marshall & Ilsley Marshall & Ilsley Senior Vice President, Senior Vice President Senior Vice President Marshall & Ilsley Marketing, Corporation Corporation Chief Administrative and Corporate Controller, and Chief Risk Officer, Corporation Marshall & Ilsley Officer, Marshall & Ilsley Marshall & Ilsley Chairman of the Board, Executive Vice President, Corporation and General Counsel, Corporation Corporation Executive Vice President President, and Chief M&I Marshall & Ilsley Marshall & Ilsley and Chief Credit Officer, Executive Officer, Bank Senior Vice President Corporation M&I Marshall & Ilsley Marshall & Ilsley and Controller, President, M&I Bank FSB Bank Trust Company N.A. General Counsel, M&I Marshall & Ilsley M&I Marshall & Ilsley Bank Chairman of the Board Bank and Chief Executive Officer, M&I Investment Management Corp. Paul J. Renard John L. Roberts Thomas A. Root Michael C. Smith Ronald E. Smith Senior Vice President Senior Vice President, Senior Vice President Senior Vice President Senior Vice President, and Director of Marshall & Ilsley and Audit Director, and Corporate Treasurer, Marshall & Ilsley Human Resources, Corporation Marshall & Ilsley Marshall & Ilsley Corporation Marshall & Ilsley Corporation Corporation Senior Vice President, Executive Vice President, Corporation M&I Marshall & Ilsley M&I Marshall & Ilsley Bank Bank Annual Report to Shareholders | 11
  13. 13. Selected Affiliate Boards M&I Marshall & Arizona West Coast Florida Central Florida Indiana Ilsley Bank Community Bank Community Bank Community Bank Community Bank Advisory Board Advisory Board Advisory Board Advisory Board 770 North Water Street Milwaukee, WI 53202 David G. Powers Marni McKinney Dennis R. Jones Jerry L. Neff (414) 765-7700 President, Chairman, Chairman and President, Chairman, www.mibank.com M&I Marshall & Ilsley Bank, M&I Marshall & Ilsley Bank, M&I Marshall & Ilsley Bank, M&I Marshall & Ilsley Bank, Indiana Region Central Florida Region Arizona West Coast Florida Region Directors Dennis J. Kuester Thomas B. Ball III Reagan K. Rick Michael C. Francis Charles M. Britton Chairman of the Board, Owner, Tom Ball Real Estate President, Owner/Manager, President, M&I Marshall & Ilsley Bank M&I Marshall & Ilsley Bank, Francis Insurance Agency M&I Marshall & Ilsley Bank, Robley R. Bruce Indiana Region West Coast Florida Region Chairman of the Board, Owner, Rob Bruce Auto Sales D. Otis Wolkins Marshall & Ilsley John F. Ackerman Malcolm “Mick” Aslin Vice President, retired, Corporation Randy O. Burden Managing Director, GTE Service Corporation Private Investor Investor, Real Estate & Cardinal Equity Partners Mark F. Furlong Financial Services Leyton S. Woolf, Jr. Morry L. Birnbaum President and Gerald L. Bepko Owner/Farmer, Chairman Emeritus, Chief Executive Officer, James P. Caruso Chancellor Emeritus, Woolf Roses, L.L.C. Marshall & Ilsley M&I Marshall & Ilsley Bank President, Pineloch Indiana University Trust Company N.A. Management Corp. President and Purdue University – John Zidich Chief Executive Officer, Indianapolis Glen R. Bomberger President/Publisher John T. Cash, Jr. Marshall & Ilsley Corporation The Arizona Republic Executive Vice President Indiana University President, Cash and Chief Financial Officer, Trustee’s Professor and Associates P.A. Richard A. Abdoo retired, A.O. Smith & Chairman of the Board Company G. Frederick Glass Robert G. Dello Russo and Chief Executive Officer, Vice President and Director President, Del-Air Heating retired, Wisconsin Energy Thomas R. Hayes of Intercollegiate Athletics, and Air Conditioning Corporation President and Indiana University Chief Operating Officer, Chairman of the Board, W. D. (Bill) Frederick Des Champs & Gregory, Inc. retired, We Energies Thomas K. McGowan Past Mayor, City of Orlando President and Harold W. Mullis Robert J. O’Toole M. A. (Manny) Garcia Chief Operating Officer, President, Chairman of the Board CEO, Atlantic Coast Kite Realty Group Trenam Kemker Attorneys and Chief Executive Officer, Management retired, A.O. Smith Curtis Miller Peter M. Platten III C. William Harkins Corporation Chairman, Vice Chairman of the Board, President, Harkins Katz, Sapper & Miller, LLP retired, Marshall & Ilsley George E. Wardeberg Development Corp. Corporation Vice Chairman of the Board, Robert H. Warrington J. Michael Hattaway retired, Wisconsin Energy Former President and Dale C. Rossman Corporation Owner, Hattaway Realty Chief Executive Officer, President, First Indiana Corporation James L. Hewitt DCR Services, Inc. James B. Wigdale President & CEO, Chairman Emeritus Michael W. Wells J. Gary Russ Hewitt Financial Corp. Marshall & Ilsley President, Owner, Corporation REI Investments, Inc. Vincent S. Hughes Russ Citrus Groves, Ltd. Directors Emeriti Retired, Hughes Supply Corp. John E. Forester Warren G. Simonds Richard T. McCree Sr. Carl L. Gosewehr Director of Client Chairman, McCree Inc. Relations and Business Burleigh E. Jacobs Development, Stuart W. Tisdale David M. McLeod Willis A. Smith James A. Urdan Executive Vice President, Construction, Inc. M&I Marshall & Ilsley Bank, Central Florida Region Thomas W. Moore President & CEO, Sunniland Corp. Timothy L. Murphy President, Magic Mining Company Michael R. Scures Executive Vice President, M&I Marshall & Ilsley Bank, Central Florida Region Jack E. Spillane Owner, Florida Mitigation Bank Bruce C. Starling Attorney/Automotive Donald F. Wright President, Wright, Fulford, Moorhead & Brown, P.A. 12 | Marshall & Ilsley Corporation
  14. 14. Kansas City Minnesota Appleton, WI Ashland, WI Brookfield, WI Burlington, WI Eagle River, WI Community Bank Community Bank Community Bank Community Bank Community Bank Community Bank Community Bank Advisory Board Advisory Board Advisory Board Advisory Board Advisory Board Advisory Board Advisory Board Pamela R. Berneking Bradley D. Chapin David J. Gitter James E. Zastrow J. Nathan Cunniff John J. Corbett James E. Levandoski President, President, Chairman, President, President, Chairman, President, M&I Marshall & Ilsley Bank, M&I Marshall & Ilsley Bank, M&I Marshall & Ilsley Bank, M&I Marshall & Ilsley Bank, M&I Marshall & Ilsley Bank, M&I Marshall & Ilsley Bank, M&I Marshall & Ilsley Bank, Kansas City Region Minnesota Appleton Ashland Brookfield Burlington Eagle River Malcolm “Mick” Aslin Craig Bentdahl William J. Braun Paul R. Bretting Robert H. Eldridge Steven J. Vonderheide Al Bybee Private Investor Former Chief President, Vice President, Executive Vice President President, Food Broker, retired Executive Officer, M&I Marshall & Ilsley Bank, C. G. Bretting and Secretary-Treasurer, M&I Marshall & Ilsley Bank, David J. Christie Gary S. Goska Excel Bank Corporation Appleton Manufacturing retired, Briggs & Stratton Burlington Company, Inc. Corporation President, Owner, Ray Bentdahl Thomas J. Boldt James R. Bauman D.J. Christie, Inc. Eliason Realty of Land Donald N. Marcouiller John R. Evans Former Chairman, Chief Executive Officer, Chairman, retired, O’Lakes Christopher J. Fisher Excel Bank Corporation The Boldt Company Regional Administrator, President, retired, M&I Marshall & Ilsley Bank, Richard D. Hansen retired, Evans Brothers Burlington Partner, Mike Fiterman John A. Bykowski Wisconsin Indianhead Company, Inc. Bryan Cave LLP President, retired, Glenda Dupons Technical College, President and President and M&I Marshall & Ilsley Bank, Andrew J. Fleckenstein Ashland Campus Charles A. Garney Chief Executive Officer, Chief Executive Officer, President, Eagle River Liberty Diversified Products SECURA Insurance Trustee, Bear Realty Inc. CEO and Chairman Leslie J. Whiteaker Mike Kwaterski Companies Fleck Foundation of the Board, Briarcliff Esperanza Frederick J. Koenen Vice President and Development Company President, Joyce A. Bytof W. P. Halquist Chief Financial Officer, Guerrero-Anderson Chairman of the Board, Kwaterski Brothers Memorial Medical Center Charles E. Mackey Chief Executive Officer, Chairman of the Board, Reineman’s True Value Inc. Wood Products, Inc. President and Coldwell Banker Halquist Stone Co., Inc. President, Chief Executive Officer, James A. Mangold III Milestone Growth Fund, Inc. The Real Estate Group, Inc. Capital Management, Inc. Irv Hansen President, Stephen M. Evans Larry C. Maddox Michael Horovitz Chairman, retired, Mangold Insurance, Inc. Former Owner, M&I Marshall & Ilsley Bank, Private Investor Owner and President, Daniel G. Rehberg Evans Title Companies, Inc. Brookfield Minneapolis Glass Teresa Martin Company President, Mark J. Fenlon James E. Keyes A to Z Refrigeration Co., Inc. Vice President, David Malmberg Northeast Regional Chairman of the Board, Lockton Companies, Inc. Lawrence Smith Manager, KSM Industries, Inc. Chairman and CEO, M&I Wealth Management Daniel J. Saale DCM Inc. Larry’s Barber Shop James M. Leef Chief Financial Officer Paul J. Heid Monica Nassif President, Nueterra Holdings, LLC Chairman of the Board, Industrial Towel & President, Heid Music Company, Inc. Uniform, Inc. Scott M. Slabotsky The Caldrea Company Shareholder, Mayer Mary M. Hosmer Gordon J. Liebl Sheldon Wert Hoffman McCann, Executive Vice President – President, an Independent CPA Firm Former President and Commercial Lines A. L. Schutzman Co., Inc. Chief Executive Officer, Managing Director, Department, Century Bancshares, Inc. CBIZ Accounting & Randall J. Wright Willis HRH, Inc. Tax Advisory Service President and John E. Pfefferle Chief Executive Officer, Scott Westlake President, Empire Level Mfg. Corp. Member, Pfefferle Companies Old Corkscrew Directors Emeriti Plantation, LLC Glenn A. Francke Timothy Suess Philip K. Harvey President and CEO, Suess Electronics John P. Metzger Lawrence W. Wirth President, retired, Presto Products, Inc. Director Emeritus Gus A. Zuehlke Annual Report to Shareholders | 13
  15. 15. Eau Claire, WI Green Bay, WI Hartland, WI Janesville, WI Kenosha, WI Community Bank Community Bank Community Bank Community Bank Community Bank Advisory Board Advisory Board Advisory Board Advisory Board Advisory Board Robert R. Hood Michael D. Simmer Arthur T. Kraemer Ronald K. Ochs Kenneth L. Fellman Chairman, President, Chairman, Chairman, President, M&I Marshall & Ilsley Bank, M&I Marshall & Ilsley Bank, M&I Marshall & Ilsley Bank, M&I Marshall & Ilsley Bank, M&I Marshall & Ilsley Bank, Eau Claire Green Bay Hartland Janesville Kenosha William A. Kaiser Bernard E. Dahlin Scott A. Kraemer Mary Willmer–Sheedy Mario Garetto, M.D. President, President, President, President, Gastroenterologist M&I Marshall & Ilsley Bank, Nichols Paper Products M&I Marshall & Ilsley Bank, M&I Marshall & Ilsley Bank, David Hagman Eau Claire Hartland Janesville Wesley H. Garner II President, Peter B. Scobie Steven C. Boysa Frank E. Bauchiero Chairman and CEO, Vista International Chairman and Great Lakes Calcium Corp. President, Consultant Packaging LLC Chief Executive Officer, Basco, LLC Michael J. Langenhorst J. Michael Borden Robert G. Terwall R. W. Scobie, Inc. Robert C. Goff President and CEO, retired, Chief Executive Officer, President, Steven R. Senn Anamax Group, U.S., President, Hufcor, Inc. Hallum Enterprises Inc. Chief Executive Officer, a division of Sanimax Goff’s Auto Body, Inc. Mark A. Cullen Dennis Vignieri Senn Blacktop, Inc. Corporation Stanley F. Hack Chairman, President and Roger R. Sipple Peter D. Mancuso Attorney J. P. Cullen & Sons Chief Executive Officer, Roger & Donald Sipple Farm Chief Executive Officer, Kenosha Beef International Donald L. McNeil Richard L. Dashnaw Lindquist Machine Co. Limited Daniel J. Toycen Retired, Executive Retired, Coltec Industries Ann M. Murphy President, Director, Inc. Dennis L. Hansch Toycen Motors, Inc. Murphy Development, Inc. Richard A. Natalizio Attorney, President, Thomas M. Olejniczak Chairman of the Board, Nowlan & Mouat Toycen of Ladysmith, Inc. Partner, retired, Charles H. Harker Liebmann, Conway, HNI Company, Inc. Kenneth C. Vance Olejniczak & Jerry, S.C. President, President, Charles L. Rushman Mid-States Concrete Ken Vance Car City Inc. Thomas L. Olson Chairman, Mary E. Kilkenny President, President, retired, First Weber Realty Ken Vance Motors, Inc. Sonoco – U.S. Mills, Inc. Broker, Paul J. Schmidt Keefe Real Estate Mark Skogen President, retired, James F. Ruethling President, Collections Unlimited, Inc. Festival Foods Retired, Sheldon Volk Beloit Clinic, S.C. Ronald A. Weyers Executive Vice President, David A. Weber retired, Directors Emeriti M&I Lake Country Bank President, Richard Baumgarten Mode Industries, Inc. Dennis H. Wollenzien William R. Bodart President and Chief Carl Farah Operating Officer, retired, Michael B. Gage M&I Lake Country Bank Edward L. Meyer, Jr. Peter M. Platten III Directors Emeriti Patrick A. Corcoran Anton R. Grasch J. Scott Kestly August U. Pabst Charles A. Perry Thomas J. Waldera 14 | Marshall & Ilsley Corporation
  16. 16. La Crosse, WI Madison, WI Marshfield, WI Mayville, WI Menomonee Oshkosh, WI Racine, WI Falls, WI Community Bank Community Bank Community Bank Community Bank Community Bank Community Bank Advisory Board Advisory Board Advisory Board Advisory Board Advisory Board Advisory Board Community Bank Advisory Board Larry W. Bodin Douglas S. Nelson Alan D. Nystrom Gregory Ryan Steven R. Schmudlach Timothy J. Majcen President, President, President, President, President, President, Richard C. Becker M&I Marshall & Ilsley Bank, M&I Marshall & Ilsley Bank, M&I Marshall & Ilsley Bank, M&I Marshall & Ilsley Bank, M&I Marshall & Ilsley Bank, M&I Marshall & Ilsley Bank, President, La Crosse Madison Marshfield Mayville Oshkosh Racine M&I Marshall & Ilsley Bank, Menomonee Falls Dr. Julio J. Bird, M.D. Timothy B. Erdman John Baltus Melvin Drinkwine Jere Chapin Matthew L. Andis Gundersen Lutheran Chairman and CEO, President, Retired, President, retired, President, Ronald R. Bast Erdman Holdings Baltus Oil Co. Tab Products Co. M&I Central State Bank Andis Company President, Karl J. Brickl Riteway Bus Service, Inc. John M. Flesch Donald Boon Leo R. Fisher Dennis Elmer Thomas L. Beck President, retired, Brickl Bros., Inc. Executive Vice President President, Chairman of the Board, Food Broker President, Robert E. Drisner and Treasurer, Boon Construction retired, Unico, Inc. President and Russell J. Callahan, Jr. Gary R. Lerch Gordon Flesch M&I Bank of Mayville Chief Executive Officer, Ronald D. Doine James O. Parrish Company, Inc. Retired, Herbergers President, retired, Community Health Dennis M. Kemmel President, Service Oil Company, Inc. Vice President, Finance, Care Services Harold F. Mayer Randolph A. Eddy, Sr. Doine Excavating, Inc. Owner, retired, Twin Disc, Inc. H. Andersen Lyke Vice President Operations, Cowles-Henke-Kemmel President, Donald H. Nimmer Directors Emeriti Terry Frankland retired, Oscar Mayer Foods Insurance Agency Carrier Insurance Agency President, Chief Executive Officer, Kenneth Jensen Corp. President, Lyke Corporation Enercon Industries George F. Olson Ernest C. Styberg, Jr. Barbara Skogen V&H, Inc. Corporation Robert F. O’Loughlin Dennis E. Schwab Sales and Engineering, Willard T. Walker, Sr. Vice President, Kenneth F. Heiman President, W. G. Strohwig Tool & Skogen’s Foodliner, Inc. President, Michael Richardson Harold C. Weiss Laser Link Golf Die, Inc. Owner, Coldwell Banker– Chief Executive Officer, Ronald A. Wessels Nasonville Dairy, Inc. Schwab Realty Ltd. Richardson Financial Richard R. Renk Roy Rohlinger President, retired, Group, Inc. Ronald Maurer President, Vice President, M&I Marshall & Ilsley Bank, The Renk Seed Company Rohlinger Construction, Inc. La Crosse President, Douglas H. Stadelmann Maurer Roofing President, Douglas G. Reuhl Stanley A. Waas Stadelmann President, President, Engineering, Inc. American of Madison Waas Boring & Cable, Inc. Director Emeritus Robert A. Schlicht Don A. Schneiders Past Chairman, M&I Marshall & Ilsley Bank, Madison Terry K. Shockley President, Shockley Group, Inc. Jay L. Smith President, JLS Investment Group F. Charles Steinhauer Partner, Steinhauer & Company Jerry J. Weygandt Professor of Accounting, UW School of Business Kathleen E. Woit President, Madison Community Foundation Annual Report to Shareholders | 15

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