DBRS Rates Marshall & Ilsley Corp. - Senior at A (high)

Dominion Bond Rating Service (“DBRS”) has today assigned ratings to Marshall & Ilsley Corporation (“M&I” or the “Company”) and its operating bank and thrift subsidiaries as indicated above. The trend for all ratings is Stable.

The ratings are based on M&I’s consistently superior and stable earnings growth, generated by a strong community-centered banking franchise and a broad range of banking, operating, and payment services. The ratings are further supported by the Company’s healthy profitability and sustained good asset quality through various economic cycles, along with a record of high internal equity growth.

M&I has been growing and expanding at a rapid pace, which presents some challenges. Loan growth, at nearly 17% CAGR over the past five years, has outstripped core deposit growth, resulting in M&I’s increasing reliance on more costly long-term debt funding. DBRS notes that, although the maturities of debt obligations are sufficiently staggered to avoid funding disruptions, the increasing need for debt financing could constrain M&I’s future loan growth and weaken its profitability. Concurrently, acquisition-related goodwill has lowered tangible common equity (“TCE”), resulting in the TCE-based capital ratios being weaker than those of most of its similarly-rated peers. As well, M&I’s exposure to commercial real estate (“CRE”) has been rising steadily and, at about 3.6 times TCE (excluding “owner-occupied” loans) at year-end 2005, it represents an elevated concentration risk. These challenges are also taken into account by the ratings.

M&I’s core strength emanates from its banking franchise, accounting to 67% of 2005 net earnings. This strength is anchored in a leading deposit market share in Wisconsin (ranked number one with 18%) and banking relationships with 40% of the corporations in the state and 30% of its consumers. Over the past five years, the Company has successfully expanded into higher growth markets, both through acquisitions and new branch openings. As a result, bank earnings in Wisconsin have declined to 42% from 73% of consolidated earnings during this period, while bank earnings from other regions have grown to 25% from 3% of consolidated earnings. The recent acquisitions of Gold Banc Corporation, Inc. and Trustcorp Financial, Inc. will strengthen M&I’s market positions in St. Louis and Kansas City, as well as in Florida’s densely populated southwestern markets.

Metavante, the Company’s fully owned subsidiary, is a leading provider of bank operating and payment services that generate stable and growing amounts of fee-based revenues, accounting for about 17% of 2005’s consolidated earnings. The stable growth in Metavante’s earnings arises from over 3,000 long-term multi-product contractual relationships that include 91 of the top 100 banks in the U.S. and a top-tier market position (number three) that facilitates both deeper client penetration and the formation of new client relationships. DBRS notes that the ownership of Metavante also provides M&I substantial financial flexibility. Although an attractive business, Metavante is capital intensive and requires a relatively high cost base. Its partial or full sale would provide M&I with substantial capital relief and improved operating efficiency.

M&I’s profitability – based on return on assets (ROA), risk adjusted return, and return on equity (ROE) –has consistently exceeded that of most of its peers over the past five years in spite of the relatively high cost structure of Metavante, the expenses associated with growth and expansion, and the rise in the relative cost of the funding. Good loan yields, low loan loss provisions, and the high non-interest income content of net revenues (59% in 2005) account for the Company’s attractive profitability.

The low loan loss provisioning reflects M&I’s strong asset quality – non-performing assets (NPAs) (including 90-plus day delinquencies) as percentages of loans, pre-tax earnings and TCE have consistently remained at or below those of most peers over the past five years. Net charge-offs (NCOs) have also remained at or below those of peers. The loan portfolio is balanced between the commercial and consumer sectors, and it is sufficiently diversified geographically and among various industries – save for the elevated concentration in CRE.

The holding company’s stand-alone financial profile is sound. Double-leverage at about 105% is not material, and unencumbered liquid assets are sufficient to cover all operating and debt service obligations, including anticipated dividend payments in excess of six months without taking into account dividend income from regulated bank and thrift subsidiaries.

Marshall & Ilsley Corporation, a diversified financial services corporation headquartered in Milwaukee, Wisconsin, reported US$46.2 billion in consolidated assets at December 31, 2005.