##### Table of Contents

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---

FORM 10-K



---



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2005

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

Commission File No. 1-15403



---

MARSHALL & ILSLEY CORPORATION

(Exact name of registrant as specified in its charter)



---



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Wisconsin                                                      |  | 39-0968604                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|770 North Water Street                                         |  |                                     
|Milwaukee, Wisconsin                                           |  | 53202                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

Registrants telephone number, including area code: (414) 765-7801



---

Securities registered pursuant
to Section 12(b) of the Act:



|                                                     |  |                                                
|---------------------------------------------------- |  | -----------------------------------------------
|Title of Each Class:                                 |  | Name of Each Exchange on Which Registered:     
|Common Stock - $1.00 par value 6.50% Common SPACESSM |  | New York Stock Exchange New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None



---

Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No ̈

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act.    Yes ̈No  x

Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the
Exchange Act. (Check one):

Large accelerated filer  x        Accelerated filer ̈Non-accelerated filer ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes ̈No  x

The aggregate market value of the voting stock held by nonaffiliates of the registrant as of June 30, 2005 was approximately $10,002,456,000. The
number of shares of common stock outstanding as of January 31, 2006 was 235,817,814.

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates information by reference from the Proxy Statement for the registrants Annual Meeting of Shareholders to be held on
April 25, 2006.



---



---

##### Table of Contents

MARSHALL & ILSLEY CORPORATION

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005

TABLE OF CONTENTS



|         |  |                                                                                                             |  |     
|-------- |  | ----------------------------------------------------------------------------------------------------------- |  | ----
|         |  |                                                                                                             |  | PAGE
|PART I  
|         |  |                                                                                                            
|ITEM 1.  |  | BUSINESS                                                                                                    |  | 1   
|         |  |                                                                                                            
|ITEM 1A. |  | RISK FACTORS                                                                                                |  | 11  
|         |  |                                                                                                            
|ITEM 1B. |  | UNRESOLVED STAFF COMMENTS                                                                                   |  | 17  
|         |  |                                                                                                            
|ITEM 2.  |  | PROPERTIES                                                                                                  |  | 17  
|         |  |                                                                                                            
|ITEM 3.  |  | LEGAL PROCEEDINGS                                                                                           |  | 17  
|         |  |                                                                                                            
|ITEM 4.  |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                         |  | 17  
|        
|PART II 
|         |  |                                                                                                            
|ITEM 5.  |  | MARKET FOR REGISTRANTS COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |  | 20  
|         |  |                                                                                                            
|ITEM 6.  |  | SELECTED FINANCIAL DATA                                                                                     |  | 21  
|         |  |                                                                                                            
|ITEM 7.  |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                       |  | 24  
|         |  |                                                                                                            
|ITEM 7A. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                  |  | 51  
|         |  |                                                                                                            
|ITEM 8.  |  | CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA FOR YEARS ENDED DECEMBER 31, 2005, 2004, AND 2003  |  | 53  
|         |  |                                                                                                            
|ITEM 9.  |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                        |  | 107 
|         |  |                                                                                                            
|ITEM 9A. |  | CONTROLS AND PROCEDURES                                                                                     |  | 107 
|         |  |                                                                                                            
|ITEM 9B. |  | OTHER INFORMATION                                                                                           |  | 108 
|        
|PART III
|         |  |                                                                                                            
|ITEM 10. |  | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                                          |  | 109 
|         |  |                                                                                                            
|ITEM 11. |  | EXECUTIVE COMPENSATION                                                                                      |  | 109 
|         |  |                                                                                                            
|ITEM 12. |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS              |  | 109 
|         |  |                                                                                                            
|ITEM 13. |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                              |  | 109 
|         |  |                                                                                                            
|ITEM 14. |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                      |  | 109 
|        
|PART IV 
|         |  |                                                                                                            
|ITEM 15. |  | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                                                                  |  | 109 



i



---

##### Table of Contents

PART I

ITEM 1. BUSINESS

General

Marshall & Ilsley Corporation (M&I or the Corporation), incorporated in Wisconsin in 1959, is a registered bank
holding company under the Bank Holding Company Act of 1956 (the BHCA) and is certified as a financial holding company under the Gramm-Leach-Bliley Act. As of December 31, 2005, M&I had consolidated total assets of approximately
$46.2 billion and consolidated total deposits of approximately $27.7 billion, making M&I the largest bank holding company headquartered in Wisconsin. The executive offices of M&I are located at 770 North Water Street, Milwaukee, Wisconsin
53202 (telephone number (414) 765-7801).

M&Is principal assets are the stock of its bank and nonbank subsidiaries, which,
as of February 1, 2006, included Metavante Corporation (Metavante), five bank and trust subsidiaries and a number of companies engaged in businesses that the Board of Governors of the Federal Reserve System (the Federal
Reserve Board) has determined to be closely-related or incidental to the business of banking. M&I provides its subsidiaries with financial and managerial assistance in such areas as budgeting, tax planning, auditing, compliance assistance,
asset and liability management, investment administration and portfolio planning, business development, advertising and human resources management.

Generally, M&I organizes its business segments based on legal entities. Each entity offers a variety of products and services to meet the needs of its customers and the particular market served. Based on the way M&I organizes its
business, M&I has two reportable segments: Banking and Data Services (or Metavante). Banking consists of accepting deposits, making loans and providing other services such as cash management, foreign exchange and correspondent banking to a
variety of commercial and retail customers. Data Services consists of providing data processing services, developing and selling software and providing consulting services to financial services companies, including M&I affiliates, as well as
providing credit card merchant services. M&Is primary other business segments include Trust Services, Mortgage Banking (residential and commercial), Capital Markets Group, Brokerage and Insurance Services, and Commercial Leasing.

Banking Operations

M&Is
bank subsidiaries provide a full range of banking services to individuals, businesses and governments throughout Wisconsin, and in the Phoenix and Tucson, Arizona metropolitan areas, the Minneapolis/St. Paul, Minnesota and the St. Louis, Missouri
metropolitan areas, Las Vegas, Nevada, Naples and Bonita Springs, Florida and Belleville, Illinois. These subsidiaries offer retail, institutional, business, international and correspondent banking and investment services through the operation of
195 banking offices in Wisconsin, 42 offices in Arizona, 14 offices in Minnesota, seven offices in Missouri, two offices in Florida, one office in Nevada and one office in Illinois, as well as on the Internet. M&Is bank subsidiaries hold a
significant portion of their mortgage loan and investment portfolios indirectly through their ownership interests in direct and indirect subsidiaries. M&I Marshall & Ilsley Bank (M&I Bank) is M&Is largest bank
subsidiary, with consolidated assets as of December 31, 2005 of approximately $38.9 billion.

Through its bank and nonbank
subsidiaries, M&I offers a variety of loan products to retail customers, including credit cards, lines of credit, automobile loans and leases, student loans, home equity loans, personal loans, residential mortgage loans and mortgage refinancing.
M&I also offers a variety of loan and leasing products to business, commercial and institutional customers, including business loans, lines of credit, standby letters of credit, credit cards, government-sponsored loans, commercial real estate
financing, construction financing, commercial mortgage loans and equipment and machinery leases. In addition, through its Home Lending Solutions division, M&I Bank FSB originates residential mortgage loans and lines of credit as part of its
wholesale lending program. M&I Business Credit, Inc. provides working capital loans to commercial borrowers secured by accounts receivable, inventory and other marketable assets. M&I Dealer Finance, Inc. provides retail vehicle lease and
installment sale financing. M&I Support Services Corp. provides bank operation support for loan and deposit account processing and maintenance, item processing and other banking services.

M&Is lending activities involve credit risk. Credit risk is controlled through active asset quality management and the use of lending standards
and thorough review of potential borrowers. M&I evaluates the credit



1



---

##### Table of Contents

risk of each borrower on an individual basis and, where deemed appropriate, collateral is obtained. Collateral varies by individual loan customer but may
include accounts receivable, inventory, real estate, equipment, deposits, personal and government guarantees, and general security agreements. Access to collateral is dependent upon the type of collateral obtained. On an on-going basis, M&I
monitors its collateral and the collateral value related to the loan balance outstanding.

The M&I bank subsidiaries may use wholesale
deposits, which include foreign (Eurodollar) deposits. Wholesale deposits are funds in the form of deposits generated through distribution channels other than M&Is own banking branches. These deposits allow M&Is bank subsidiaries
to gather funds across a geographic base and at pricing levels considered attractive, where the underlying depositor may be retail or institutional. Access to wholesale deposits also provides M&I with the flexibility to not pursue single service
time deposit relationships in markets that have experienced unprofitable pricing levels.

M&Is securitization activities are
generally limited to basic term or revolving securitization facilities associated with indirect automobile loans. A discussion of M&Is securitization activities is contained in Item 7, Managements Discussion and Analysis of
Financial Condition and Results of Operations, and in Note 8 of the Notes to the Consolidated Financial Statements contained in Item 8, Consolidated Financial Statements and Supplementary Data.

Data ServicesMetavante Operations

Metavante
delivers banking and payment technologies to financial services firms and businesses. Metavante products and services drive account processing for deposit, loan and trust systems, image-based and conventional check processing, electronic funds
transfer, consumer health care payments, and electronic presentment and payment. Metavante organizes its business in two groups: Financial Solutions and Payment Solutions.

The Financial Solutions Group includes banking and trust solutions, offering integrated products and services for financial services providers that are
centered on customer and account management, specializing in deposit, loan and investment accounts. Two core processing products offer financial institution clients flexibility in choosing either a licensed or an outsourced solution. Metavante
delivers a complete, integrated customer relationship management solution that offers analytical and decision support capabilities, channel integration, sales and service automation, and consulting services. Metavante electronic banking solutions
provide end-users with consolidated access to their financial relationships through Internet and mobile banking, as well as personal financial management software and telephone banking. Metavante corporate electronic banking solutions provide a
comprehensive set of Internet banking, multi-bank services, and collection and disbursement services that address the needs of corporate and middle-market customers. Metavante investment technology services offers a set of Internet-enabled products
and services that address asset and liability aggregation, trust and investment account management, and client and regulatory reporting. Through its image solutions division, Metavante provides comprehensive image-based check and document processing
and distributed image-capture solutions, including image-based payment processing, a national check image exchange and settlement network, and browser-based document and report management software. Metavante lending solutions provide loan
originating, processing and closing software systems for the residential mortgage, consumer and small business lending industries. Metavante also offers risk and compliance software, data, and services that address the regulatory and compliance
mandate of financial institutions.

Through its Payment Solutions Group Metavante provides a complete suite of payment solutions including
electronic bill presentment and payment; electronic check presentment and exchange; electronic funds transfer; signature and PIN-debit services; debit-, prepaid- and credit-card account processing; flexible-spending account, health-savings account
and health-reimbursement arrangement (FSA/HSA/HRA) medical payment cards; card personalization; balance transfer; automated clearing house (ACH); automated teller machine (ATM) driving; merchant and gateway processing; and transportation payment
services. Metavante owns and operates the NYCE Network. The NYCE Network provides financial institutions, retailers and independent ATM deployers with shared network services for ATMs, point-of-sale, account-to-account transfers and direct bill
payment for millions of consumers across the United States and Canada. Beyond its core service of providing the convenience of personal identification number (PIN) debit account access at ATMs and retailer point-of-sale terminals, NYCE provides ATM
driving and fully automated monitoring services, gateway services, on and off-line signature debit card processing, and card authorization solutions. Through its healthcare payments division, Metavante offers a



2



---

##### Table of Contents

consumer-directed health benefits payment platform and a market-leading employee benefits card to electronically access FSAs, HRAs, HSAs, transit/parking
accounts and dependent care accounts. Metavante provides medical identification cards, combination eligibility/payment cards, and the ability to access multiple benefits accounts from a single card. Metavante also provides a comprehensive
FSA/HSA/HRA platform that provides all the technology a financial institution, health insurance company, third-party administrator, or commercial business needs to offer these accounts. Services include account processing, trustee services, checks
and debit cards, online and phone access to account information, investment options, regulatory reporting and related data translation and movement between payers, providers and consumers.

Metavantes revenue consists of fees related to information and transaction processing services, software licensing and maintenance, conversion
services and other professional services. Maintenance fees include ongoing client support and product updates. Metavante also receives buyout fees related to client termination prior to the end of the contract term. The buyout fee is contractual and
based on the estimated remaining contract value. Buyout fees can vary significantly from quarter to quarter and year to year.

Metavantes expenses consist primarily of salaries and related expenses and processing servicing expenses, such as data processing, telecommunications and equipment expenses. Other operating costs include selling, general and
administrative costs, such as advertising and marketing expenses, travel, supplies and postage, and the use of outside firms for legal, accounting or other professional services, and amortization of investments in software, premises and equipment,
conversions and acquired intangible assets.

Other Business Operations

M&Is other nonbank subsidiaries operate a variety of bank-related businesses, including those providing trust services, residential mortgage banking, capital markets, brokerage and insurance, commercial
leasing, and commercial mortgage banking.

Trust Services. Marshall & Ilsley Trust Company N.A. (M&I Trust)
provides trust and employee benefit plan services to customers throughout the United States with offices in Wisconsin, Arizona, Minnesota, Florida, Nevada, Missouri and Indiana. M&I Investment Management Corp. offers a full range of asset
management services to M&I Trust, the Marshall Funds and other individual, business and institutional customers.

Residential
Mortgage Banking. M&I Mortgage Corp., a subsidiary of M&I Bank FSB, sells and services residential mortgage loans. M&I Mortgage Reinsurance Corporation, a subsidiary of M&I Bank, acts as a reinsurer of private mortgage insurance
written in connection with residential mortgage loans originated in the M&I system.

Capital Markets. M&I Capital Markets
Group L.L.C., M&I Capital Markets Group II, L.L.C. and M&I Ventures L.L.C. provide venture capital, financial advisory and strategic planning services to customers, including assistance in connection with the private placement of securities,
raising funds for expansion, leveraged buy-outs, divestitures, mergers and acquisitions and small business investment company transactions.

Brokerage and Insurance. M&I Brokerage Services, Inc., a broker-dealer registered with the National Association of Securities Dealers, Inc. and the Securities and Exchange Commission, provides brokerage and other
investment-related services to a variety of retail and commercial customers. M&I Insurance Services, Inc. provides life, long-term care and disability income insurance products and annuities to retail clients and business owners.

Commercial Leasing. M&I Equipment Finance Company, a subsidiary of M&I Bank, leases a variety of equipment and machinery to large and
small businesses.

Commercial Mortgage Banking. The Richter-Schroeder Company, Inc. originates and services long-term commercial
real estate loans for institutional investors.

Other. M&I Community Development Corporation makes investments designed
primarily to promote the public welfare in markets and communities served by affiliates and subsidiaries of M&I.

More information on
M&Is business segments is contained in Note 22 of the Notes to the Consolidated Financial Statements contained in Item 8, Consolidated Financial Statements and Supplementary Data.



3



---

##### Table of Contents

Risk Management

Managing risk is an essential component of successfully operating a financial services company. M&I has an enterprise-wide approach to risk governance, measurement, management and reporting risks inherent in its
businesses. Risk management practices include key elements such as independent checks and balances, formal authority limits, policies and procedures and portfolio management. M&Is internal audit department also evaluates risk management
activities. These activities include performing internal audits and reporting the results to management and the Audit and Risk Management Committees, as appropriate.

M&I has established a number of management committees responsible for assessing and evaluating risks associated with the Companys businesses including the Credit Policy Committee, Asset Liability Committee
(ALCO) and the Corporate Risk Management Committee. In 2005, M&I established a Risk Management Committee of the Board of Directors for oversight and governance of its risk management function. The Boards Risk Management Committee consists
of three non-management directors and has the responsibility of overseeing managements actions with respect to credit, market, liquidity, fiduciary, operational, compliance, legal and reputation risks as well as M&Is overall risk
profile. The Chief Risk Officer is responsible for reporting to this committee.

Operational Risk Management

Operational risk is the risk of loss from human errors, failed or inadequate processes or systems and external events. This risk is inherent in all
businesses. Resulting losses could take the form of explicit charges, increased operational costs, harm to M&Is reputation or lost opportunities.

M&I seeks to mitigate operational risk through a system of internal controls to manage this risk at appropriate levels. Primary responsibility for managing internal controls lies with the managers of
M&Is various business lines. M&I monitors and assesses the overall effectiveness of its system of internal controls on an ongoing basis. The Corporate Risk Management Committee oversees M&Is monitoring, management and
measurement of operational risk. In addition, M&I has established several other executive management committees to monitor, measure and report on specific operational risks to the Company, including, business continuity planning, customer
information security and compliance. These committees report to the Risk Management Committee of the Board of Directors on a regular basis.

Corporate Governance Matters

M&I has adopted a Code of Business Conduct and Ethics that applies to all of
M&Is employees, officers and directors, including M&Is Chief Executive Officer, Chief Financial Officer and Controller. The Code of Business Conduct and Ethics is filed as an exhibit to this report and is also available on
M&Is web site at www.micorp.com. M&I intends to disclose any amendment to or waiver of the Code of Business Conduct and Ethics that applies to M&Is Chief Executive Officer, Chief Financial Officer or Controller on its web
site within five business days following the date of the amendment or waiver.

M&I makes available free of charge through its web site
its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and its insiders Section 16 reports and all amendments to these reports as soon as reasonably practicable after these materials are filed with or
furnished to the Securities and Exchange Commission. In addition, certain documents relating to corporate governance matters are available on M&Is web site described above. These documents include, among others, the following:



| |  |  | Charter for the Audit Committee of the Board of Directors;
| | - |  | ----------------------------------------------------------



| |  |  | Charter for the Compensation and Human Resources Committee of the Board of Directors;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | Charter for the Nominating and Corporate Governance Committee of the Board of Directors;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | Categorical Standards for Lending, Banking and Other Business Relationships Involving M&Is Directors;
| | - |  | ------------------------------------------------------------------------------------------------------



4



---

##### Table of Contents

| |  |  | Corporate Governance Guidelines; and
| | - |  | ------------------------------------



| |  |  | Code of Business Conduct and Ethics.
| | - |  | ------------------------------------

Shareholders also may obtain a copy
of any of these documents free of charge by calling the M&I Shareholder Information Line at 1-800-318-0208. Information contained on any of M&Is web sites is not deemed to be a part of this Annual Report.

Acquisitions

On January 4,
2006, Marshall & Ilsley Trust Company N. A. completed the acquisition of the assets of FirstTrust Indiana (FirstTrust), a division of First Indiana Bank, N.A. The acquired assets included those related to FirstTrusts
provision of asset management, trust administration and estate planning services to high-net-worth individuals and institutional customers.

On January 3, 2006, Metavante completed the acquisition of AdminiSource Corp. (AdminiSource), a Carrollton, Texas provider of health care payment distribution services. The acquisition was part of Metavantes
continuing expansion of its consumer-directed health care payments business.

On December 21, 2005, M&I announced its plan to
acquire Trustcorp Financial, Inc. (Trustcorp), the St. Louis-based parent company of Missouri State Bank & Trust, which provides banking services in Missouri. The transaction, which is subject to approval by the stockholders of
Trustcorp and the receipt of requisite regulatory approvals, is expected to close in the second quarter of 2006.

On November 18,
2005, Metavante completed the acquisition of LINK2GOV Corp. (LINK2GOV) of Nashville, Tennessee. LINK2GOV is a provider of comprehensive, customized online phone and point-of-sale payment processing services, including credit and debit
solutions, to many federal, state and local governments and financial intermediaries servicing government entities, including the Internal Revenue Service.

On November 10, 2005, M&I announced its plan to acquire Gold Banc Corporation, Inc. (Gold Banc), the Leawood, Kansas-based parent company of Gold Bank, which provides commercial banking services
in Florida, Kansas, Missouri and Oklahoma. The transaction was approved by the Gold Banc stockholders on January 25, 2006, and is expected to be completed promptly following the receipt of the requisite regulatory approvals.

On October 6, 2005, Metavante completed the acquisition of Birmingham, Alabama-based Brasfield Corporation (Brasfield). Brasfield
provides core banking, processing, customer service, check and document imaging and check exchange services to community banks, and strengthens Metavantes community banking strategy.

On August 11, 2005, Metavante completed the acquisition of GHR Systems, Inc. (GHR) of Wayne, Pennsylvania. GHR provides loan origination
technologies for the residential mortgage and consumer finance industries, offers point of sale products for any channel and comprehensive underwriting, processing and closing technologies.

On August 8, 2005, Metavante completed the acquisition of TREEV LLC (TREEV) of Herndon, Virginia. TREEV provides browser-based document
imaging, storage and retrieval products and services for the financial-services industry in both lending and deposit environments. TREEV complements Metavantes check-imaging products and services by providing solutions for document storage and
retrieval, including electronic report storage.

On July 22, 2005, Metavante completed the acquisition of Med-i-Bank, Inc.
(MBI) of Waltham, Massachusetts. MBI provides electronic payment processing services for employee benefit and consumer-directed healthcare accounts, such as flexible spending accounts, health reimbursement arrangements and health savings
account systems.

On February 9, 2005, Metavante completed the acquisition of Clark, New Jerseybased Prime Associates, Inc., a
leading international provider of software, data and services that address the regulatory and compliance mandate of financial institutions such as anti-money laundering regulations. Prime Associates provides regulatory compliance solutions for the
Bank Secrecy Act and the USA PATRIOT Act of 2001 and regulations and policy statements promulgated thereunder, including Office of Foreign Asset Control filtering.



5



---

##### Table of Contents

More information on M&Is acquisitions can be found in Note 3 of the Notes to the Consolidated
Financial Statements contained in Item 8, Consolidated Financial Statements and Supplementary Data.

M&I continues to evaluate
opportunities to acquire banking institutions and other financial service providers and frequently conducts due diligence activities in connection with possible transactions. As a result, M&I may engage in discussions, and in some cases,
negotiations with prospective targets and may make future acquisitions for cash, equity or debt securities. The issuance of additional shares of M&I common stock would dilute a shareholders ownership interest in M&I. In addition,
M&Is acquisitions may involve the payment of a premium over book value, and therefore, some dilution of book value may occur with any future acquisition. Generally, it is M&Is policy not to comment on such discussions or possible
acquisitions until a definitive agreement has been signed. M&Is strategy for growth includes strengthening its presence in core markets, expanding into attractive markets and broadening its product offerings.

Principal Sources of Revenue

The
table below shows the amount and percentages of M&Is total consolidated revenues resulting from interest on loans and leases, interest on investment securities and fees for data processing services for each of the last three years ($ in
thousands):



|                         |  |                              |           |                         |                                   |   |        |                                   |                         |  |      |        |  |                         |         |  |               |   |  |   |          
|------------------------ |  | ---------------------------- | --------- | ----------------------- | --------------------------------- | - | ------ | --------------------------------- | ----------------------- |  | ---- | ------ |  | ----------------------- | ------- |  | ------------- | - |  | - | ---------
|                         |  | Interest on Loans and Leases |           |                         | Fees for Data Processing Services |   |        | Interest on Investment Securities |                         |  |     
|Years Ended December 31, |  | Amount                       |           | Percent ofTotalRevenues |                                   |   | Amount |                                   | Percent ofTotalRevenues |  |      | Amount |  | Percent ofTotalRevenues |         |  | TotalRevenues
|2005                     |  | $                            | 1,926,377 |                         | 48.6                              | % |        | $                                 | 1,141,371               |  | 28.8 | %      |  | $                       | 287,339 |  | 7.3           | % |  | $ | 3,962,890
|2004                     |  |                              | 1,404,189 |                         | 45.1                              |   |        |                                   | 891,005                 |  | 28.6 |        |  |                         | 261,330 |  | 8.4           |   |  |   | 3,112,285
|2003                     |  |                              | 1,304,060 |                         | 47.5                              |   |        |                                   | 657,827                 |  | 24.0 |        |  |                         | 225,602 |  | 8.2           |   |  |   | 2,745,721

M&I business segment information is contained in Note 22 of the Notes to the Consolidated
Financial Statements contained in Item 8, Consolidated Financial Statements and Supplementary Data.

Competition

M&I and its subsidiaries face substantial competition from hundreds of competitors in the markets they serve, some of which are larger and have
greater resources than M&I. M&Is bank subsidiaries compete for deposits and other sources of funds and for credit relationships with other banks, savings associations, credit unions, finance companies, mutual funds, life insurance
companies (and other long-term lenders) and other financial and non-financial companies located both within and outside M&Is primary market area, many of which offer products functionally equivalent to bank products. M&Is nonbank
operations compete with numerous banks, finance companies, data servicing companies, leasing companies, mortgage bankers, brokerage firms, financial advisors, trust companies, mutual funds and investment bankers in Wisconsin and throughout the
United States.

The markets for the banking and payment products and services offered by Metavante are intensely competitive. Metavante
competes with a variety of companies in various segments of the financial services industry, and its competitors vary in size and in the scope and breadth of products and services they offer. Certain segments of the financial services industry tend
to be highly fragmented with numerous companies competing for market share. Other segments of the financial services industry have large well-capitalized competitors who command the majority of market share. Metavante also faces competition from
in-house technology departments of existing and potential clients who may develop their own product offerings.

Employees

As of December 31, 2005, M&I and its subsidiaries employed in the aggregate 13,967 employees. M&I considers employee relations to be
excellent. None of the employees of M&I or its subsidiaries are represented by a collective bargaining group.



6



---

##### Table of Contents

Supervision and Regulation

As a registered bank holding company, M&I is subject to regulation and examination by the Federal Reserve Board under the BHCA. As of
February 1, 2006, M&I owned a total of five bank and trust subsidiaries, including two Wisconsin state banks, a Missouri state bank, a federal savings bank, and a national banking association. M&Is two Wisconsin state bank
subsidiaries are subject to regulation and examination by the Wisconsin Department of Financial Institutions, as well as by the Federal Reserve Board. M&Is Missouri state bank subsidiary is subject to regulation and examination by the
Missouri Department of Economic Development, Division of Finance, and the Federal Reserve Board. M&Is federal savings bank subsidiary is subject to regulation and examination by the Office of Thrift Supervision. M&Is national
bank, through which trust operations are conducted, is subject to regulation and examination by the Office of the Comptroller of the Currency. In addition, all of M&Is bank subsidiaries are subject to examination by the Federal Deposit
Insurance Corporation (FDIC).

Under Federal Reserve Board policy, M&I is expected to act as a source of financial strength
to each of its bank subsidiaries and to commit resources to support each bank subsidiary in circumstances when it might not do so absent such requirements. In addition, there are numerous federal and state laws and regulations which regulate the
activities of M&I and its bank subsidiaries, including requirements and limitations relating to capital and reserve requirements, permissible investments and lines of business, transactions with officers, directors and affiliates, loan limits,
consumer protection laws, privacy of financial information, predatory lending, fair lending, mergers and acquisitions, issuances of securities, dividend payments, inter-affiliate liabilities, extensions of credit and branch banking. Information
regarding capital requirements for bank holding companies and tables reflecting M&Is regulatory capital position at December 31, 2005 can be found in Note 14 of the Notes to the Consolidated Financial Statements contained in
Item 8, Consolidated Financial Statements and Supplementary Data.

The federal regulatory agencies have broad power to take prompt
corrective action if a depository institution fails to maintain certain capital levels. In addition, a bank holding companys controlled insured depository institutions are liable for any loss incurred by the FDIC in connection with the default
of, or any FDIC-assisted transaction involving, an affiliated insured bank or savings association. Current federal law provides that adequately capitalized and managed bank holding companies from any state may acquire banks and bank holding
companies located in any other state, subject to certain conditions. Banks are permitted to create interstate branching networks in states that have not opted out of interstate branching. M&I Bank currently maintains interstate
branches in Arizona and Minnesota and Southwest Bank of St. Louis, M&Is Missouri state bank subsidiary, maintains an interstate branch in Illinois.

The laws and regulations to which M&I is subject are constantly under review by Congress, regulatory agencies and state legislatures. In 1999, Congress enacted the Gramm-Leach-Bliley Act (the Act),
which eliminated certain barriers to and restrictions on affiliations between banks and securities firms, insurance companies and other financial services organizations. Among other things, the Act repealed certain Glass-Steagall Act restrictions on
affiliations between banks and securities firms, and amended the BHCA to permit bank holding companies that qualify as financial holding companies to engage in a broad list of financial activities, and any non-financial
activity that the Federal Reserve Board, in consultation with the Secretary of the Treasury, determines is complementary to a financial activity and poses no substantial risk to the safety and soundness of depository institutions or the
financial system. The Act treats various lending, insurance underwriting, insurance company, portfolio investment, financial advisory, securities underwriting, dealing and market-making, and merchant banking activities as financial in nature for
this purpose.

Under the Act, a bank holding company may become certified as a financial holding company by filing a notice with the
Federal Reserve Board, together with a certification that the bank holding company meets certain criteria, including capital, management, and Community Reinvestment Act requirements. M&I elected to become certified as a financial holding company
on June 18, 2003.

In 2001, Congress enacted the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (the USA PATRIOT Act). The USA PATRIOT Act is designed to deny terrorists and criminals the ability to obtain access to the United States financial system, and has significant implications for
depository institutions, brokers, dealers and other businesses involved in the transfer of money. The USA PATRIOT Act mandates financial services companies to implement additional policies and procedures with respect to, or additional measures
designed to address, any or all of the following matters, among others: money laundering, terrorist financing, identifying and reporting suspicious activities and currency transactions, and currency crimes.



7



---

##### Table of Contents

The earnings and business of M&I and its bank subsidiaries also are affected by the general economic
and political conditions in the United States and abroad and by the monetary and fiscal policies of various federal agencies. The Federal Reserve Board impacts the competitive conditions under which M&I operates by determining the cost of funds
obtained from money market sources for lending and investing and by exerting influence on interest rates and credit conditions. In addition, legislative and economic factors can be expected to have an ongoing impact on the competitive environment
within the financial services industry. The impact of fluctuating economic conditions and federal regulatory policies on the future profitability of M&I and its subsidiaries cannot be predicted with certainty.

Selected Statistical Information

Statistical information relating to M&I and its subsidiaries on a consolidated basis is set forth as follows:



| | (1) | Average Balance Sheets and Analysis of Net Interest Income for each of the last three years is included in Item 7, Managements Discussion and Analysis of Financial
Condition and Results of Operations.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Analysis of Changes in Interest Income and Interest Expense for each of the last two years is included in Item 7, Managements Discussion and Analysis of Financial
Condition and Results of Operations.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Nonaccrual, Past Due and Restructured Loans and Leases for each of the last five years is included in Item 7, Managements Discussion and Analysis of Financial Condition
and Results of Operations.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | Summary of Loan and Lease Loss Experience for each of the last five years (including the allocation of the allowance for loans and leases) is included in Item 7,
Managements Discussion and Analysis of Financial Condition and Results of Operations.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | Return on Average Shareholders Equity, Return on Average Assets and other statistical ratios for each of the last five years can be found in Item 6, Selected Financial
Data.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | Potential Problem Loans and Leases for the last two years can be found in Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following tables set forth certain statistical information relating to M&I and its subsidiaries on a consolidated
basis.



8



---

##### Table of Contents

Investment Securities

The amortized cost of M&Is consolidated investment securities, other than trading and other short-term investments, at December 31 of each
year are ($ in thousands):



|                                      |  |      |           |      |   |           |  |   |          
|------------------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|                                      |  | 2005 |           | 2004 |   | 2003     
|U.S. Treasury and government agencies |  | $    | 4,456,610 |      | $ | 4,147,593 |  | $ | 3,856,069
|States and political subdivisions     |  |      | 1,307,403 |      |   | 1,203,412 |  |   | 1,093,033
|Other                                 |  |      | 612,621   |      |   | 686,590   |  |   | 593,875  
|                                      |  |      |           |      |   |           |  |   |          
|Total                                 |  | $    | 6,376,634 |      | $ | 6,037,595 |  | $ | 5,542,977
|                                      |  |      |           |      |   |           |  |   |          

The maturities, at amortized cost, and weighted average yields (for tax-exempt obligations on a
fully taxable basis assuming a 35% tax rate) of investment securities at December 31, 2005 are ($ in thousands):



|                                      |  |                 |           |       |                                |   |        |                                |           |  |                 |        |  |       |           |  |        |   |       |   |           |        |      |       |  |   |           |  |      |  
|------------------------------------- |  | --------------- | --------- | ----- | ------------------------------ | - | ------ | ------------------------------ | --------- |  | --------------- | ------ |  | ----- | --------- |  | ------ | - | ----- | - | --------- | ------ | ---- | ----- |  | - | --------- |  | ---- | -
|                                      |  | Within One Year |           |       | After One But WithinFive Years |   |        | After Five But WithinTen Years |           |  | After Ten Years |        |  | Total |          
|                                      |  | Amount          |           | Yield |                                |   | Amount |                                | Yield     |  |                 | Amount |  | Yield |           |  | Amount |   | Yield |   |           | Amount |      | Yield | 
|U.S. Treasury and government agencies |  | $               | 1,135,435 |       | 4.55                           | % |        | $                              | 2,301,947 |  | 4.58            | %      |  | $     | 895,948   |  | 4.58   | % |       | $ | 123,280   |        | 4.58 | %     |  | $ | 4,456,610 |  | 4.57 | %
|States and political subdivisions     |  |                 | 96,095    |       | 7.54                           |   |        |                                | 330,149   |  | 7.55            |        |  |       | 292,774   |  | 6.86   |   |       |   | 588,385   |        | 6.51 |       |  |   | 1,307,403 |  | 6.93 |  
|Other                                 |  |                 | 72,368    |       | 5.74                           |   |        |                                | 104,157   |  | 5.20            |        |  |       | 43,677    |  | 4.83   |   |       |   | 392,419   |        | 4.42 |       |  |   | 612,621   |  | 4.74 |  
|                                      |  |                 |           |       |                                |   |        |                                |           |  |                 |        |  |       |           |  |        |   |       |   |           |        |      |       |  |   |           |  |      |  
|Total                                 |  | $               | 1,303,898 |       | 4.84                           | % |        | $                              | 2,736,253 |  | 4.96            | %      |  | $     | 1,232,399 |  | 5.13   | % |       | $ | 1,104,084 |        | 5.55 | %     |  | $ | 6,376,634 |  | 5.07 | %
|                                      |  |                 |           |       |                                |   |        |                                |           |  |                 |        |  |       |           |  |        |   |       |   |           |        |      |       |  |   |           |  |      |  

Types of Loans and Leases

M&Is consolidated loans and leases, including loans held for sale, classified by type, at December 31 of each year are (in thousands):



|                                       |  |      |            |      |   |            |  |      |            |      |   |            |  |   |           
|-------------------------------------- |  | ---- | ---------- | ---- | - | ---------- |  | ---- | ---------- | ---- | - | ---------- |  | - | ----------
|                                       |  | 2005 |            | 2004 |   | 2003       |  | 2002 |            | 2001
|Commercial, financial and agricultural |  | $    | 9,491,368  |      | $ | 8,396,069  |  | $    | 7,013,073  |      | $ | 6,791,404  |  | $ | 5,656,384 
|Industrial development revenue bonds   |  |      | 74,107     |      |   | 85,394     |  |      | 97,601     |      |   | 80,110     |  |   | 71,892    
|Real estate:                           |  |      |            |      |   |            |  |      |            |      |   |            |  |   |           
|Construction                           |  |      | 3,641,942  |      |   | 2,265,227  |  |      | 1,766,697  |      |   | 1,404,414  |  |   | 1,057,691 
|Mortgage:                              |  |      |            |      |   |            |  |      |            |      |   |            |  |   |           
|Residential                            |  |      | 9,884,283  |      |   | 8,548,029  |  |      | 6,834,360  |      |   | 6,412,380  |  |   | 5,237,148 
|Commercial                             |  |      | 8,825,104  |      |   | 8,164,099  |  |      | 7,149,149  |      |   | 6,586,332  |  |   | 5,099,093 
|                                       |  |      |            |      |   |            |  |      |            |      |   |            |  |   |           
|Total mortgage                         |  |      | 18,709,387 |      |   | 16,712,128 |  |      | 13,983,509 |      |   | 12,998,712 |  |   | 10,336,241
|Personal                               |  |      | 1,617,761  |      |   | 1,540,024  |  |      | 1,747,738  |      |   | 1,852,202  |  |   | 1,210,808 
|Lease financing                        |  |      | 632,348    |      |   | 537,930    |  |      | 576,322    |      |   | 782,004    |  |   | 962,356   
|                                       |  |      |            |      |   |            |  |      |            |      |   |            |  |   |           
|Total loans and leases                 |  |      | 34,166,913 |      |   | 29,536,772 |  |      | 25,184,940 |      |   | 23,908,846 |  |   | 19,295,372
|Less:                                  |  |      |            |      |   |            |  |      |            |      |   |            |  |   |           
|Allowance for loan and lease losses    |  |      | 363,769    |      |   | 358,110    |  |      | 349,561    |      |   | 338,409    |  |   | 268,198   
|                                       |  |      |            |      |   |            |  |      |            |      |   |            |  |   |           
|Net loans and leases                   |  | $    | 33,803,144 |      | $ | 29,178,662 |  | $    | 24,835,379 |      | $ | 23,570,437 |  | $ | 19,027,174
|                                       |  |      |            |      |   |            |  |      |            |      |   |            |  |   |           



9



---

##### Table of Contents

Loan and Lease Balances and Maturities

The analysis of selected loan and lease maturities at December 31, 2005 and the rate structure for the categories indicated are ($ in thousands):



|                                       |  |                  |           |                                                       |   |                 |  |       |         |                        |   |                    |  |       |           |  |   |           |  |   |          
|-------------------------------------- |  | ---------------- | --------- | ----------------------------------------------------- | - | --------------- |  | ----- | ------- | ---------------------- | - | ------------------ |  | ----- | --------- |  | - | --------- |  | - | ---------
|                                       |  | Maturity         |           | Rate Structure of Loans and Leases Due After One Year
|                                       |  | One Year Or Less |           | Over OneYearThroughFive Years                         |   | Over Five Years |  | Total |         | WithPre-determinedRate |   | With Floating Rate |  | Total
|Commercial, financial and agricultural |  | $                | 6,243,262 |                                                       | $ | 2,881,816       |  | $     | 400,176 |                        | $ | 9,525,254          |  | $     | 1,297,173 |  | $ | 1,984,819 |  | $ | 3,281,992
|Industrial development revenue bonds   |  |                  | 2,392     |                                                       |   | 25,751          |  |       | 45,964  |                        |   | 74,107             |  |       | 38,017    |  |   | 33,698    |  |   | 71,715   
|Real estate  construction             |  |                  | 1,430,875 |                                                       |   | 2,197,263       |  |       | 13,804  |                        |   | 3,641,942          |  |       | 252,107   |  |   | 1,958,960 |  |   | 2,211,067
|Lease Financing                        |  |                  | 131,644   |                                                       |   | 439,386         |  |       | 61,318  |                        |   | 632,348            |  |       | 500,704   |  |   |          |  |   | 500,704  
|                                       |  |                  |           |                                                       |   |                 |  |       |         |                        |   |                    |  |       |           |  |   |           |  |   |          
|Total                                  |  | $                | 7,808,173 |                                                       | $ | 5,544,216       |  | $     | 521,262 |                        | $ | 13,873,651         |  | $     | 2,088,001 |  | $ | 3,977,477 |  | $ | 6,065,478
|                                       |  |                  |           |                                                       |   |                 |  |       |         |                        |   |                    |  |       |           |  |   |           |  |   |          

Notes:



|(1) | Scheduled repayments are reported in the maturity category in which the payments are due based on the terms of the loan agreements. Demand loans, loans having no stated schedule of
repayments and no stated maturity, and overdrafts are reported as due in one year or less.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | The estimated effect arising from the use of interest rate swaps as shown in the rate structure of loans and leases is immaterial.
|--- | ----------------------------------------------------------------------------------------------------------------------------------

Deposits

The average amount of and
the average rate paid on selected deposit categories for each of the years ended December 31 is as follows ($ in thousands):



|                                    |  |        |            |      |      |   |        |      |            |  |      |        |  |      |            |  |      |  
|----------------------------------- |  | ------ | ---------- | ---- | ---- | - | ------ | ---- | ---------- |  | ---- | ------ |  | ---- | ---------- |  | ---- | -
|                                    |  | 2005   |            |      | 2004 |   |        | 2003 |           
|                                    |  | Amount |            | Rate |      |   | Amount |      | Rate       |  |      | Amount |  | Rate |           
|Noninterest bearing demand deposits |  | $      | 4,942,803  |      |      |   |        | $    | 4,585,628  |  |      |        |  | $    | 4,189,724  |  |      |  
|Interest bearing demand deposits    |  |        | 2,030,996  |      | 0.89 | % |        |      | 2,233,297  |  | 0.74 | %      |  |      | 2,111,753  |  | 0.90 | %
|Savings deposits                    |  |        | 8,118,331  |      | 2.23 |   |        |      | 7,330,492  |  | 0.82 |        |  |      | 7,226,830  |  | 0.69 |  
|Time deposits                       |  |        | 11,009,343 |      | 3.14 |   |        |      | 9,838,518  |  | 2.03 |        |  |      | 8,457,571  |  | 1.89 |  
|                                    |  |        |            |      |      |   |        |      |            |  |      |        |  |      |            |  |      |  
|Total deposits                      |  | $      | 26,101,473 |      |      |   |        | $    | 23,987,935 |  |      |        |  | $    | 21,985,878 |  |      |  
|                                    |  |        |            |      |      |   |        |      |            |  |      |        |  |      |            |  |      |  

The maturity distribution of time deposits issued in amounts of $100,000 and over outstanding at
December 31, 2005 ($ in thousands) is:



|                                   |  |   |          
|---------------------------------- |  | - | ---------
|Three months or less               |  | $ | 1,727,521
|Over three and through six months  |  |   | 315,181  
|Over six and through twelve months |  |   | 1,141,096
|Over twelve months                 |  |   | 2,468,561
|                                   |  |   |          
|Total                              |  | $ | 5,652,359
|                                   |  |   |          

At December 31, 2005, time deposits issued by foreign offices totaled $2.6 billion.The majority of foreign deposits were in denominations of $100,000 or more.



10



---

##### Table of Contents

Short-Term Borrowings

Information related to M&Is Federal funds purchased and security repurchase agreements for the last three years is as follows ($ in thousands):



|                                               |  |      |           |   |      |   |           |      |  |   |           |  
|---------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                               |  | 2005 |           |   | 2004 |   |           | 2003 | 
|Amount outstanding at year end                 |  | $    | 2,325,863 |   |      | $ | 1,478,103 |      |  | $ | 741,646   |  
|Average amount outstanding during the year     |  |      | 2,043,314 |   |      |   | 2,035,428 |      |  |   | 2,580,291 |  
|Maximum outstanding at any months end         |  |      | 2,757,845 |   |      |   | 3,051,606 |      |  |   | 3,684,044 |  
|Weighted average interest rate at year end     |  |      | 4.04      | % |      |   | 2.05      | %    |  |   | 0.73      | %
|Weighted average interest rate during the year |  |      | 3.21      |   |      |   | 1.27      |      |  |   | 1.11      |  

Information relating to the Corporations short-term borrowings is included in Note 12 of the
Notes to the Consolidated Financial Statements contained in Item 8, Consolidated Financial Statements and Supplementary Data.

ITEM 1A. RISK FACTORS

Forward-Looking Statements

This report contains statements that may constitute forward-looking statements within the meaning of the safe-harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995, such as statements other than historical facts contained or incorporated by reference in this report. These forward-looking statements include statements with respect to
M&Is financial condition, results of operations, plans, objectives, future performance and business, including statements preceded by, followed by or that include the words believes, expects, or
anticipates, references to estimates or similar expressions. Future filings by M&I with the Securities and Exchange Commission, and future statements other than historical facts contained in written material, press releases and oral
statements issued by, or on behalf of, M&I may also constitute forward-looking statements.

All forward-looking statements contained in
this report or which may be contained in future statements made for or on behalf of M&I are based upon information available at the time the statement is made and M&I assumes no obligation to update any forward-looking statements.
Forward-looking statements are subject to significant risks and uncertainties, and M&Is actual results may differ materially from the results discussed in such forward-looking statements. Factors that might cause actual results to differ
from the results discussed in forward-looking statements include, but are not limited, to the risk factors set forth below.

Risk Factors

M&Is earnings are significantly affected by general business and economic conditions, including credit risk and interest rate risk.

M&Is business and earnings are sensitive to general business and economic conditions in the United States and, in particular,
the states where it has significant operations, including Wisconsin, Arizona, Minnesota, Missouri and Florida. These conditions include short-term and long-term interest rates, inflation, monetary supply, fluctuations in both debt and equity capital
markets, the strength of the U.S. and local economies, consumer spending, borrowing and saving habits, and fluctuations in the housing market. For example, an economic downturn, increase in unemployment or higher interest rates could decrease the
demand for loans and other products and services and/or result in a deterioration in credit quality and/or loan performance and collectability. Nonpayment of loans, if it occurs, could have an adverse effect on M&Is financial condition and
results of operations. Higher interest rates also could increase M&Is cost to borrow funds and increase the rate M&I pays on deposits. In addition, an overall economic slowdown could negatively impact the purchasing and decision-making
activities of the financial institution customers of Metavante.

Terrorism, acts of war or international conflicts could negatively affect
M&Is business and financial condition.

Acts or threats of war or terrorism, international conflicts, including ongoing
military operations in Iraq and Afghanistan, and the actions taken by the U.S. and other governments in response to such events could negatively impact general business and economic conditions in the U.S. If terrorist activity, acts of war or other
international hostilities cause an overall economic decline, the financial condition and operating results of M&I could be



11



---

##### Table of Contents

materially adversely affected. The potential for future terrorist attacks, the national and international responses to terrorist attacks or perceived threats
to national security and other actual or potential conflicts or acts of war, including conflict in the Middle East, have created many economic and political uncertainties that could seriously harm M&Is business and results of operations in
ways that cannot presently be predicted.

M&I earnings also are significantly affected by the fiscal and monetary policies of the federal government
and its agencies, which could affect repayment of loans and thereby materially adversely affect M&I.

The policies of the Federal
Reserve Board impact M&I significantly. The Federal Reserve Board regulates the supply of money and credit in the United States. Its policies directly and indirectly influence the rate of interest earned on loans and paid on borrowings and
interest-bearing deposits and can also affect the value of financial instruments M&I holds. Those policies determine to a significant extent M&Is cost of funds for lending and investing. Changes in those policies are beyond
M&Is control and are difficult to predict. Federal Reserve Board policies can affect M&Is borrowers, potentially increasing the risk that they may fail to repay their loans. For example, a tightening of the money supply by the
Federal Reserve Board could reduce the demand for a borrowers products and services. This could adversely affect the borrowers earnings and ability to repay its loan, which could materially adversely affect M&I.

The banking and financial services industry is highly competitive, which could adversely affect M&Is financial condition and results of operations.

M&I operates in a highly competitive environment in the products and services M&I offers and the markets in which M&I
serves. The competition among financial services providers to attract and retain customers is intense. Customer loyalty can be easily influenced by a competitors new products, especially offerings that provide cost savings to the customer.
Some of M&Is competitors may be better able to provide a wider range of products and services over a greater geographic area.

M&I believes the banking and financial services industry will become even more competitive as a result of legislative, regulatory and technological changes and the continued consolidation of the industry. Technology has lowered barriers
to entry and made it possible for non-banks to offer products and services traditionally provided by banks, such as automatic funds transfer and automatic payment systems. Also, investment banks and insurance companies are competing in more banking
businesses such as syndicated lending and consumer banking. Many of M&Is competitors are subject to fewer regulatory constraints and have lower cost structures. M&I expects the consolidation of the banking and financial services
industry to result in larger, better-capitalized companies offering a wide array of financial services and products.

Federal and state agency
regulation could increase M&Is cost structures or have other negative effects on M&I.

The holding company, its subsidiary
banks and many of its non-bank subsidiaries, including Metavante, are heavily regulated at the federal and state levels. This regulation is designed primarily to protect consumers, depositors and the banking system as a whole, not stockholders.
Congress and state legislatures and federal and state regulatory agencies continually review banking laws, regulations and policies for possible changes. Changes to statutes, regulations or regulatory policies, including changes in interpretation or
implementation of statutes, regulations or policies, could affect M&I in substantial and unpredictable ways including limiting the types of financial services and products M&I may offer, increasing the ability of non-banks to offer competing
financial services and products and/or increasing M&Is cost structures. Also, M&Is failure to comply with laws, regulations or policies could result in sanctions by regulatory agencies and damage to its reputation.

M&I is subject to examinations and challenges by tax authorities, which, if not resolved in M&Is favor, could adversely affect M&Is financial
condition and results of operations.

In the normal course of business, M&I and its affiliates are routinely subject to examinations
and challenges from federal and state tax authorities regarding the amount of taxes due in connection with investments it has made and the businesses in which it is engaged. Recently, federal and state taxing authorities have become increasingly
aggressive in challenging tax positions taken by financial institutions. These tax positions may relate to tax compliance, sales and use, franchise, gross receipts, payroll, property and income tax issues, including tax base, apportionment and tax
credit planning. The challenges made by tax authorities may result in adjustments to the timing or amount of taxable income or deductions or the allocation of income among tax jurisdictions. If any such challenges are made and are not resolved in
M&Is favor, they could have an adverse effect on M&Is financial condition and results of operations.



12



---

##### Table of Contents

Consumers may decide not to use banks to complete their financial transactions, which could result in a loss of income
to M&I.

Technology and other changes are allowing parties to complete financial transactions that historically have involved banks
at one or both ends of the transaction. For example, consumers can now pay bills and transfer funds directly without banks. The process of eliminating banks as intermediaries, known as disintermediation, could result in the loss of fee income, as
well as the loss of customer deposits and income generated from those deposits.

Maintaining or increasing M&Is market share depends on market
acceptance and regulatory approval of new products and services and other factors, and M&Is failure to achieve such acceptance and approval could harm its market share.

M&Is success depends, in part, on its ability to adapt its products and services to evolving industry standards and to control expenses. There
is increasing pressure on financial services companies to provide products and services at lower prices. This can reduce M&Is net interest margin and revenues from its fee-based products and services. In addition, M&Is success
depends in part on its ability to generate significant levels of new business in its existing markets and in identifying and penetrating markets. Growth rates for card-based payment transactions and other product markets may not continue at recent
levels. Further, the widespread adoption of new technologies, including Internet-based services, could require M&I to make substantial expenditures to modify or adapt its existing products and services or render M&Is existing products
obsolete. M&I may not successfully introduce new products and services, achieve market acceptance of its products and services, develop and maintain loyal customers and/or break into targeted markets.

The holding company relies on dividends from its subsidiaries for most of its revenue, and the banking subsidiaries hold a significant portion of their assets
indirectly.

The holding company is a separate and distinct legal entity from its subsidiaries. It receives substantially all of its
revenue from dividends from its subsidiaries. These dividends are the principal source of funds to pay dividends on the holding companys common stock and interest on its debt. The payment of dividends by a subsidiary is subject to federal law
restrictions as well as to the laws of the subsidiarys state of incorporation. Also, a parent companys right to participate in a distribution of assets upon a subsidiarys liquidation or reorganization is subject to the prior claims
of the subsidiarys creditors. In addition, the M&I bank and savings association subsidiaries hold a significant portion of their mortgage loan and investment portfolios indirectly through their ownership interests in direct and indirect
subsidiaries.

M&I depends on the accuracy and completeness of information about customers and counterparties, and inaccurate or incomplete
information could negatively impact M&Is financial condition and results of operations.

In deciding whether to extend credit
or enter into other transactions with customers and counterparties, M&I may rely on information provided to it by customers and counterparties, including financial statements and other financial information. M&I may also rely on
representations of customers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. For example, in deciding whether to extend credit to a business,
M&I may assume that the customers audited financial statements conform with generally accepted accounting principles and present fairly, in all material respects, the financial condition, results of operations and cash flows of the
customer. M&I may also rely on the audit report covering those financial statements. M&Is financial condition and results of operations could be negatively impacted to the extent it relies on financial statements that do not comply
with GAAP or that are materially misleading.

M&Is accounting policies and methods are the basis of how M&I reports its financial
condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain.

M&Is accounting policies and methods are fundamental to how M&I records and reports its financial condition and results of operations. M&Is management must exercise judgment in selecting and applying many of these
accounting policies and methods in order to ensure that they comply with generally accepted accounting



13



---

##### Table of Contents

principles and reflect managements judgment as to the most appropriate manner in which to record and report M&Is financial condition and
results of operations. In some cases, management must select the accounting policy or method to apply from two or more alternatives, any of which might be reasonable under the circumstances yet might result in M&Is reporting materially
different amounts than would have been reported under a different alternative.

M&I has identified four accounting policies as being
critical to the presentation of its financial condition and results of operations because they require management to make particularly subjective and/or complex judgments about matters that are inherently uncertain and because of the
likelihood that materially different amounts would be reported under different conditions or using different assumptions. These critical accounting policies relate to: (1) the allowance for loan and lease losses; (2) capitalized software
and conversion costs; (3) financial asset sales and securitizations; and (4) income taxes. Because of the inherent uncertainty of estimates about these matters, no assurance can be given that the application of alternative policies or
methods might not result in M&Is reporting materially different amounts.

More information on M&Is critical accounting
policies is contained in Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations.

M&I has an active
acquisition program, which involves risks related to integration of acquired companies or businesses and the potential for the dilution of the value of M&I stock.

M&I regularly explores opportunities to acquire banking institutions, financial technology providers and other financial services providers. M&I cannot predict the number, size or timing of future
acquisitions. M&I typically does not publicly comment on a possible acquisition or business combination until it has signed a definitive agreement for the transaction. Once M&I has signed a definitive agreement, transactions of this type are
generally subject to regulatory approvals and other customary conditions. There can be no assurance M&I will receive such regulatory approvals without unexpected delays or conditions or that such conditions will be timely met to M&Is
satisfaction, or at all.

Difficulty in integrating an acquired company or business may cause M&I not to realize expected revenue
increases, cost savings, increases in geographic or product presence, and/or other projected benefits from the acquisition. Specifically, the integration process could result in higher than expected deposit attrition (run-off), loss of customers and
key employees, the disruption of M&Is business or the business of the acquired company, or otherwise adversely affect M&Is ability to maintain existing relationships with clients, employees and suppliers or to enter into new
business relationships. M&I may not be able to successfully leverage the combined product offerings to the combined customer base. These factors could contribute to M&I not achieving the anticipated benefits of the acquisition within the
desired time frames, if at all.

Future acquisitions could require M&I to issue stock, to use substantial cash or liquid assets or to
incur debt. In such cases, the value of M&I stock could be diluted and M&I could become more susceptible to economic downturns and competitive pressures.

M&I is dependent on senior management, and the loss of service of any of M&Is senior executive officers could cause M&Is business to suffer.

M&Is continued success depends to a significant extent upon the continued services of its senior management. The loss of services of any of
M&Is senior executive officers could cause M&Is business to suffer. In addition, M&Is success depends in part upon senior managements ability to implement M&Is business strategy.

M&Is stock price can be volatile.

M&Is stock price can fluctuate widely in response to a variety of factors including:



| |  |  | actual or anticipated variations in M&Is quarterly results;
| | - |  | ------------------------------------------------------------



| |  |  | new technology or services by M&Is competitors;
| | - |  | ------------------------------------------------



14



---

##### Table of Contents

| |  |  | unanticipated losses or gains due to unexpected events, including losses or gains on securities held for investment purposes;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------



| |  |  | significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving M&I or its competitors;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in accounting policies or practices;
| | - |  | --------------------------------------------



| |  |  | failure to integrate M&Is acquisitions or realize anticipated benefits from M&Is acquisitions; or
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | changes in government regulations.
| | - |  | ----------------------------------

General market
fluctuations, industry factors and general economic and political conditions, such as economic slowdowns or recessions, interest rate changes, credit loss trends or currency fluctuations, also could cause M&Is stock price to decrease
regardless of its operating results.

M&I may be a defendant in a variety of litigation and other actions, which may have a material adverse effect
on its business, operating results and financial condition.

M&I and its subsidiaries may be involved from time to time in a variety
of litigation arising out of M&Is business. M&Is insurance may not cover all claims that may be asserted against it, and any claims asserted against M&I, regardless of merit or eventual outcome, may harm M&Is
reputation. Should the ultimate judgments or settlements in any litigation exceed M&Is insurance coverage, they could have a material adverse effect on M&Is business, operating results and financial condition. In addition,
M&I may not be able to obtain appropriate types or levels of insurance in the future, nor may M&I be able to obtain adequate replacement policies with acceptable terms, if at all.

In addition to the factors discussed above, the following factors concerning Metavantes business may cause M&Is results to differ from
the results discussed in forward-looking statements:

Unauthorized disclosure of sensitive or confidential client or customer information, whether
through a breach of M&Is computer systems or otherwise, could severely harm its business.

As part of M&Is financial and data
processing products and services, it collects, processes and retains sensitive and confidential client and customer information on behalf of itself and other third parties, such as Metavantes customers. Despite the security measures M&I
has in place, its facilities and systems, and those of its third party service providers, may be vulnerable to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors, or other similar events.
Any security breach involving the misappropriation, loss or other unauthorized disclosure of confidential customer information, whether by M&I or by its vendors, could severely damage its reputation, expose it to the risks of litigation and
liability, disrupt its operations and harm its business.

Damage to the data centers on which Metavante relies could harm Metavantes business.

Metavantes data centers are an integral part of its business. Damage to Metavantes data centers due to acts of terrorism,
fire, power loss, telecommunications failure and other disasters could have a material adverse effect on Metavantes business, operating results and financial condition. In addition, because Metavante relies on the integrity of the data it
processes, if this data is incorrect or somehow tainted, client relations and confidence in Metavantes services could be impaired, which would harm Metavantes business.

Network operational difficulties or security problems could damage Metavantes reputation and business.

Metavante depends on the reliable operation of network connections from its clients and its clients end users to its systems. Any operational problems or outages in these systems would cause Metavante to be unable to process
transactions for its clients and its clients end users, resulting in decreased revenues. In addition, any system delays, failures or loss of data, whatever the cause, could reduce client satisfaction with Metavantes products and services
and harm Metavantes financial results.

Metavante also depends on the security of its systems. Metavantes networks may be
vulnerable to unauthorized access, computer viruses and other disruptive problems. Metavante transmits confidential financial



15



---

##### Table of Contents

information in providing its services. In addition, under agreements with certain customers, Metavante will be financially liable if consumer data is
compromised while in Metavantes possession, regardless of the safeguards Metavante may have instituted. A material security problem affecting Metavante could damage its reputation, deter financial services providers from purchasing its
products, deter their customers from using its products or result in liability to Metavante. Any material security problem affecting Metavantes competitors could affect the marketplaces perception of Internet banking and electronic
commerce service in general and have the same effects.

Lack of system integrity or credit quality related to Metavante funds settlement could result in
a financial loss.

Metavante settles funds on behalf of financial institutions, other businesses and consumers and receives funds from
clients, card issuers, payment networks and consumers on a daily basis for a variety of transaction types. Transactions facilitated by Metavante include debit card, credit card and electronic bill payment transactions, supporting consumers,
financial institutions and other businesses. These payment activities rely upon the technology infrastructure that facilitates the verification of activity with counterparties and the facilitation of the payment. If the continuity of operations or
integrity of processing were compromised this could result in a financial loss to Metavante due to a failure in payment facilitation. In addition, Metavante may issue credit to consumers, financial institutions or other businesses as part of the
funds settlement. A default on this credit by a counterparty could result in a financial loss to Metavante.

Metavante may not be able to protect its
intellectual property, and Metavante may be subject to infringement claims.

Metavante relies on a combination of contractual rights and
copyright, trademark, patent and trade secret laws to establish and protect its proprietary technology. Despite Metavantes efforts to protect its intellectual property, third parties may infringe or misappropriate Metavantes intellectual
property or may develop software or technology competitive to Metavantes. Metavantes competitors may independently develop similar technology, duplicate its products or services or design around Metavantes intellectual property
rights. Metavante may have to litigate to enforce and protect its intellectual property rights, trade secrets and know-how or to determine their scope, validity or enforceability, which is expensive and could cause a diversion of resources and may
not prove successful. The loss of intellectual property protection or the inability to secure or enforce intellectual property protection could harm Metavantes business and ability to compete.

Metavante also may be subject to costly litigation in the event its products or technology infringe upon another partys proprietary rights. Third
parties may have, or may eventually be issued, patents that would be infringed by Metavantes products or technology. Any of these third parties could make a claim of infringement against Metavante with respect to its products or technology.
Metavante may also be subject to claims by third parties for breach of copyright, trademark or license usage rights. Any such claims and any resulting litigation could subject Metavante to significant liability for damages. An adverse determination
in any litigation of this type could require Metavante to design around a third partys patent or to license alternative technology from another party. In addition, litigation is time consuming and expensive to defend and could result in the
diversion of the time and attention of Metavantes management and employees. Any claims from third parties may also result in limitations on Metavantes ability to use the intellectual property subject to these claims.

Changes in the network pricing and transaction routing strategies of NYCE, a subsidiary of Metavante, could adversely affect NYCEs revenue and Metavantes
results of operations.

The transaction volume and the corresponding revenues of NYCE, a subsidiary of Metavante, are driven in large
measure by NYCEs execution of long-term strategies for network pricing (including interchange and network fees) and transaction routing. As the debit and electronic payments marketplace continues to shift and mature, it may be necessary for
NYCE to pursue alternate pricing and/or transaction routing strategies. Any significant changes to NYCEs current pricing and/or transaction routing strategies would likely be implemented over a transitional phase. Such changes could result in
reductions of participant card base, reductions in merchant acceptance, and the potential for transaction misrouting during the transitional phase, any of which would adversely affect NYCEs revenue and Metavantes results of operations.

Metavantes business could suffer if it fails to attract and retain key technical people.

Metavantes success depends in large part upon Metavantes ability to attract and retain highly skilled technical, management and sales and
marketing personnel. Because the development of Metavantes products and



16



---

##### Table of Contents

services requires knowledge of computer hardware, operating system software, system management software and application software, key technical personnel
must be proficient in a number of disciplines. Competition for the best peoplein particular individuals with technology experienceis intense. Metavante may not be able to hire key people or pay them enough to keep them.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

M&I and M&I Bank occupy offices on all or portions of 15 floors of a 21-story
building located at 770 North Water Street, Milwaukee, Wisconsin. M&I Bank owns the building and its adjacent 10-story parking lot and leases the remaining floors to a professional tenant. In addition, various subsidiaries of M&I lease
commercial office space in downtown Milwaukee office buildings near the 770 North Water Street facility. M&I Bank also owns or leases various branch offices throughout Wisconsin, 42 offices in the Phoenix and Tucson, Arizona metropolitan areas,
13 offices in the Minneapolis, Minnesota metropolitan area and one office in Duluth, Minnesota. Southwest Bank of St. Louis owns or leases six offices in the St. Louis, Missouri metropolitan area and one office in Belleville, Illinois. M&I Bank
of Mayville, a special limited purpose subsidiary of M&I located in Mayville, Wisconsin, and M&I Bank FSB, a federal savings bank subsidiary of M&I located in Las Vegas, Nevada with branches in Naples and Bonita Springs, Florida and
Milwaukee, Wisconsin, occupy modern facilities which are leased. Metavante owns a data processing facility located in Brown Deer, a suburb of Milwaukee, from which Metavante conducts data processing activities, a facility in Milwaukee that houses
its software development teams and a card production facility in Romeoville, Illinois. Properties leased by Metavante also include commercial office space in Brown Deer and Milwaukee, a data processing site in Oak Creek, Wisconsin, and processing
centers and sales offices in various cities such as Willowbrook, Illinois; Sioux Falls, South Dakota; San Jose, California; Ann Arbor, Michigan; Atlanta, Georgia; and Madison, Wisconsin. In addition, the companies acquired by
Metavante own property in Oklahoma City, Oklahoma and lease properties in Berkeley, California; Englewood and Longmont, Colorado; Madison, Connecticut; Orlando and Tampa, Florida; Waltham, Massachusetts; Northern New Jersey; Wayne, Pennsylvania;
Nashville, Tennessee; Addison and Carrollton, Texas; Herndon, Virginia; Toronto, Ontario, Canada; and Prague, Czech Republic.

ITEM 3. LEGAL PROCEEDINGS

M&I is not currently involved in any material pending legal proceedings,
other than litigation of a routine nature and various legal matters which are being defended and handled in the ordinary course of business.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

Executive Officers of the Registrant

(Age as of March 1, 2006)



|                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name of Officer          |  | Office                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Dennis J. Kuester Age 63 |  | Chairman of the Board since January 2005, Chief Executive Officer since January 2002, President from 1987 to 2005, Director since February 1994 of Marshall & Ilsley Corporation; Chairman
of the Board and Chief Executive Officer since October 2001, President from January 1989 to October 2001 and Director since 1989, M&I Marshall & Ilsley Bank; Chairman of the Board and Director, Metavante Corporation; Director of Marshall
& Ilsley Trust Company National Association.
|                         | 
|Ryan R. Deneen Age 41    |  | Senior Vice President, Director of Corporate Tax of Marshall & Ilsley Corporation since December 2003; Director of M&I Marshall & Ilsley Holdings II, Inc. and Milease, LLC since
2004; Partner with KPMG LLP, a public accounting firm, from 1997 to November 2003.                                                                                                                                                                                                                 



17



---

##### Table of Contents

|                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|----------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name of Officer               |  | Office                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Thomas R. Ellis Age 48        |  | Senior Vice President of Marshall & Ilsley Corporation since February 2005; Executive Vice President since February 2005, Senior Vice President from 1998 to February 2005 of M&I
Marshall & Ilsley Bank; Director of M&I Support Services Corp., Marshall & Ilsley Trust Company National Association, M&I Equipment Finance Company, M&I Business Credit, Inc. and M&I Capital Markets Group II,
L.L.C.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                              | 
|Randall J. Erickson Age 46    |  | Senior Vice President, General Counsel and Secretary of Marshall & Ilsley Corporation since June 2002; General Counsel and Corporate Secretary of M&I Marshall & Ilsley Bank;
Director of Metavante Corporation, M&I Bank FSB, M&I Community Development Corporation, M&I Investment Partners Management, LLC and Milease, LLC; Director, Vice President and Secretary of M&I Capital Markets Group, L.L.C. and M&I
Ventures, L.L.C.; Director and Secretary of M&I Capital Markets Group II, L.L.C.; Director and Vice President of SWB Holdings, Inc.; Shareholder at Godfrey & Kahn, S.C., a Milwaukee-based law firm, from September 1990 to June
2002.                                                                                                                                                                                                       
|                              | 
|Mark F. Furlong Age 48        |  | President since April 2005, Executive Vice President from January 2002 to April 2005, Senior Vice President from April 2001 to January 2002, and Chief Financial Officer from April 2001 to
July 2004 of Marshall & Ilsley Corporation; Director and President of M&I Marshall & Ilsley Bank since July 2004; Director, Vice President and Treasurer of M&I Capital Markets Group, L.L.C. and M&I Ventures L.L.C.; Director of
Metavante Corporation, Marshall & Ilsley Trust Company National Association, M&I Bank Mayville, M&I Equipment Finance Company and Milease, LLC; Senior Vice President of Southwest Bank of St. Louis; Executive Vice President and Chief
Financial Officer of Old Kent Financial Corporation from 1998 to 2001; First Vice President/Director of Corporate Development/Commercial Banking of H.F. Ahmanson & Co. from 1992 to 1998.
|                              | 
|Mark R. Hogan Age 51          |  | Senior Vice President and Chief Credit Officer since October 2001, Marshall & Ilsley Corporation; Executive Vice President since February 2005, Chief Credit Officer since November 1995
and Senior Vice President from 1995 to February 2005, M&I Marshall & Ilsley Bank; Director, M&I Equipment Finance Company, M&I Business Credit, Inc., Richter-Schroeder Company and M&I Capital Markets Group II, L.L.C.; Director
and Vice President of SWB Holdings, Inc.                                                                                                                                                                                                                                                                                                                                                                                              
|                              | 
|Patricia R. Justiliano Age 55 |  | Senior Vice President since 1994 and Corporate Controller since April 1989, Vice President from 1986 to 1994, Marshall & Ilsley Corporation; Vice President since January 1999, Controller
since September 1998, M&I Marshall & Ilsley Bank; Director, President and Treasurer of M&I Marshall & Ilsley Holdings, Inc., M&I Marshall & Ilsley Investment II Corporation, M&I Zion Investment II Corporation and M&I
Zion Holdings, Inc.; Director, Vice President and Treasurer of M&I Insurance Company of Arizona, Inc.; Director and Treasurer of M&I Mortgage Reinsurance Corporation; Director of M&I Bank FSB, M&I Bank of Mayville, M&I Marshall
& Ilsley Investment Corporation, M&I Mortgage Corp., M&I Servicing Corp., M&I Zion Investment Corp., SWB Investment Corporation and SWB Investment II Corporation.                                        
|                              | 
|Beth D. Knickerbocker Age 39  |  | Senior Vice President, Chief Risk Officer of Marshall & Ilsley Corporation since January 2005; Vice President, Senior Compliance Counsel of Marshall & Ilsley Corporation from May 2004
to January 2005; Attorney at Sutherland Asbill & Brennan LLP, a Washington, D.C. law firm, from 2000 to May 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         



18



---

##### Table of Contents

|                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name of Officer          |  | Office                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Kenneth C. Krei Age 56   |  | Senior Vice President of Marshall & Ilsley Corporation since July 2003; Chairman of the Board since January 2005, President and Chief Executive Officer of Marshall & Ilsley Trust
Company National Association since July 2003; Chairman of the Board since January 2005 and Chief Executive Officer of M&I Investment Management Corp. since July 2003; Chairman of the Board of M&I Brokerage Services, Inc. and M&I
Insurance Services, Inc.; Director and President of M&I Investment Partners Management, LLC; Director of M&I Support Services, M&I Brokerage Services, Inc. and Marshall Funds; Director and Vice President of M&I Realty Advisors, Inc.;
Executive Vice President, Investment Advisors at Fifth Third Bancorp from 2001 to 2003; Executive Vice President, Investment and Insurance Services at Old Kent Financial Corporation from 1998 to 2001.
|                         | 
|Frank R. Martire Age 58  |  | Senior Vice President since April 2003, Marshall & Ilsley Corporation; Director, President and Chief Executive Officer since March 2003, President, Financial Services Group, Metavante
Corporation from January 2003 to March 2003; Manager of Metavante Acquisition Company, LLC; Director of NYCE Corporation; President and Chief Operating Officer of Call Solutions Inc. from 2001 to 2003; President and Chief Operating Officer,
Financial Institution Systems and Services Group, of Fiserv, Inc. from 1991 to 2001.                                                                                                                                                                                                                                                                                                                                             
|                         | 
|Thomas J. ONeill Age 45 |  | Senior Vice President since April 1997, Marshall & Ilsley Corporation; Executive Vice President since 2000, Senior Vice President from 1997 to 2000, Vice President from 1991 to 1997,
M&I Marshall & Ilsley Bank; Senior Vice President of Southwest Bank of St. Louis; Director and President of M&I Bank FSB, M&I Dealer Finance, Inc., M&I Insurance Company of Arizona, Inc., M&I Mortgage Corp. and M&I
Mortgage Reinsurance Corporation; Director and Vice President of M&I Community Development Corporation and M&I Realty Advisors, Inc.; Director of M&I Bank of Mayville, M&I Brokerage Services, Inc., Marshall & Ilsley Trust Company
National Association, M&I Insurance Services, Inc. and M&I Support Services Corp.; Senior Vice President, Southwest Bank of St. Louis.                                                                                
|                         | 
|John M. Presley Age 45   |  | Senior Vice President and Chief Financial Officer since October 2004, Marshall & Ilsley Corporation; Chief Financial Officer of M&I Marshall & Ilsley Bank since October 2004;
Director of Marshall & Ilsley Trust Company National Association, M&I Brokerage Services, Inc., M&I Insurance Services and Metavante Corporation; Chief Financial Officer of National Commerce Financial from 2003 to 2004; President and
Chief Executive Officer of First Market Bank from 1996 to 2003; and Chief Financial Officer of National Commerce Bank Services, Inc. from 1990 to 1996.                                                                                                                                                                                                                                                                                          
|                         | 
|Paul J. Renard Age 45    |  | Senior Vice President, Director of Human Resources since 2000, Vice President and manager since 1994, Marshall & Ilsley Corporation; Senior Vice President of M&I Marshall & Ilsley
Bank.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                         | 
|John L. Roberts Age 53   |  | Senior Vice President of Marshall & Ilsley Corporation since 1994; Senior Vice President since 1994, Vice President and Controller from 1986 to 1995, M&I Marshall & Ilsley Bank;
President and Director since 1995, M&I Support Services Corp.; Director, M&I Bank FSB and M&I Mortgage Corp.; President and Director of M&I Bank of Mayville.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                         | 
|Thomas A. Root Age 49    |  | Senior Vice President since 1998, Audit Director since May 1996, Vice President from 1991 to 1998, Marshall & Ilsley Corporation; Vice President since 1993 and Audit Director since 1999,
M&I Marshall & Ilsley Bank.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                         | 
|Ronald E. Smith Age 59   |  | Senior Vice President since March 2005, Marshall & Ilsley Corporation; Executive Vice President since March 2005, Senior Vice President from 2001 to March 2005, M&I Marshall &
Ilsley Bank; Executive Vice President from 1996 to March 2001 of M&I Bank of Madison; Director, Richter-Schroeder Company, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

Certain Relationships and Related Transactions

A son of Mr. Martire and Ms. Knickerbockers spouse were employed by M&I or its subsidiaries and received compensation and benefits
that exceeded $60,000 in 2005. The compensation and benefits received by each were established by M&I in accordance with its employment and compensation practices applicable to employees holding comparable positions.



19



---

##### Table of Contents

PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Stock Listing

M&Is common stock is traded under the symbol MI on the New York
Stock Exchange. Common dividends declared and the price range for M&Is common stock for each of the last five years can be found in Item 8, Consolidated Financial Statements and Supplementary Data, Quarterly Financial Information.

A discussion of the regulatory restrictions on the payment of dividends can be found under Item 7, Managements Discussion and
Analysis of Financial Condition and Results of Operations, and in Note 14 in Item 8, Consolidated Financial Statements and Supplementary Data.

Holders of Common Equity

At December 31, 2005 M&I had approximately 17,463 record holders of its common stock.

Shares Purchased

The
following table reflects the purchases of M&I common stock for the specified period:



|                                |  |                                     |  |                            |       |                                                                              |   |                                                                           |           
|------------------------------- |  | ----------------------------------- |  | -------------------------- | ----- | ---------------------------------------------------------------------------- | - | ------------------------------------------------------------------------- | ----------
|Period                          |  | Total Number ofShares Purchased (1) |  | Average PricePaid PerShare |       | Total Number ofShares Purchasedas Part of PubliclyAnnounced Plansor
Programs |   | MaximumNumber ofShares that MayYet be PurchasedUnder the Plansor
Programs
|October 1 to October 31, 2005   |  | 59,097                              |  | $                          | 42.95 |                                                                              |  |                                                                           | 12,000,000
|November 1 to November 30, 2005 |  | 62,525                              |  | $                          | 43.15 |                                                                              |  |                                                                           | 12,000,000
|December 1 to December 31, 2005 |  | 3,639                               |  | $                          | 43.38 |                                                                              |  |                                                                           | 12,000,000

---

|(1) | Includes shares purchased by rabbi trusts pursuant to nonqualified deferred compensation plans for the three months ended December 31, 2005.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------

M&Is Share Repurchase Program was publicly reconfirmed in April 2004 and again in April 2005. The Share Repurchase Program authorizes the
purchase of up to 12 million shares annually and renews each year at that level unless changed or terminated by subsequent Board action.



20



---

##### Table of Contents

ITEM 6. SELECTED FINANCIAL DATA

Consolidated Summary of Earnings

Years Ended December 31 ($000s except share data)



|                                                                                     |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|------------------------------------------------------------------------------------ |  | ---- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | - |  | ---- | --------- | - |  | - | --------- | -
|                                                                                     |  | 2005 |           |   | 2004 |   |           | 2003 |  |   | 2002      |   |  | 2001 |          
|Interest Income:                                                                     |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Loans and leases                                                                     |  | $    | 1,926,377 |   |      | $ | 1,404,189 |      |  | $ | 1,304,060 |   |  | $    | 1,297,166 |   |  | $ | 1,358,802 |  
|Investment securities                                                                |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Taxable                                                                              |  |      | 214,537   |   |      |   | 200,107   |      |  |   | 165,075   |   |  |      | 198,037   |   |  |   | 270,336   |  
|Exempt from federal income taxes                                                     |  |      | 64,127    |   |      |   | 58,826    |      |  |   | 57,968    |   |  |      | 60,637    |   |  |   | 62,273    |  
|Trading securities                                                                   |  |      | 229       |   |      |   | 271       |      |  |   | 258       |   |  |      | 328       |   |  |   | 884       |  
|Short-term investments                                                               |  |      | 8,675     |   |      |   | 2,397     |      |  |   | 2,559     |   |  |      | 11,168    |   |  |   | 16,812    |  
|                                                                                     |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Total interest income                                                                |  |      | 2,213,945 |   |      |   | 1,665,790 |      |  |   | 1,529,920 |   |  |      | 1,567,336 |   |  |   | 1,709,107 |  
|                                                                                     |  |      |           |   |     
|Interest Expense:                                                                    |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Deposits                                                                             |  |      | 544,920   |   |      |   | 276,102   |      |  |   | 228,216   |   |  |      | 283,385   |   |  |   | 566,899   |  
|Short-term borrowings                                                                |  |      | 106,333   |   |      |   | 61,256    |      |  |   | 81,070    |   |  |      | 150,310   |   |  |   | 188,587   |  
|Long-term borrowings                                                                 |  |      | 330,144   |   |      |   | 196,440   |      |  |   | 163,348   |   |  |      | 127,343   |   |  |   | 110,842   |  
|                                                                                     |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Total interest expense                                                               |  |      | 981,397   |   |      |   | 533,798   |      |  |   | 472,634   |   |  |      | 561,038   |   |  |   | 866,328   |  
|                                                                                     |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Net interest income                                                                  |  |      | 1,232,548 |   |      |   | 1,131,992 |      |  |   | 1,057,286 |   |  |      | 1,006,298 |   |  |   | 842,779   |  
|Provision for loan and lease losses                                                  |  |      | 44,795    |   |      |   | 37,963    |      |  |   | 62,993    |   |  |      | 74,416    |   |  |   | 54,115    |  
|                                                                                     |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Net interest income after provision for loan and lease losses                        |  |      | 1,187,753 |   |      |   | 1,094,029 |      |  |   | 994,293   |   |  |      | 931,882   |   |  |   | 788,664   |  
|                                                                                     |  |      |           |   |     
|Other Income:                                                                        |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Data processing services                                                             |  |      | 1,141,371 |   |      |   | 891,005   |      |  |   | 657,827   |   |  |      | 601,500   |   |  |   | 559,816   |  
|Trust services                                                                       |  |      | 165,679   |   |      |   | 150,917   |      |  |   | 126,759   |   |  |      | 120,586   |   |  |   | 120,827   |  
|Net securities gains (losses)                                                        |  |      | 45,414    |   |      |   | 35,352    |      |  |   | 21,572    |   |  |      | (6,271    | ) |  |   | (6,759    | )
|Other                                                                                |  |      | 396,481   |   |      |   | 369,221   |      |  |   | 409,643   |   |  |      | 366,873   |   |  |   | 327,366   |  
|                                                                                     |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Total other income                                                                   |  |      | 1,748,945 |   |      |   | 1,446,495 |      |  |   | 1,215,801 |   |  |      | 1,082,688 |   |  |   | 1,001,250 |  
|                                                                                     |  |      |           |   |     
|Other Expense:                                                                       |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Salaries and benefits                                                                |  |      | 1,042,744 |   |      |   | 887,279   |      |  |   | 797,518   |   |  |      | 745,518   |   |  |   | 695,405   |  
|Other                                                                                |  |      | 803,587   |   |      |   | 708,279   |      |  |   | 654,189   |   |  |      | 550,460   |   |  |   | 593,464   |  
|                                                                                     |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Total other expense                                                                  |  |      | 1,846,331 |   |      |   | 1,595,558 |      |  |   | 1,451,707 |   |  |      | 1,295,978 |   |  |   | 1,288,869 |  
|                                                                                     |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Income before income taxes and cumulative effect of changes in accounting principles |  |      | 1,090,367 |   |      |   | 944,966   |      |  |   | 758,387   |   |  |      | 718,592   |   |  |   | 501,045   |  
|Provision for income taxes                                                           |  |      | 362,898   |   |      |   | 317,880   |      |  |   | 214,282   |   |  |      | 238,265   |   |  |   | 163,124   |  
|                                                                                     |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Income before cumulative effect of changes in accounting principles                  |  |      | 727,469   |   |      |   | 627,086   |      |  |   | 544,105   |   |  |      | 480,327   |   |  |   | 337,921   |  
|Cumulative effect of changes in accounting principles, net of income taxes           |  |      |          |   |      |   |          |      |  |   |          |   |  |      |          |   |  |   | (436      | )
|                                                                                     |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Net Income                                                                           |  | $    | 727,469   |   |      | $ | 627,086   |      |  | $ | 544,105   |   |  | $    | 480,327   |   |  | $ | 337,485   |  
|                                                                                     |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Net income per common share:**                                                       |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Basic:                                                                               |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Income before cumulative effect of changes in accounting principles                  |  | $    | 3.15      |   |      | $ | 2.81      |      |  | $ | 2.41      |   |  | $    | 2.24      |   |  | $ | 1.60      |  
|Cumulative effect of changes in accounting principles, net of income taxes           |  |      |          |   |      |   |          |      |  |   |          |   |  |      |          |   |  |   |          |  
|                                                                                     |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Net income                                                                           |  | $    | 3.15      |   |      | $ | 2.81      |      |  | $ | 2.41      |   |  | $    | 2.24      |   |  | $ | 1.60      |  
|                                                                                     |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Diluted:                                                                             |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Income before cumulative effect of changes in accounting principles                  |  | $    | 3.10      |   |      | $ | 2.77      |      |  | $ | 2.38      |   |  | $    | 2.16      |   |  | $ | 1.55      |  
|Cumulative effect of changes in accounting principles, net of income taxes           |  |      |          |   |      |   |          |      |  |   |          |   |  |      |          |   |  |   |          |  
|                                                                                     |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Net income                                                                           |  | $    | 3.10      |   |      | $ | 2.77      |      |  | $ | 2.38      |   |  | $    | 2.16      |   |  | $ | 1.55      |  
|                                                                                     |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Other Significant Data:                                                              |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Year-End Common Stock Price**                                                        |  | $    | 43.04     |   |      | $ | 44.20     |      |  | $ | 38.25     |   |  | $    | 27.38     |   |  | $ | 31.64     |  
|Return on Average Shareholders Equity                                               |  |      | 16.95     | % |      |   | 17.89     | %    |  |   | 16.79     | % |  |      | 17.36     | % |  |   | 13.89     | %
|Return on Average Assets                                                             |  |      | 1.68      |   |      |   | 1.69      |      |  |   | 1.64      |   |  |      | 1.64      |   |  |   | 1.28      |  
|Dividend Payout Ratio                                                                |  |      | 30.00     |   |      |   | 29.24     |      |  |   | 29.41     |   |  |      | 28.94     |   |  |   | 36.65     |  
|Average Equity to Average Assets Ratio                                               |  |      | 9.91      |   |      |   | 9.43      |      |  |   | 9.74      |   |  |      | 9.47      |   |  |   | 9.21      |  
|Ratio of Earnings to Fixed Charges*                                                  |  |      |           |   |      |   |           |      |  |   |           |   |  |      |           |   |  |   |           |  
|Excluding Interest on Deposits                                                       |  |      | 3.35      | x |      |   | 4.36      | x    |  |   | 3.84      | x |  |      | 3.38      | x |  |   | 2.56      | x
|Including Interest on Deposits                                                       |  |      | 2.08      | x |      |   | 2.70      | x    |  |   | 2.53      | x |  |      | 2.23      | x |  |   | 1.56      | x

---

|* | See Exhibit 12 for detailed computation of these ratios.
|- | --------------------------------------------------------

|** | Restated for 2-for-1 stock split effective June 17, 2002.
|-- | ---------------------------------------------------------



21



---

##### Table of Contents

Consolidated Average Balance Sheets

Years ended December 31 ($000s except share data)



|                                                                                          |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|----------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | ---- |  | - | ----------- | - |  | ---- | ----------- | - |  | - | ----------- | -
|                                                                                          |  | 2005 |             |   | 2004 |   |             | 2003 |  |   | 2002        |   |  | 2001 |            
|Assets:                                                                                   |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Cash and due from banks                                                                   |  | $    | 966,078     |   |      | $ | 835,391     |      |  | $ | 752,215     |   |  | $    | 708,256     |   |  | $ | 651,367     |  
|Investment securities:                                                                    |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Trading securities                                                                        |  |      | 26,922      |   |      |   | 22,297      |      |  |   | 23,017      |   |  |      | 15,247      |   |  |   | 21,284      |  
|Short-term investments                                                                    |  |      | 237,178     |   |      |   | 171,057     |      |  |   | 264,254     |   |  |      | 717,129     |   |  |   | 503,857     |  
|Other investment securities:                                                              |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Taxable                                                                                   |  |      | 4,847,722   |   |      |   | 4,672,741   |      |  |   | 4,038,579   |   |  |      | 3,325,568   |   |  |   | 3,926,737   |  
|Tax exempt                                                                                |  |      | 1,334,793   |   |      |   | 1,199,139   |      |  |   | 1,173,466   |   |  |      | 1,224,737   |   |  |   | 1,269,175   |  
|                                                                                          |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Total investment securities                                                               |  |      | 6,446,615   |   |      |   | 6,065,234   |      |  |   | 5,499,316   |   |  |      | 5,282,681   |   |  |   | 5,721,053   |  
|                                                                                          |  |      |             |   |     
|Loans and Leases:                                                                         |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Commercial                                                                                |  |      | 8,954,619   |   |      |   | 7,621,040   |      |  |   | 6,905,323   |   |  |      | 6,143,862   |   |  |   | 5,478,342   |  
|Real estate                                                                               |  |      | 20,728,918  |   |      |   | 17,215,467  |      |  |   | 14,938,082  |   |  |      | 12,633,208  |   |  |   | 10,514,536  |  
|Personal                                                                                  |  |      | 1,525,502   |   |      |   | 1,632,440   |      |  |   | 1,874,315   |   |  |      | 1,388,447   |   |  |   | 1,182,049   |  
|Lease financing                                                                           |  |      | 567,344     |   |      |   | 552,551     |      |  |   | 674,871     |   |  |      | 862,927     |   |  |   | 1,026,215   |  
|                                                                                          |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Total loans and leases                                                                    |  |      | 31,776,383  |   |      |   | 27,021,498  |      |  |   | 24,392,591  |   |  |      | 21,028,444  |   |  |   | 18,201,142  |  
|Less: Allowance for loan and lease losses                                                 |  |      | 362,886     |   |      |   | 360,408     |      |  |   | 347,838     |   |  |      | 302,664     |   |  |   | 253,089     |  
|                                                                                          |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Net loans and leases                                                                      |  |      | 31,413,497  |   |      |   | 26,661,090  |      |  |   | 24,044,753  |   |  |      | 20,725,780  |   |  |   | 17,948,053  |  
|                                                                                          |  |      |             |   |     
|Premises and equipment, net                                                               |  |      | 458,179     |   |      |   | 448,134     |      |  |   | 440,492     |   |  |      | 418,042     |   |  |   | 391,633     |  
|Accrued interest and other assets                                                         |  |      | 3,999,172   |   |      |   | 3,152,745   |      |  |   | 2,531,245   |   |  |      | 2,067,891   |   |  |   | 1,658,203   |  
|                                                                                          |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Total Assets                                                                              |  | $    | 43,283,541  |   |      | $ | 37,162,594  |      |  | $ | 33,268,021  |   |  | $    | 29,202,650  |   |  | $ | 26,370,309  |  
|                                                                                          |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Liabilities and Shareholders Equity:                                                     |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Deposits:                                                                                 |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Noninterest bearing                                                                       |  | $    | 4,942,803   |   |      | $ | 4,585,628   |      |  | $ | 4,189,724   |   |  | $    | 3,509,133   |   |  | $ | 2,895,083   |  
|Interest bearing:                                                                         |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Bank issued deposits:                                                                     |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Bank issued interest bearing activity deposits                                            |  |      | 10,027,250  |   |      |   | 9,960,645   |      |  |   | 10,084,996  |   |  |      | 8,996,778   |   |  |   | 7,833,126   |  
|Bank issued time deposits                                                                 |  |      | 4,410,456   |   |      |   | 3,384,120   |      |  |   | 3,399,734   |   |  |      | 3,540,124   |   |  |   | 3,975,253   |  
|                                                                                          |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Total bank issued deposits                                                                |  |      | 14,437,706  |   |      |   | 13,344,765  |      |  |   | 13,484,730  |   |  |      | 12,536,902  |   |  |   | 11,808,379  |  
|Wholesale deposits                                                                        |  |      | 6,720,964   |   |      |   | 6,057,542   |      |  |   | 4,311,424   |   |  |      | 2,596,952   |   |  |   | 2,487,129   |  
|                                                                                          |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Total interest bearing deposits                                                           |  |      | 21,158,670  |   |      |   | 19,402,307  |      |  |   | 17,796,154  |   |  |      | 15,133,854  |   |  |   | 14,295,508  |  
|                                                                                          |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Total deposits                                                                            |  |      | 26,101,473  |   |      |   | 23,987,935  |      |  |   | 21,985,878  |   |  |      | 18,642,987  |   |  |   | 17,190,591  |  
|Short-term borrowings                                                                     |  |      | 2,925,642   |   |      |   | 2,908,168   |      |  |   | 3,138,752   |   |  |      | 4,188,339   |   |  |   | 3,944,160   |  
|Long-term borrowings                                                                      |  |      | 8,193,001   |   |      |   | 5,329,571   |      |  |   | 3,798,851   |   |  |      | 2,693,447   |   |  |   | 1,962,801   |  
|Accrued expenses and other liabilities                                                    |  |      | 1,772,023   |   |      |   | 1,432,134   |      |  |   | 1,103,886   |   |  |      | 911,187     |   |  |   | 843,198     |  
|                                                                                          |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Total liabilities                                                                         |  |      | 38,992,139  |   |      |   | 33,657,808  |      |  |   | 30,027,367  |   |  |      | 26,435,960  |   |  |   | 23,940,750  |  
|                                                                                          |  |      |             |   |     
|Shareholders Equity                                                                      |  |      | 4,291,402   |   |      |   | 3,504,786   |      |  |   | 3,240,654   |   |  |      | 2,766,690   |   |  |   | 2,429,559   |  
|                                                                                          |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Total Liabilities and Shareholders Equity                                                |  | $    | 43,283,541  |   |      | $ | 37,162,594  |      |  | $ | 33,268,021  |   |  | $    | 29,202,650  |   |  | $ | 26,370,309  |  
|                                                                                          |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Other Significant Data:                                                                   |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Book Value Per Share at Year End**                                                        |  | $    | 19.98       |   |      | $ | 17.24       |      |  | $ | 15.00       |   |  | $    | 13.51       |   |  | $ | 11.65       |  
|Average Common Shares Outstanding**                                                       |  |      | 231,300,867 |   |      |   | 223,123,866 |      |  |   | 226,342,764 |   |  |      | 212,799,996 |   |  |   | 208,587,816 |  
|Employees at Year End                                                                     |  |      | 13,967      |   |      |   | 13,345      |      |  |   | 12,244      |   |  |      | 12,625      |   |  |   | 11,657      |  
|                                                                                          |  |      |             |   |     
|Credit Quality Ratios:                                                                    |  |      |             |   |      |   |             |      |  |   |             |   |  |      |             |   |  |   |             |  
|Net Loan and Lease Charge-offs to Average Loans and Leases                                |  |      | 0.12        | % |      |   | 0.11        | %    |  |   | 0.21        | % |  |      | 0.21        | % |  |   | 0.22        | %
|Total Nonperforming Loans and Leases* and OREO to End of Period Loans and Leases and OREO |  |      | 0.44        |   |      |   | 0.48        |      |  |   | 0.74        |   |  |      | 0.85        |   |  |   | 0.94        |  
|Allowance for Loan and Lease Losses to End of Period Loans and Leases                     |  |      | 1.06        |   |      |   | 1.21        |      |  |   | 1.39        |   |  |      | 1.42        |   |  |   | 1.39        |  
|Allowance for Loan and Lease Losses to Total Nonperforming Loans and Leases*              |  |      | 259         |   |      |   | 271         |      |  |   | 202         |   |  |      | 174         |   |  |   | 154         |  

---

|* | Loans and leases nonaccrual, restructured, and past due 90 days or more.
|- | ------------------------------------------------------------------------

|** | Restated for 2-for-1 stock split effective June 17, 2002.
|-- | ---------------------------------------------------------



22



---

##### Table of Contents

Yield & Cost Analysis

Years ended December 31 (Tax equivalent basis)



|                                              |  |      |   |  |      |   |  |      |   |  |      |   |  |      |  
|--------------------------------------------- |  | ---- | - |  | ---- | - |  | ---- | - |  | ---- | - |  | ---- | -
|                                              |  | 2005 |   |  | 2004 |   |  | 2003 |   |  | 2002 |   |  | 2001 |  
|Average Rates Earned:                         |  |      |   |  |      |   |  |      |   |  |      |   |  |      |  
|Loan and Leases                               |  | 6.07 | % |  | 5.21 | % |  | 5.36 | % |  | 6.18 | % |  | 7.48 | %
|Investment Securities  Taxable               |  | 4.41 |   |  | 4.30 |   |  | 4.13 |   |  | 6.11 |   |  | 7.04 |  
|Investment Securities  Tax-Exempt            |  | 7.26 |   |  | 7.53 |   |  | 7.58 |   |  | 7.49 |   |  | 7.28 |  
|Trading Securities                            |  | 0.89 |   |  | 1.26 |   |  | 1.16 |   |  | 2.21 |   |  | 4.21 |  
|Short-term Investments                        |  | 3.66 |   |  | 1.40 |   |  | 0.97 |   |  | 1.56 |   |  | 3.34 |  
|                                              |  |      |   |  |     
|Average Rates Paid:                           |  |      |   |  |      |   |  |      |   |  |      |   |  |      |  
|Interest Bearing Deposits                     |  | 2.58 | % |  | 1.42 | % |  | 1.28 | % |  | 1.87 | % |  | 3.97 | %
|Short-term Borrowings                         |  | 3.63 |   |  | 2.11 |   |  | 2.58 |   |  | 3.59 |   |  | 4.78 |  
|Long-term Borrowings                          |  | 4.03 |   |  | 3.69 |   |  | 4.30 |   |  | 4.73 |   |  | 5.65 |  
|M&I Marshall & Ilsley Bank Average Prime Rate |  | 6.19 |   |  | 4.34 |   |  | 4.12 |   |  | 4.67 |   |  | 6.91 |  



23



---

##### Table of Contents

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

The Corporations overall strategy is to drive earnings per share growth by: (1) expanding banking
operations into faster growing regions beyond Wisconsin; (2) increasing the number of financial institutions to which the Corporation provides correspondent banking services and products; (3) expanding trust services and other wealth
management product and service offerings; and (4) growing Metavantes business through organic growth, cross sales of technology products and acquisitions.

The Corporation continues to focus on its key metrics of growing revenues through balance sheet growth, fee-based income growth and strong credit quality. Management believes that the Corporation has demonstrated
solid fundamental performance in each of these key areas and as a result, the year ended December 31, 2005 produced strong financial results across all of its segments and reporting units.

Strong sales efforts and an improving economy resulted in solid loan and deposit growth in all of the Corporations markets. Both noninterest and
bank-issued interest bearing deposit growth trends were especially encouraging. These factors resulted in an increase in net interest income in 2005 compared to 2004. The favorable economic conditions in our markets have resulted in net charge-off
levels below the Corporations historical net charge-off levels again in 2005. An active acquisition and cross-sale strategy coupled with successful outsourcing contract renewals enabled Metavante to continue double-digit growth in segment
earnings. Continued growth in assets under management and assets under administration resulted in solid growth in fee income for Trust Services. Mortgage loan production was very strong in 2005 compared to 2004. Although an unpredictable source of
earnings, the Corporations Capital Markets Group recognized investment securities gains for the third year in a row. These factors, along with continued expense management, all contributed to the consolidated earnings growth in 2005.

Net income in 2005 amounted to $727.5 million or $3.10 per share on a diluted basis. The return on average assets and return on average
equity were 1.68% and 16.95%, respectively. By comparison, 2004 net income was $627.1 million, diluted earnings per share was $2.77, the return on average assets was 1.69% and the return on average equity was 17.89%. For the year ended
December 31, 2003, net income was $544.1 million or $2.38 per diluted share and the returns on average assets and average equity were 1.64% and 16.79%, respectively.

With regard to the outlook in 2006 for the Banking Segment, management expects that organic commercial loan growth (as a percentage) will be in the low double digits. Organic personal loan production is expected to
increase modestly. However, organic personal loan growth (as a percentage) will depend on the proportion of personal loan production retained versus sold. Management is encouraged by the recent organic growth in bank-issued deposits and will
continue to focus on growing this important source of funds in 2006. Net charge-offs in 2006 are expected to range from 15 basis points to 20 basis points of average loans which represents a return to historical levels. Management expects
Metavantes revenue in 2006 to be in the range of $1.4 billion to $1.5 billion. Organic revenue growth (as a percentage) and segment income growth are expected to continue to modestly improve.

In November and December of 2005, the Corporation announced the acquisitions of Gold Banc Corporation, Inc. (Gold Banc), the parent company
of Gold Bank, and Trustcorp Financial, Inc. (Trustcorp), the parent company of Missouri State Bank & Trust. These transactions are expected to close in the second quarter of 2006. Gold Banc is a financial holding company with
consolidated assets of $4.2 billion headquartered in Leawood, Kansas, a part of the Kansas City metropolitan area. Gold Banc provides banking and asset management services in Kansas, Florida, Missouri and Oklahoma through 31 banking locations.
Trustcorp, with $746.2 million in assets, has seven bank branches located in the St. Louis, Missouri metropolitan area. Management expects that these transactions in the aggregate will be dilutive to the Corporations consolidated results of
operations in 2006 by approximately $0.05 per diluted share, assuming the transactions are completed in accordance with current expectations.

On January 1, 2006, the Corporation adopted FAS 123(R), the new accounting standard that requires all share-based compensation to be expensed. The amount of the expense is based on the estimated fair value of the award and is
recognized over the vesting period. For the Corporation, additional expense will be reported for its



24



---

##### Table of Contents

stock option awards and its employee stock purchase plan. Assuming the same number of awards granted in 2005 and the same fair values, the Corporation
estimates that the additional expense for stock options and the employee stock purchase plan will be dilutive to the Corporations consolidated results of operations in 2006 by approximately $0.10 per diluted share. The Corporation elected the
Modified Retrospective Application method to adopt the new accounting standard. Under that method all prior periods will be restated to reflect the effect of expensing stock options and the employee stock purchase plan. Shareholders equity at
December 31, 2005 will increase by $67.7 million as a result of the restatement. The Corporation believes the Modified Retrospective Application will provide better comparability and usefulness to users of the Corporations financial
information.

The Corporations actual results for 2006 could differ materially from those expected by management. See
Forward-Looking Statements in Item 1A. of this Form 10-K for a discussion of the various risk factors that could cause actual results to differ materially from expected results.

The results of operations and financial condition for the periods presented include the effects of the acquisitions by Metavante as well as the
banking-related acquisition from the dates of consummation of the acquisitions. All transactions were accounted for using the purchase method of accounting. See Note 3 in Notes to Consolidated Financial Statements for a discussion of the
Corporations acquisition activities in 2005, 2004 and 2003.

Significant Transactions

Some of the more significant transactions in 2005, 2004 and 2003 consisted of the following:

During the second and third quarters of 2005, the Corporation realized a gain primarily due to the sale of an entity associated with its investment in an
independent private equity and venture capital partnership. The gross pre-tax gain amounted to $29.4 million and is reported in Net Investment Securities Gains in the Consolidated Statements of Income. On an after-tax basis, and net of related
compensation expense, the gain amounted to $16.5 million or $0.07 per diluted share for the twelve months ended December 31, 2005.

During the third quarter of 2005, the Corporation realized a gain due to an equity investment that the Corporation liquidated in a cash tender offer. The gross pre-tax gain amounted to $6.6 million and is reported in Net Investment
Securities Gains in the Consolidated Statements of Income. On an after-tax basis, the gain amounted to $3.9 million or $0.02 per diluted share for the twelve months ended December 31, 2005.

During the first quarter of 2005, the Corporations banking segments investment in certain membership interests of PULSE EFT Associates
(PULSE) was liquidated by PULSE due to a change in control. The cash received resulted in a pre-tax gain of $5.6 million and is reported in Net Investment Securities Gains in the Consolidated Statements of Income.

During 2004, net gains associated with the Corporations Capital Markets Group investments amounted to $34.6 million. Approximately $34.1 million of
the net gain in 2004 was from a net unrealized gain recognized in the fourth quarter of 2004 due to the net increase in market value of an investment in an independent private equity and venture capital partnership.

The net unrealized gain recognized in the fourth quarter of 2004 was offset by charitable foundation expense which was higher than historical levels and
other accrual adjustments that amounted to approximately $6.8 million.

During 2004, Metavante sold its small business 401k Retirement Plan
Services operations. In conjunction with an expanded processing relationship, Metavante also sold the direct customer base of Paytrust.com in 2004. These transactions resulted in an aggregate loss of approximately $7.1 million.

During 2004, the Corporation issued 3.6 million shares of its common stock in a public offering that resulted in net proceeds to the Corporation of
approximately $149.9 million. Also during 2004, the Corporation issued $400 million of equity units (referred to as Common SPACESSM) that resulted in net proceeds to the Corporation of approximately $389.2 million. Each Common SPACES consists of (i) a stock purchase contract under which the investor agrees to purchase for $25.00, a fraction of a share of
the Corporations common stock on the stock purchase date and (ii) a 1/40, or 2.5%, undivided beneficial interest in a preferred security of M&I Capital Trust B (also referred to as the STACKSSM) with each share having an initial liquidation value of $1,000. The stock



25



---

##### Table of Contents

purchase date is expected to be August 15, 2007 but could be deferred for quarterly periods until August 15, 2008. On the stock purchase date, the
number of shares of common stock the Corporation will issue upon settlement of the stock purchase contracts depends on the applicable market value per share of the Corporations common stock, which will be determined just prior to the stock
purchase date, and other factors. The Corporation currently estimates that it will issue approximately 8.7 million to 10.9 million common shares to settle shares issuable pursuant to the stock purchase contracts. The proceeds from these
issuances together with proceeds from the issuance of $600.0 million of senior notes were used for general corporate purposes, including maintaining capital at desired levels and providing long-term financing for the acquisitions completed by
Metavante in 2004.

During 2004, the Corporations banking segment prepaid and retired certain higher cost long-term debt and
terminated some related receive floating / pay fixed interest rate swaps designated as cash flow hedges. The total debt retired amounted to $355.0 million and the charge to earnings amounted to a loss of $6.9 million.

During 2003, gains recognized by the Corporations Capital Markets Group amounted to $20.0 million. Approximately $16.2 million of the gain was from
the sale of an investment in the third quarter of 2003.

Also during 2003, several income tax audits covering multiple tax jurisdictions
were resolved which positively affected the banking segment by approximately $28.6 million and Metavante by $10.7 million and resulted in a lower provision for income taxes in the Consolidated Statements of Income for the year ended
December 31, 2003.

The Corporation used the unanticipated Capital Markets Group gains and the benefits from resolving income tax
audits to take advantage of the low interest rate environment in 2003. The Corporation prepaid and retired certain higher cost long-term debt and terminated some related receive floating / pay fixed interest rate swaps designated as cash flow
hedges. The total debt retired amounted to $744.6 million and the charge to earnings amounted to $56.7 million.

As a result of a shift in
product strategy, Metavante wrote-off certain purchased and internally developed software in 2003 that will no longer be used, resulting in losses of $22.8 million in 2003.

Net Interest Income

Net interest income, which is the difference between
interest earned on earning assets and interest owed on interest bearing liabilities, represented approximately 41.3% of the Corporations source of revenues in 2005.

Net interest income in 2005 amounted to $1,232.5 million compared with net interest income of $1,132.0 million in 2004, an increase of $100.5 million or 8.9%. Loan growth and the growth in noninterest bearing and
other bank-issued deposits were the primary contributors to the increase in net interest income. Net interest income in 2005 was negatively affected by lower loan spreads and the interest expense associated with debt issued in the third quarter of
2004 to fund Metavantes acquisitions.

Average earning assets in 2005 amounted to $38.2 billion compared to $33.1 billion in 2004, an
increase of $5.1 billion or 15.5%. Increases in average loans and leases accounted for 92.6% of the growth in average earning assets.

Average interest bearing liabilities increased $4.6 billion or 16.8% in 2005 compared to 2004. Approximately $1.8 billion or 37.9% of the growth in average interest bearing liabilities was attributable to interest bearing deposits and the
remainder of the growth in average interest bearing liabilities was attributable to long term borrowings.

Average noninterest bearing
deposits increased $0.4 billion or 7.8% in 2005 compared to the prior year.

Net interest income in 2004 amounted to $1,132.0 million
compared with net interest income of $1,057.3 million in 2003, an increase of $74.7 million or 7.1%. Loan growth and growth in lower cost deposits, increased spreads on certain loan products and the impact of the early retirement of some higher cost
long-term borrowings in 2003 and 2004 were positive contributors to the increase in net interest income in 2004. Net interest income in 2004 was negatively affected by the lengthening of liabilities in order to reduce future volatility in net
interest income as a result of interest rate movements and cash expenditures for common share buybacks and acquisitions.



26



---

##### Table of Contents

Average earning assets in 2004 amounted to $33.1 billion compared to $29.9 billion in 2003, an increase
of $3.2 billion or 10.7%. Increases in average loans and leases accounted for the majority of the growth in average earning assets.

Average interest bearing liabilities increased $2.9 billion or 11.8% in 2004 compared to 2003. Approximately $1.6 billion or 55.3% of the growth in average interest bearing liabilities was attributable to interest bearing deposits and the
remainder of the growth in average interest bearing liabilities was attributable to long-term borrowings.

Average noninterest bearing
deposits increased $0.4 billion or 9.4% in 2004 compared to the prior year.

The growth and composition of the Corporations average
loan and lease portfolio for the current year and prior two years are reflected in the following table ($ in millions):



|                                            |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|------------------------------------------- |  | ---- | -------- | ---- | - | -------- |  | -------------- | -------- |  | ---------- | - |  | ----- | -
|                                            |  |      |          |      |   |          |  | Percent Growth |         
|                                            |  | 2005 |          | 2004 |   | 2003     |  | 2005vs2004     |          |  | 2004vs2003 |  
|Commercial:                                 |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Commercial                                  |  | $    | 8,954.6  |      | $ | 7,621.0  |  | $              | 6,905.3  |  | 17.5       | % |  | 10.4  | %
|Commercial real estate:                     |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Commercial mortgages                        |  |      | 8,575.8  |      |   | 7,658.2  |  |                | 6,901.0  |  | 12.0       |   |  | 11.0  |  
|Construction                                |  |      | 1,412.8  |      |   | 1,097.4  |  |                | 999.5    |  | 28.7       |   |  | 9.8   |  
|                                            |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Total commercial real estate                |  |      | 9,988.6  |      |   | 8,755.6  |  |                | 7,900.5  |  | 14.1       |   |  | 10.8  |  
|Commercial lease financing                  |  |      | 439.4    |      |   | 397.0    |  |                | 390.0    |  | 10.7       |   |  | 1.8   |  
|                                            |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Total commercial                            |  |      | 19,382.6 |      |   | 16,773.6 |  |                | 15,195.8 |  | 15.6       |   |  | 10.4  |  
|Personal:                                   |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Residential real estate:                    |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Residential mortgages                       |  |      | 4,239.5  |      |   | 2,855.3  |  |                | 2,335.2  |  | 48.5       |   |  | 22.3  |  
|Construction                                |  |      | 1,513.0  |      |   | 839.8    |  |                | 593.0    |  | 80.2       |   |  | 41.6  |  
|                                            |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Total residential real estate               |  |      | 5,752.5  |      |   | 3,695.1  |  |                | 2,928.2  |  | 55.7       |   |  | 26.2  |  
|Consumer loans:                             |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Student                                     |  |      | 79.4     |      |   | 87.2     |  |                | 95.8     |  | (8.9       | ) |  | (9.0  | )
|Credit card                                 |  |      | 223.6    |      |   | 224.0    |  |                | 198.0    |  | (0.2       | ) |  | 13.1  |  
|Home equity loans and lines                 |  |      | 4,987.9  |      |   | 4,764.8  |  |                | 4,109.4  |  | 4.7        |   |  | 15.9  |  
|Other                                       |  |      | 1,222.5  |      |   | 1,321.3  |  |                | 1,580.5  |  | (7.5       | ) |  | (16.4 | )
|                                            |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Total consumer loans                        |  |      | 6,513.4  |      |   | 6,397.3  |  |                | 5,983.7  |  | 1.8        |   |  | 6.9   |  
|Personal lease financing                    |  |      | 127.9    |      |   | 155.5    |  |                | 284.9    |  | (17.7      | ) |  | (45.4 | )
|                                            |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Total personal                              |  |      | 12,393.8 |      |   | 10,247.9 |  |                | 9,196.8  |  | 20.9       |   |  | 11.4  |  
|                                            |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Total consolidated average loans and leases |  | $    | 31,776.4 |      | $ | 27,021.5 |  | $              | 24,392.6 |  | 17.6       | % |  | 10.8  | %
|                                            |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  

Average loans and leases increased $4.8 billion or 17.6% in 2005 compared to 2004. Total average
commercial loan growth amounted to $2.6 billion. Total average commercial loan growth in 2005 compared to 2004 consisted of average commercial real estate and commercial real estate construction loan growth which contributed $1.2 billion and average
commercial loan growth which contributed $1.4 billion. Total average personal loan growth amounted to $2.2 billion in 2005 compared to 2004. This growth was driven primarily by growth in residential real estate loans that consist primarily of
traditional three and five year ARMs (adjustable rate mortgages), balloon mortgage loans and construction loans. Total average residential real estate loans grew by $2.1 billion in 2005 compared to 2004. From a production standpoint, residential
mortgage loan closings in 2005 were $1.5 billion or 35.8% higher than residential real estate loan closings in 2004. Average home equity loans and lines increased $0.2 billion in 2005 compared to 2004. Average indirect auto loans and leases declined
approximately $0.3 billion in 2005 compared to 2004 which reflects, in part, the effect of the sale and securitization of indirect auto loans in 2005 and 2004.



27



---

##### Table of Contents

Management attributes the strong growth in commercial loans in 2005 compared to 2004 to the strength of
the local economies in the markets the Corporation serves, sales success and continued customer satisfaction. Management expects that organic commercial loan growth (as a percentage) will reach the low double digits in 2006. The basis for this
expectation includes continued success in attracting new customers in all of the Corporations markets and continued modest economic growth in the primary markets that the Corporation serves.

Home equity loans and lines, which include M&Is wholesale activity, continue to be the primary consumer loan products. Home equity loan and
line production in 2005 continued to be strong. The rate of growth in home equity loans and lines in 2005 compared to 2004 was affected by the amount of loans sold at origination and increased prepayment activity on the Corporations wholesale
home equity products. The proportion of loans sold at origination significantly increased in 2005 compared to 2004 in response to the increased demand for home equity products with higher loan-to-value characteristics. Organic personal loan
production is expected to increase modestly. However, organic personal loan growth (as a percentage) in 2006 will depend on the proportion of personal loan production retained versus sold.

The Corporation sells some of its residential real estate loan production (residential real estate and home equity loans) in the secondary market.
Selected residential real estate loans with rate and term characteristics that are considered desirable are periodically retained in the portfolio. Residential real estate loans originated and sold to the secondary market amounted to $2.4 billion in
2005 compared to $1.6 billion in 2004. At December 31, 2005, mortgage loans held for sale amounted to $198.7 million. Gains from the sale of mortgage loans amounted to $42.4 million in 2005 compared to $27.2 million in 2004.

Auto loans securitized and sold amounted to $0.5 billion in each of 2005 and 2004. Net losses from the sale and securitization of auto loans, including
write-downs of auto loans held for sale, amounted to $2.0 million in 2005 compared to $3.4 million in 2004. The losses incurred were primarily due to lower loan interest rate spreads associated with new auto loan production in a rising interest rate
environment. See Note 8 in Notes to Consolidated Financial Statements for further discussion of the Corporations securitization activities. At December 31, 2005, auto loans held for sale amounted to $79.1 million.

The Corporation anticipates that it will continue to divest of selected assets through sale or securitization in future periods.

Average loans and leases increased $2.6 billion or 10.8% in 2004 compared to 2003. Total average commercial loan growth amounted to $1.6 billion. Total
average commercial loan growth in 2004 compared to 2003 consisted of average commercial real estate and commercial real estate construction loan growth which contributed $0.9 billion and average commercial loan growth which contributed $0.7 billion.
Total average personal loan growth amounted to $1.1 billion in 2004 compared to 2003. Total average personal loan growth in 2004 compared to 2003 was driven by growth in average home equity loans and lines which increased $0.7 billion and growth in
average residential real estate and residential real estate construction loan growth which increased $0.8 billion. From a production standpoint, residential real estate loan closings in 2004 were $1.3 billion or 23.6% lower than residential real
estate loan closings in 2003. Average indirect auto loans and leases declined approximately $0.4 billion in 2004 compared to 2003 which reflects, in part, the effect of the sale and securitization of indirect auto loans in 2004 and 2003.

The strong growth in commercial loans in 2004 generally occurred somewhat evenly throughout the year, was experienced in all of the Corporations
markets, and came from both new customers and existing customers across a variety of industries.

Residential real estate loans originated
and sold to the secondary market amounted to $1.6 billion in 2004 compared to $3.5 billion in 2003. Approximately $0.3 billion of loans sold in 2004 were attributable to the AmerUs Home Lending, Inc. (AmerUs) acquisition. Gains from the
sale of mortgage loans amounted to $27.2 million in 2004 compared to $54.1 million in 2003. Approximately $6.2 million of the gain in 2004 was attributable to the AmerUs acquisition.

Auto loans securitized and sold amounted to $0.5 billion in 2004 compared to $0.8 billion in 2003. Net losses from the sale and securitization of auto
loans, including write-downs of auto loans held for sale, amounted to $3.4 million in 2004 compared to gains from the sale and securitization of auto loans of $2.7 million in 2003.



28



---

##### Table of Contents

The growth and composition of the Corporations consolidated average deposits for the current year
and prior two years are reflected below ($ in millions):



|                                    |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|----------------------------------- |  | ---- | -------- | ---- | - | -------- |  | -------------- | -------- |  | ---------- | - |  | ----- | -
|                                    |  |      |          |      |   |          |  | Percent Growth |         
|                                    |  | 2005 |          | 2004 |   | 2003     |  | 2005vs2004     |          |  | 2004vs2003 |  
|Bank issued deposits:               |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Noninterest bearing:                |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Commercial                          |  | $    | 3,480.6  |      | $ | 3,210.5  |  | $              | 2,903.3  |  | 8.4        | % |  | 10.6  | %
|Personal                            |  |      | 940.8    |      |   | 897.1    |  |                | 815.9    |  | 4.9        |   |  | 10.0  |  
|Other                               |  |      | 521.4    |      |   | 478.0    |  |                | 470.5    |  | 9.1        |   |  | 1.6   |  
|                                    |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Total noninterest bearing           |  |      | 4,942.8  |      |   | 4,585.6  |  |                | 4,189.7  |  | 7.8        |   |  | 9.4   |  
|                                    |  |      |          |      |  
|Interest bearing:                   |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Activity accounts:                  |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Savings and NOW                     |  |      | 3,096.2  |      |   | 3,388.4  |  |                | 3,148.7  |  | (8.6       | ) |  | 7.6   |  
|Money market                        |  |      | 5,980.1  |      |   | 5,675.6  |  |                | 6,115.3  |  | 5.4        |   |  | (7.2  | )
|Foreign activity                    |  |      | 951.0    |      |   | 896.7    |  |                | 821.0    |  | 6.1        |   |  | 9.2   |  
|                                    |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Total activity accounts             |  |      | 10,027.3 |      |   | 9,960.7  |  |                | 10,085.0 |  | 0.7        |   |  | (1.2  | )
|                                    |  |      |          |      |  
|Time deposits:                      |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Other CDs and time                  |  |      | 3,048.1  |      |   | 2,632.7  |  |                | 2,764.7  |  | 15.8       |   |  | (4.8  | )
|CDs $100,000 and over               |  |      | 1,362.3  |      |   | 751.4    |  |                | 635.1    |  | 81.3       |   |  | 18.3  |  
|                                    |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Total time deposits                 |  |      | 4,410.4  |      |   | 3,384.1  |  |                | 3,399.8  |  | 30.3       |   |  | (0.5  | )
|                                    |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Total interest bearing              |  |      | 14,437.7 |      |   | 13,344.8 |  |                | 13,484.8 |  | 8.2        |   |  | (1.0  | )
|                                    |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Total bank issued deposits          |  |      | 19,380.5 |      |   | 17,930.4 |  |                | 17,674.5 |  | 8.1        |   |  | 1.4   |  
|                                    |  |      |          |      |  
|Wholesale deposits:                 |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Money market                        |  |      | 1,073.1  |      |   | 499.8    |  |                | 74.6     |  | 114.7      |   |  | 569.9 |  
|Brokered CDs                        |  |      | 4,641.1  |      |   | 4,582.8  |  |                | 2,986.0  |  | 1.3        |   |  | 53.5  |  
|Foreign time                        |  |      | 1,006.8  |      |   | 974.9    |  |                | 1,250.8  |  | 3.3        |   |  | (22.1 | )
|                                    |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Total wholesale deposits            |  |      | 6,721.0  |      |   | 6,057.5  |  |                | 4,311.4  |  | 11.0       |   |  | 40.5  |  
|                                    |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  
|Total consolidated average deposits |  | $    | 26,101.5 |      | $ | 23,987.9 |  | $              | 21,985.9 |  | 8.8        | % |  | 9.1   | %
|                                    |  |      |          |      |   |          |  |                |          |  |            |   |  |       |  

Average total bank issued deposits increased $1.5 billion or 8.1% in 2005 compared with 2004.
Average noninterest bearing deposits increased $0.4 billion and average interest bearing deposits increased $1.1 billion. Average time deposits exhibited the greatest growth in bank issued interest bearing deposits in 2005 compared to 2004. Average
money market accounts grew $0.3 billion in 2005 compared to 2004. This growth was offset in part by a decline in savings and NOW accounts compared to the prior year.

Noninterest deposit balances tend to exhibit some seasonality with a trend of balances declining somewhat in the early part of the year followed by growth in balances throughout the remainder of the year. A portion of
the noninterest balances is sensitive to the interest rate environment. Larger balances tend to be maintained when overall interest rates are low and smaller balances tend to be maintained as overall interest rates increase. Overall, the re-pricing
characteristics of the Corporations assets and liabilities continue to be reasonably matched. As interest rates have risen, the Corporation has increasingly been able to competitively price these deposit products which has contributed to the
growth in interest bearing bank issued deposits and resulted in less reliance on wholesale funding sources in 2005. Management expects these trends to continue.

In commercial banking, the focus remains on developing deeper relationships by capitalizing on cross-sale opportunities and through the sale of treasury management products and services along with incentive plans
focused on growing deposits. The retail banking strategy continues to focus on aggressively selling the right products to meet the needs of customers and enhance the Corporations profitability.

Average wholesale deposits increased $0.7 billion in 2005 compared to 2004. These deposits are funds in the form of deposits generated through
distribution channels other than the Corporations own banking branches. These deposits allow the Corporations bank subsidiaries to gather funds across a wider geographic base and at



29



---

##### Table of Contents

pricing levels considered attractive. The underlying depositor may be retail or institutional. Access to and use of these funding sources also provide the
Corporation added flexibility not to pursue unprofitable single service time deposit relationships.

Average bank issued deposits increased
$0.3 billion or 1.4% in 2004 compared with 2003. Average noninterest bearing deposits increased $0.4 billion and average interest bearing activity accounts decreased $0.1 billion. Savings and NOW accounts, especially NOW accounts, exhibited the
greatest growth in bank issued interest bearing activity deposits in 2004 compared to 2003. This growth was offset in part by a decline in money market deposits compared to the prior year. Average bank issued time deposits were relatively unchanged
in 2004 compared to 2003.

In 2004, average wholesale deposits increased $1.7 billion which reflects the Corporations greater use of
wholesale funding alternatives, especially institutional CDs.

During 2005, the Corporations lead bank, M&I Marshall &
Ilsley Bank (M&I Bank) issued $1,150.0 million of fixed rate senior notes with a weighted average interest rate of 4.21%. In addition, M&I Bank issued $1,225.0 million of floating rate senior notes and issued $350.0 million of
fixed rate subordinated notes at an interest rate of 4.85%. New Federal Home Loan Bank (FHLB) floating rate advances in 2005 amounted to $550.0 million. In December 2005, $1.0 billion of existing senior bank notes (puttable reset
securities) were remarketed. The interest rates used to determine interest on floating rate senior notes and floating rate FHLB advances are indexed to the London Interbank Offered Rate (LIBOR). During 2005, $100.5 million of the
Corporations Series E notes with a weighted average interest rate of 1.75% and $450.0 million of M&I Banks FHLB advances with a weighted average interest rate of 1.90% matured.

During 2004, M&I Bank prepaid $300.0 million of floating rate FHLB advances and terminated receive floating / pay fixed interest rate swaps
designated as cash flow hedges against the FHLB advances. The termination of the interest rate swaps resulted in a charge to earnings of $2.0 million. Also during 2004, a fixed rate advance from the FHLB aggregating $55.0 million with an annual
coupon interest rate of 5.06% was prepaid and retired resulting in a charge to earnings of $4.9 million. The charge to earnings resulting from these transactions is reported in other expense in the Consolidated Statements of Income.

The net interest margin on a fully taxable equivalent basis (FTE) as a percent of average earning assets was 3.31% in 2005 compared to 3.52%
in 2004, a decrease of 21 basis points. The Corporation estimates that the additional interest expense associated with the $1.0 billion of debt issued in late July 2004 to finance Metavantes 2004 acquisitions lowered the net interest margin on
a FTE basis by approximately 11 basis points in 2005. Unlike a bank acquisition or loan growth, where the primary source of revenue is interest income, the revenue impact of Metavantes acquisitions is reported in other income and is not a
component of the net interest margin statistic. The yield on average earning assets was 5.88% in 2005 compared to 5.14% in 2004, an increase of 74 basis points. The cost of interest bearing liabilities was 3.04% in 2005 compared to 1.93% in 2004, an
increase of 111 basis points.

The Corporation actively manages the repricing characteristics of its liabilities so as to minimize the
long-term impact on net interest income when interest rates begin to rise. Management anticipates that loan spreads will most likely continue to narrow, particularly in a rising interest rate environment, and as the economy improves, the
Corporations capacity to generate loans may exceed its ability to generate appropriately priced deposits. As a result, the net interest margin FTE as a percent of average earning assets could continue to have modest downward pressure in 2006.
Net interest income and the net interest margin percentage can vary and continue to be influenced by loan and deposit growth, product spreads, pricing competition in the Corporations markets, prepayment activity, future interest rate changes
and various other factors.

The net interest margin on a FTE basis as a percent of average earning assets was 3.52% in 2004 compared to
3.65% in 2003, a decrease of 13 basis points. The Corporation estimates that the additional interest expense associated with the $1.0 billion of debt issued in late July 2004 to finance Metavantes 2004 acquisitions lowered the net interest
margin on a FTE basis by approximately 6 basis points. The yield on average earning assets was 5.14% in 2004 compared to 5.24% in 2003, a decrease of 10 basis points. The cost of interest bearing liabilities was 1.93% in 2004 compared to 1.91% in
2003, an increase of 2 basis points.



30



---

##### Table of Contents

Average Balance Sheets and Analysis of Net Interest Income

The Corporations consolidated average balance sheets, interest earned and interest paid, and the average interest rates earned and paid for each of
the last three years are presented in the following table ($ in thousands):



|                                                  |  |                |            |   |                     |   |                         |      |      |                |  |   |                     |   |                         |   |           |                |      |   |                     |   |                         |   |  |   |           |  |      |  
|------------------------------------------------- |  | -------------- | ---------- | - | ------------------- | - | ----------------------- | ---- | ---- | -------------- |  | - | ------------------- | - | ----------------------- | - | --------- | -------------- | ---- | - | ------------------- | - | ----------------------- | - |  | - | --------- |  | ---- | -
|                                                  |  | 2005           |            |   | 2004                |   |                         | 2003 |     
|                                                  |  | AverageBalance |            |   | InterestEarned/Paid |   | AverageYield orCost (3) |      |      | AverageBalance |  |   | InterestEarned/Paid |   | AverageYield orCost (3) |   |           | AverageBalance |      |   | InterestEarned/Paid |   | AverageYield orCost (3) |  
|Loans and leases (1)(2)                           |  | $              | 31,776,383 |   |                     | $ | 1,928,818               |      | 6.07 | %              |  | $ | 27,021,498          |   |                         | $ | 1,406,825 |                | 5.21 | % |                     | $ | 24,392,591              |   |  | $ | 1,306,565 |  | 5.36 | %
|Investment securities:                            |  |                |            |   |                     |   |                         |      |      |                |  |   |                     |   |                         |   |           |                |      |   |                     |   |                         |   |  |   |           |  |      |  
|Taxable                                           |  |                | 4,847,722  |   |                     |   | 214,537                 |      | 4.41 |                |  |   | 4,672,741           |   |                         |   | 200,107   |                | 4.30 |   |                     |   | 4,038,579               |   |  |   | 165,075   |  | 4.13 |  
|Tax-exempt (1)                                    |  |                | 1,334,793  |   |                     |   | 95,001                  |      | 7.26 |                |  |   | 1,199,139           |   |                         |   | 88,425    |                | 7.53 |   |                     |   | 1,173,466               |   |  |   | 87,194    |  | 7.58 |  
|Federal funds sold and security resale agreements |  |                | 153,701    |   |                     |   | 5,347                   |      | 3.48 |                |  |   | 53,675              |   |                         |   | 857       |                | 1.60 |   |                     |   | 28,692                  |   |  |   | 395       |  | 1.38 |  
|Trading securities (1)                            |  |                | 26,922     |   |                     |   | 240                     |      | 0.89 |                |  |   | 22,297              |   |                         |   | 281       |                | 1.26 |   |                     |   | 23,017                  |   |  |   | 266       |  | 1.16 |  
|Other short-term investments                      |  |                | 83,477     |   |                     |   | 3,328                   |      | 3.99 |                |  |   | 117,382             |   |                         |   | 1,540     |                | 1.31 |   |                     |   | 235,562                 |   |  |   | 2,164     |  | 0.92 |  
|                                                  |  |                |            |   |                     |   |                         |      |      |                |  |   |                     |   |                         |   |           |                |      |   |                     |   |                         |   |  |   |           |  |      |  
|Total interest earning assets                     |  |                | 38,222,998 |   |                     |   | 2,247,271               |      | 5.88 | %              |  |   | 33,086,732          |   |                         |   | 1,698,035 |                | 5.14 | % |                     |   | 29,891,907              |   |  |   | 1,561,659 |  | 5.24 | %
|Cash and demand deposits due from banks           |  |                | 966,078    |   |                     |   |                         |      |      |                |  |   | 835,391             |   |                         |   |           |                |      |   |                     |   | 752,215                 |   |  |   |           |  |      |  
|Premises and equipment, net                       |  |                | 458,179    |   |                     |   |                         |      |      |                |  |   | 448,134             |   |                         |   |           |                |      |   |                     |   | 440,492                 |   |  |   |           |  |      |  
|Other assets                                      |  |                | 3,999,172  |   |                     |   |                         |      |      |                |  |   | 3,152,745           |   |                         |   |           |                |      |   |                     |   | 2,531,245               |   |  |   |           |  |      |  
|Allowance for loan and lease losses               |  |                | (362,886   | ) |                     |   |                         |      |      |                |  |   | (360,408            | ) |                         |   |           |                |      |   |                     |   | (347,838                | ) |  |   |           |  |      |  
|                                                  |  |                |            |   |                     |   |                         |      |      |                |  |   |                     |   |                         |   |           |                |      |   |                     |   |                         |   |  |   |           |  |      |  
|Total assets                                      |  | $              | 43,283,541 |   |                     |   |                         |      |      |                |  | $ | 37,162,594          |   |                         |   |           |                |      |   |                     | $ | 33,268,021              |   |  |   |           |  |      |  
|                                                  |  |                |            |   |                     |   |                         |      |      |                |  |   |                     |   |                         |   |           |                |      |   |                     |   |                         |   |  |   |           |  |      |  
|Interest bearing deposits:                        |  |                |            |   |                     |   |                         |      |      |                |  |   |                     |   |                         |   |           |                |      |   |                     |   |                         |   |  |   |           |  |      |  
|Bank issued deposits:                             |  |                |            |   |                     |   |                         |      |      |                |  |   |                     |   |                         |   |           |                |      |   |                     |   |                         |   |  |   |           |  |      |  
|Bank issued interest bearing activity deposits    |  | $              | 10,027,250 |   |                     | $ | 192,441                 |      | 1.92 | %              |  | $ | 9,960,645           |   |                         | $ | 77,621    |                | 0.78 | % |                     | $ | 10,084,996              |   |  | $ | 75,221    |  | 0.75 | %
|Bank issued time deposits                         |  |                | 4,410,456  |   |                     |   | 141,530                 |      | 3.21 |                |  |   | 3,384,120           |   |                         |   | 82,938    |                | 2.45 |   |                     |   | 3,399,734               |   |  |   | 85,472    |  | 2.51 |  
|                                                  |  |                |            |   |                     |   |                         |      |      |                |  |   |                     |   |                         |   |           |                |      |   |                     |   |                         |   |  |   |           |  |      |  
|Total bank issued deposits                        |  |                | 14,437,706 |   |                     |   | 333,971                 |      | 2.31 |                |  |   | 13,344,765          |   |                         |   | 160,559   |                | 1.20 |   |                     |   | 13,484,730              |   |  |   | 160,693   |  | 1.19 |  
|Wholesale deposits                                |  |                | 6,720,964  |   |                     |   | 210,949                 |      | 3.14 |                |  |   | 6,057,542           |   |                         |   | 115,543   |                | 1.91 |   |                     |   | 4,311,424               |   |  |   | 67,523    |  | 1.57 |  
|                                                  |  |                |            |   |                     |   |                         |      |      |                |  |   |                     |   |                         |   |           |                |      |   |                     |   |                         |   |  |   |           |  |      |  
|Total interest bearing deposits                   |  |                | 21,158,670 |   |                     |   | 544,920                 |      | 2.58 |                |  |   | 19,402,307          |   |                         |   | 276,102   |                | 1.42 |   |                     |   | 17,796,154              |   |  |   | 228,216   |  | 1.28 |  
|Short-term borrowings                             |  |                | 2,925,642  |   |                     |   | 106,333                 |      | 3.63 |                |  |   | 2,908,168           |   |                         |   | 61,256    |                | 2.11 |   |                     |   | 3,138,752               |   |  |   | 81,070    |  | 2.58 |  
|Long-term borrowings                              |  |                | 8,193,001  |   |                     |   | 330,144                 |      | 4.03 |                |  |   | 5,329,571           |   |                         |   | 196,440   |                | 3.69 |   |                     |   | 3,798,851               |   |  |   | 163,348   |  | 4.30 |  
|                                                  |  |                |            |   |                     |   |                         |      |      |                |  |   |                     |   |                         |   |           |                |      |   |                     |   |                         |   |  |   |           |  |      |  
|Total interest bearing liabilities                |  |                | 32,277,313 |   |                     |   | 981,397                 |      | 3.04 | %              |  |   | 27,640,046          |   |                         |   | 533,798   |                | 1.93 | % |                     |   | 24,733,757              |   |  |   | 472,634   |  | 1.91 | %
|Noninterest bearing deposits                      |  |                | 4,942,803  |   |                     |   |                         |      |      |                |  |   | 4,585,628           |   |                         |   |           |                |      |   |                     |   | 4,189,724               |   |  |   |           |  |      |  
|Other liabilities                                 |  |                | 1,772,023  |   |                     |   |                         |      |      |                |  |   | 1,432,134           |   |                         |   |           |                |      |   |                     |   | 1,103,886               |   |  |   |           |  |      |  
|Shareholders equity                              |  |                | 4,291,402  |   |                     |   |                         |      |      |                |  |   | 3,504,786           |   |                         |   |           |                |      |   |                     |   | 3,240,654               |   |  |   |           |  |      |  
|                                                  |  |                |            |   |                     |   |                         |      |      |                |  |   |                     |   |                         |   |           |                |      |   |                     |   |                         |   |  |   |           |  |      |  
|Total liabilities and shareholders equity        |  | $              | 43,283,541 |   |                     |   |                         |      |      |                |  | $ | 37,162,594          |   |                         |   |           |                |      |   |                     | $ | 33,268,021              |   |  |   |           |  |      |  
|                                                  |  |                |            |   |                     |   |                         |      |      |                |  |   |                     |   |                         |   |           |                |      |   |                     |   |                         |   |  |   |           |  |      |  
|Net interest income                               |  |                |            |   |                     | $ | 1,265,874               |      |      |                |  |   |                     |   |                         | $ | 1,164,237 |                |      |   |                     |   |                         |   |  | $ | 1,089,025 |  |      |  
|                                                  |  |                |            |   |                     |   |                         |      |      |                |  |   |                     |   |                         |   |           |                |      |   |                     |   |                         |   |  |   |           |  |      |  
|Net yield on interest earning assets              |  |                |            |   |                     |   |                         |      | 3.31 | %              |  |   |                     |   |                         |   |           |                | 3.52 | % |                     |   |                         |   |  |   |           |  | 3.65 | %
|                                                  |  |                |            |   |                     |   |                         |      |      |                |  |   |                     |   |                         |   |           |                |      |   |                     |   |                         |   |  |   |           |  |      |  

---

Notes:



|(1) | Fully taxable equivalent basis, assuming a Federal income tax rate of 35% for all years presented, and excluding disallowed interest expense.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Loans and leases on nonaccrual status have been included in the computation of average balances.
|--- | ------------------------------------------------------------------------------------------------

|(3) | Based on average balances excluding fair value adjustments for available for sale securities.
|--- | ---------------------------------------------------------------------------------------------



31



---

##### Table of Contents

Analysis of Changes in Interest Income and Interest Expense

The effects on interest income and interest expense due to volume and rate changes in 2005 and 2004 are outlined in the following table. Changes not due
solely to either volume or rate are allocated to rate ($ in thousands):



|                                                  |  |                                     |         |   |                  |   |         |                                     |  |   |                   |   |  |             |         |   |                    |   |         |   |  |   |         |  
|------------------------------------------------- |  | ----------------------------------- | ------- | - | ---------------- | - | ------- | ----------------------------------- |  | - | ----------------- | - |  | ----------- | ------- | - | ------------------ | - | ------- | - |  | - | ------- | -
|                                                  |  | 2005 versus 2004                    |         |   | 2004 versus 2003 |  
|                                                  |  | Increase (Decrease) Dueto Change in |         |   |                  |   |         | Increase (Decrease) Dueto Change in |  |   |                   |  
|                                                  |  | AverageVolume (2)                   |         |   | AverageRate      |   |         | Increase(Decrease)                  |  |   | AverageVolume (2) |   |  | AverageRate |         |   | Increase(Decrease) |  
|Interest on earning assets:                       |  |                                     |         |   |                  |   |         |                                     |  |   |                   |   |  |             |         |   |                    |   |         |   |  |   |         |  
|Loans and leases (1)                              |  | $                                   | 247,730 |   |                  | $ | 274,263 |                                     |  | $ | 521,993           |   |  | $           | 140,909 |   |                    | $ | (40,649 | ) |  | $ | 100,260 |  
|Investment securities:                            |  |                                     |         |   |                  |   |         |                                     |  |   |                   |   |  |             |         |   |                    |   |         |   |  |   |         |  
|Taxable                                           |  |                                     | 9,203   |   |                  |   | 5,227   |                                     |  |   | 14,430            |   |  |             | 27,347  |   |                    |   | 7,685   |   |  |   | 35,032  |  
|Tax-exempt (1)                                    |  |                                     | 10,124  |   |                  |   | (3,548  | )                                   |  |   | 6,576             |   |  |             | 1,751   |   |                    |   | (520    | ) |  |   | 1,231   |  
|Federal funds sold and security resale agreements |  |                                     | 1,600   |   |                  |   | 2,890   |                                     |  |   | 4,490             |   |  |             | 345     |   |                    |   | 117     |   |  |   | 462     |  
|Trading securities (1)                            |  |                                     | 58      |   |                  |   | (99     | )                                   |  |   | (41               | ) |  |             | (8      | ) |                    |   | 23      |   |  |   | 15      |  
|Other short-term investments                      |  |                                     | (444    | ) |                  |   | 2,232   |                                     |  |   | 1,788             |   |  |             | (1,087  | ) |                    |   | 463     |   |  |   | (624    | )
|Total interest income change                      |  | $                                   | 265,950 |   |                  | $ | 283,286 |                                     |  | $ | 549,236           |   |  | $           | 168,741 |   |                    | $ | (32,365 | ) |  | $ | 136,376 |  
|                                                  |  |                                     |         |   |                  |  
|Expense on interest bearing liabilities:          |  |                                     |         |   |                  |   |         |                                     |  |   |                   |   |  |             |         |   |                    |   |         |   |  |   |         |  
|Interest bearing deposits:                        |  |                                     |         |   |                  |   |         |                                     |  |   |                   |   |  |             |         |   |                    |   |         |   |  |   |         |  
|Bank issued deposits:                             |  |                                     |         |   |                  |   |         |                                     |  |   |                   |   |  |             |         |   |                    |   |         |   |  |   |         |  
|Bank issued interest bearing activity deposits    |  | $                                   | 520     |   |                  | $ | 114,300 |                                     |  | $ | 114,820           |   |  | $           | (933    | ) |                    | $ | 3,333   |   |  | $ | 2,400   |  
|Bank issued time deposits                         |  |                                     | 25,145  |   |                  |   | 33,447  |                                     |  |   | 58,592            |   |  |             | (392    | ) |                    |   | (2,142  | ) |  |   | (2,534  | )
|Total bank issued deposits                        |  |                                     | 13,115  |   |                  |   | 160,297 |                                     |  |   | 173,412           |   |  |             | (1,666  | ) |                    |   | 1,532   |   |  |   | (134    | )
|Wholesale deposits                                |  |                                     | 12,671  |   |                  |   | 82,735  |                                     |  |   | 95,406            |   |  |             | 27,414  |   |                    |   | 20,606  |   |  |   | 48,020  |  
|Total interest bearing deposits                   |  |                                     | 24,940  |   |                  |   | 243,878 |                                     |  |   | 268,818           |   |  |             | 20,559  |   |                    |   | 27,327  |   |  |   | 47,886  |  
|Short-term borrowings                             |  |                                     | 369     |   |                  |   | 44,708  |                                     |  |   | 45,077            |   |  |             | (5,949  | ) |                    |   | (13,865 | ) |  |   | (19,814 | )
|Long-term borrowings                              |  |                                     | 105,661 |   |                  |   | 28,043  |                                     |  |   | 133,704           |   |  |             | 65,821  |   |                    |   | (32,729 | ) |  |   | 33,092  |  
|Total interest expense change                     |  | $                                   | 89,499  |   |                  | $ | 358,100 |                                     |  | $ | 447,599           |   |  | $           | 55,510  |   |                    | $ | 5,654   |   |  | $ | 61,164  |  

---

Notes:



|(1) | Fully taxable equivalent basis, assuming a Federal income tax rate of 35% for all years presented, and excluding disallowed interest expense.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Based on average balances excluding fair value adjustments for available for sale securities.
|--- | ---------------------------------------------------------------------------------------------



32



---

##### Table of Contents

Summary of Loan and Lease Loss Experience and Credit Quality

The following tables present comparative credit quality information as of and for the year ended December 31, 2005, as well as selected comparative
years:

Consolidated Credit Quality Information

December 31, ($000s)



|                                                                                 |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|-------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                                                 |  | 2005 |         |   | 2004 |   |         | 2003 |  |   | 2002    |   |  | 2001 |        
|Nonperforming Assets by Type                                                     |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Loans and Leases:                                                                |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Nonaccrual                                                                       |  | $    | 134,718 |   |      | $ | 127,722 |      |  | $ | 166,387 |   |  | $    | 188,232 |   |  | $ | 166,434 |  
|Renegotiated                                                                     |  |      | 143     |   |      |   | 236     |      |  |   | 278     |   |  |      | 326     |   |  |   | 378     |  
|Past Due 90 Days or More                                                         |  |      | 5,725   |   |      |   | 4,405   |      |  |   | 6,111   |   |  |      | 5,934   |   |  |   | 6,982   |  
|                                                                                 |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Total Nonperforming Loans and Leases                                             |  |      | 140,586 |   |      |   | 132,363 |      |  |   | 172,776 |   |  |      | 194,492 |   |  |   | 173,794 |  
|Other Real Estate Owned                                                          |  |      | 8,869   |   |      |   | 8,056   |      |  |   | 13,235  |   |  |      | 8,692   |   |  |   | 6,796   |  
|                                                                                 |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Total Nonperforming Assets                                                       |  | $    | 149,455 |   |      | $ | 140,419 |      |  | $ | 186,011 |   |  | $    | 203,184 |   |  | $ | 180,590 |  
|                                                                                 |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Allowance for Loan and Lease Losses                                              |  | $    | 363,769 |   |      | $ | 358,110 |      |  | $ | 349,561 |   |  | $    | 338,409 |   |  | $ | 268,198 |  
|                                                                                 |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Consolidated Statistics                                                          |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net Charge-offs to Average Loans and Leases                                      |  |      | 0.12    | % |      |   | 0.11    | %    |  |   | 0.21    | % |  |      | 0.21    | % |  |   | 0.22    | %
|Total Nonperforming Loans and Leases to Total Loans and Leases                   |  |      | 0.41    |   |      |   | 0.45    |      |  |   | 0.69    |   |  |      | 0.81    |   |  |   | 0.90    |  
|Total Nonperforming Assets to Total Loans And Leases and Other Real Estate Owned |  |      | 0.44    |   |      |   | 0.48    |      |  |   | 0.74    |   |  |      | 0.85    |   |  |   | 0.94    |  
|Allowance for Loan and Lease Losses to Total Loans and Leases                    |  |      | 1.06    |   |      |   | 1.21    |      |  |   | 1.39    |   |  |      | 1.42    |   |  |   | 1.39    |  
|Allowance for Loan and Lease Losses to Nonperforming Loans and Leases            |  |      | 259     |   |      |   | 271     |      |  |   | 202     |   |  |      | 174     |   |  |   | 154     |  

Major Categories of Nonaccrual Loans and Leases ($000s)



|                                  |  |                   |         |              |                   |   |                 |       |   |            |   |              |  |     |                |  |       |  
|--------------------------------- |  | ----------------- | ------- | ------------ | ----------------- | - | --------------- | ----- | - | ---------- | - | ------------ |  | --- | -------------- |  | ----- | -
|                                  |  | December 31, 2005 |         |              | December 31, 2004 |  
|                                  |  | Nonaccrual        |         | % ofLoanType |                   |   | % of Nonaccrual |       |   | Nonaccrual |   | % ofLoanType |  |     | % ofNonaccrual | 
|Commercial and Lease Financing    |  | $                 | 45,269  |              | 0.4               | % |                 | 33.6  | % |            | $ | 45,510       |  | 0.5 | %              |  | 35.6  | %
|                                  |  |                   |         |              |                   |  
|Real Estate                       |  |                   |         |              |                   |   |                 |       |   |            |   |              |  |     |                |  |       |  
|Construction and Land Development |  |                   | 913     |              |                  |   |                 | 0.7   |   |            |   | 578          |  |    |                |  | 0.5   |  
|Commercial Real Estate            |  |                   | 28,644  |              | 0.3               |   |                 | 21.3  |   |            |   | 31,852       |  | 0.4 |                |  | 24.9  |  
|Residential Real Estate           |  |                   | 57,982  |              | 0.6               |   |                 | 43.0  |   |            |   | 49,206       |  | 0.6 |                |  | 38.5  |  
|                                  |  |                   |         |              |                   |   |                 |       |   |            |   |              |  |     |                |  |       |  
|Total Real Estate                 |  |                   | 87,539  |              | 0.4               |   |                 | 65.0  |   |            |   | 81,636       |  | 0.4 |                |  | 63.9  |  
|Personal                          |  |                   | 1,910   |              | 0.1               |   |                 | 1.4   |   |            |   | 576          |  |    |                |  | 0.5   |  
|                                  |  |                   |         |              |                   |   |                 |       |   |            |   |              |  |     |                |  |       |  
|Total                             |  | $                 | 134,718 |              | 0.4               | % |                 | 100.0 | % |            | $ | 127,722      |  | 0.4 | %              |  | 100.0 | %
|                                  |  |                   |         |              |                   |   |                 |       |   |            |   |              |  |     |                |  |       |  



33



---

##### Table of Contents

Allocation of the Allowance for Loan and Lease Losses ($000s)



|                                        |  |                   |         |                                                   |                   |   |        |                   |                                                   |  |       |        |  |                                                    |         |  |       |  
|--------------------------------------- |  | ----------------- | ------- | ------------------------------------------------- | ----------------- | - | ------ | ----------------- | ------------------------------------------------- |  | ----- | ------ |  | -------------------------------------------------- | ------- |  | ----- | -
|                                        |  | December 31, 2005 |         |                                                   | December 31, 2004 |   |        | December 31, 2003 |                                                  
|                                        |  | Amount            |         | Percent ofLoans andLeases to TotalLoans andLeases |                   |   | Amount |                   | Percent ofLoans andLeases to TotalLoans andLeases |  |       | Amount |  | Percent of Loans andLeases to TotalLoans andLeases |        
|Balance at end of period applicable to: |  |                   |         |                                                   |                   |   |        |                   |                                                   |  |       |        |  |                                                    |         |  |       |  
|Commercial, Financial & Agricultural    |  | $                 | 222,078 |                                                   | 28.0              | % |        | $                 | 244,042                                           |  | 28.7  | %      |  | $                                                  | 237,510 |  | 28.2  | %
|Real Estate                             |  |                   |         |                                                   |                   |   |        |                   |                                                   |  |       |        |  |                                                    |         |  |       |  
|Residential Mortgage                    |  |                   | 12,921  |                                                   | 34.9              |   |        |                   | 12,311                                            |  | 32.6  |        |  |                                                    | 28,369  |  | 29.9  |  
|Commercial Mortgage                     |  |                   | 63,813  |                                                   | 30.5              |   |        |                   | 49,965                                            |  | 31.7  |        |  |                                                    | 37,013  |  | 32.7  |  
|Personal                                |  |                   | 24,153  |                                                   | 4.7               |   |        |                   | 14,252                                            |  | 5.2   |        |  |                                                    | 18,213  |  | 6.9   |  
|Lease Financing                         |  |                   | 40,804  |                                                   | 1.9               |   |        |                   | 37,540                                            |  | 1.8   |        |  |                                                    | 28,456  |  | 2.3   |  
|                                        |  |                   |         |                                                   |                   |   |        |                   |                                                   |  |       |        |  |                                                    |         |  |       |  
|Total                                   |  | $                 | 363,769 |                                                   | 100.0             | % |        | $                 | 358,110                                           |  | 100.0 | %      |  | $                                                  | 349,561 |  | 100.0 | %
|                                        |  |                   |         |                                                   |                   |   |        |                   |                                                   |  |       |        |  |                                                    |         |  |       |  



|                                        |  |                   |         |                                                   |                   |   |        |   |                                                   |  |       |  
|--------------------------------------- |  | ----------------- | ------- | ------------------------------------------------- | ----------------- | - | ------ | - | ------------------------------------------------- |  | ----- | -
|                                        |  | December 31, 2002 |         |                                                   | December 31, 2001 |  
|                                        |  | Amount            |         | Percent ofLoans andLeases to TotalLoans andLeases |                   |   | Amount |   | Percent ofLoans andLeases to TotalLoans andLeases | 
|Balance at end of period applicable to: |  |                   |         |                                                   |                   |   |        |   |                                                   |  |       |  
|Commercial, Financial & Agricultural    |  | $                 | 234,980 |                                                   | 28.7              | % |        | $ | 190,542                                           |  | 29.7  | %
|Real Estate                             |  |                   |         |                                                   |                   |   |        |   |                                                   |  |       |  
|Residential Mortgage                    |  |                   | 35,518  |                                                   | 28.9              |   |        |   | 26,916                                            |  | 29.5  |  
|Commercial Mortgage                     |  |                   | 22,141  |                                                   | 31.3              |   |        |   | 14,336                                            |  | 29.5  |  
|Personal                                |  |                   | 18,394  |                                                   | 7.8               |   |        |   | 21,468                                            |  | 6.3   |  
|Lease Financing                         |  |                   | 27,376  |                                                   | 3.3               |   |        |   | 14,936                                            |  | 5.0   |  
|                                        |  |                   |         |                                                   |                   |   |        |   |                                                   |  |       |  
|Total                                   |  | $                 | 338,409 |                                                   | 100.0             | % |        | $ | 268,198                                           |  | 100.0 | %
|                                        |  |                   |         |                                                   |                   |   |        |   |                                                   |  |       |  

Reconciliation of Consolidated Allowance for Loan and Lease Losses ($000s)



|                                                         |  |      |         |      |   |         |  |      |         |      |   |         |  |   |        
|-------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|                                                         |  | 2005 |         | 2004 |   | 2003    |  | 2002 |         | 2001
|Allowance for Loan and Lease Losses at Beginning of Year |  | $    | 358,110 |      | $ | 349,561 |  | $    | 338,409 |      | $ | 268,198 |  | $ | 235,115
|Provision for Loan and Lease Losses                      |  |      | 44,795  |      |   | 37,963  |  |      | 62,993  |      |   | 74,416  |  |   | 54,115 
|Allowance of Banks and Loans Acquired                    |  |      |        |      |   | 27      |  |      |        |      |   | 39,813  |  |   | 19,151 
|                                                         |  |      |         |      |  
|Loans and Leases Charged-off:                            |  |      |         |      |   |         |  |      |         |      |   |         |  |   |        
|Commercial                                               |  |      | 21,540  |      |   | 16,775  |  |      | 17,689  |      |   | 23,003  |  |   | 22,773 
|Real EstateConstruction                                 |  |      | 68      |      |   | 33      |  |      | 57      |      |   | 94      |  |   | 186    
|Real EstateMortgage                                     |  |      | 21,147  |      |   | 13,259  |  |      | 15,192  |      |   | 10,681  |  |   | 11,795 
|Personal                                                 |  |      | 15,580  |      |   | 12,821  |  |      | 12,100  |      |   | 12,265  |  |   | 10,965 
|Leases                                                   |  |      | 1,189   |      |   | 7,967   |  |      | 24,625  |      |   | 9,246   |  |   | 2,890  
|                                                         |  |      |         |      |   |         |  |      |         |      |   |         |  |   |        
|Total Charge-offs                                        |  |      | 59,524  |      |   | 50,855  |  |      | 69,663  |      |   | 55,289  |  |   | 48,609 
|                                                         |  |      |         |      |  
|Recoveries on Loans and Leases:                          |  |      |         |      |   |         |  |      |         |      |   |         |  |   |        
|Commercial                                               |  |      | 11,758  |      |   | 12,631  |  |      | 8,736   |      |   | 3,819   |  |   | 4,135  
|Real EstateConstruction                                 |  |      | 1       |      |   | 2       |  |      | 88      |      |   | 96      |  |   | 43     
|Real EstateMortgage                                     |  |      | 2,741   |      |   | 3,887   |  |      | 4,278   |      |   | 2,462   |  |   | 1,419  
|Personal                                                 |  |      | 3,069   |      |   | 3,327   |  |      | 3,058   |      |   | 3,053   |  |   | 2,567  
|Leases                                                   |  |      | 2,819   |      |   | 1,567   |  |      | 1,662   |      |   | 1,841   |  |   | 262    
|                                                         |  |      |         |      |   |         |  |      |         |      |   |         |  |   |        
|Total Recoveries                                         |  |      | 20,388  |      |   | 21,414  |  |      | 17,822  |      |   | 11,271  |  |   | 8,426  
|                                                         |  |      |         |      |   |         |  |      |         |      |   |         |  |   |        
|Net Loans and Leases Charged-off                         |  |      | 39,136  |      |   | 29,441  |  |      | 51,841  |      |   | 44,018  |  |   | 40,183 
|                                                         |  |      |         |      |   |         |  |      |         |      |   |         |  |   |        
|Allowance for Loan and Lease Losses at End of Year       |  | $    | 363,769 |      | $ | 358,110 |  | $    | 349,561 |      | $ | 338,409 |  | $ | 268,198
|                                                         |  |      |         |      |   |         |  |      |         |      |   |         |  |   |        



34



---

##### Table of Contents

Non performing assets consist of nonperforming loans and leases and other real estate owned
(OREO). The amount of nonperforming assets is affected by acquisitions accounted for under the purchase method of accounting. The assets and liabilities, including the nonperforming assets, of the acquired entity are included in the
Corporations consolidated balance sheets from the date the business combination is completed, which impacts period-to-period comparisons.

OREO is principally comprised of commercial and residential properties acquired in partial or total satisfaction of problem loans and amounted to $8.9 million, $8.1 million and $13.2 million at December 31, 2005, 2004 and 2003,
respectively.

Nonperforming loans and leases consist of nonaccrual, renegotiated or restructured loans, and loans and leases that are
delinquent 90 days or more and still accruing interest. The balance of nonperforming loans and leases are affected by acquisitions and may be subject to fluctuation based on the timing of cash collections, renegotiations and renewals.

Generally, loans that are 90 days or more past due as to interest or principal are placed on nonaccrual. Exceptions to these rules are generally only for
loans fully collateralized by readily marketable securities or other relatively risk free collateral. In addition, a loan may be placed on nonaccrual when management makes a determination that the facts and circumstances warrant such classification
irrespective of the current payment status.

Maintaining nonperforming assets at an acceptable level is important to the ongoing success of
a financial services institution. The Corporations comprehensive credit review and approval process is critical to ensuring that the amount of nonperforming assets on a long-term basis is minimized within the overall framework of acceptable
levels of credit risk. In addition to the negative impact on net interest income and credit losses, nonperforming assets also increase operating costs due to the expense associated with collection efforts.

At December 31, 2005, nonperforming loans and leases amounted to $140.6 million or 0.41% of consolidated loans and leases compared to $132.4 million
or 0.45% at December 31, 2004 and $172.8 million or 0.69% at December 31, 2003. Nonaccrual loans and leases increased $7.0 million or 5.5% at year-end 2005 compared to year-end 2004. The net increase was primarily due to increases in
nonaccrual home equity lines of credit that are included in nonaccrual residential real estate in the previously presented table entitled Major Categories of Nonaccrual Loans and Leases.

Delinquency can be an indicator of potential problem loans and leases. At December 31, 2005, loans and leases past due 60-89 days and still accruing
interest amounted to $33.0 million or 0.10% of total loans and leases outstanding compared to $19.4 million or 0.07% of total loans and leases outstanding at December 31, 2004 and $41.9 million or 0.17% of total loans and leases outstanding at
December 31, 2003.

In addition to its nonperforming loans and leases, the Corporation has loans and leases for which payments are
presently current, but which management believes could possibly be classified as nonperforming in the near future. These loans are subject to constant management attention and their classification is reviewed on an ongoing basis. At
December 31, 2005, such loans amounted to $61.3 million compared to $72.4 million at December 31, 2004 and $72.8 million at December 31, 2003.

Net charge-offs amounted to $39.1 million or 0.12% of average loans and leases in 2005 compared with $29.4 million or 0.11% of average loans and leases in 2004 and $51.8 million or 0.21% of average loans and leases in
2003. Included in net charge-offs for 2003 was a $19.0 million charge-off related to the carrying value of lease obligations for airplanes leased to a regional airline.

Net charge-offs and nonperforming loans and leases in 2005 and 2004 were better than management had expected. The ratio of net charge-offs to average loans and leases to some extent reflects a higher than normal level
of recoveries. The ratio of recoveries to charge-offs was 34.3% in 2005 and 42.1% in 2004 compared to a five year average of 27.9%. Although positive resolutions continue to be achieved on prior charge-offs, recoveries are expected to continue to
trend downwards. Management expects net charge-offs and nonperforming loans to trend to historical levels that would indicate net charge-offs as a percent of average loans and leases to be more in the range of 0.15% to 0.20% and nonperforming loans
and leases as a percent of total loans and leases to range from current levels to 0.60%. While it is unclear when this will occur, management does not believe that current net charge-off and nonperforming loan and lease levels are sustainable
indefinitely. Negative economic events, an adverse development in industry segments within the portfolio or deterioration of a large loan or lease could also have significant adverse impacts on the actual loss levels.



35



---

##### Table of Contents

Consistent with the relatively stable credit quality trends noted above, the provision for loan and lease
losses amounted to $44.8 million in 2005. By comparison, the provision for loan and lease losses amounted to $38.0 million and $63.0 million in 2004 and 2003, respectively. The provisions for loan and lease losses are the amounts required to
establish the allowance for loan and lease losses at the required level after considering charge-offs and recoveries. The ratio of the allowance for loan and lease losses to total loans and leases was 1.06% at December 31, 2005 compared to
1.21% at December 31, 2004 and 1.39% at December 31, 2003.

Other Income

Total other income amounted to $1,748.9 million in 2005 compared to $1,446.5 million in 2004, an increase of $302.4 million or 20.9%. Data processing
services revenue accounted for 82.8% of the growth in total other income in 2005 compared to 2004. Trust services revenue, mortgage banking revenue, loan fees and other commissions and fees and investment securities gains also contributed to growth
in total other income in 2005 compared to 2004.

Total data processing services external revenue amounted to $1,141.4 million in 2005
compared to $891.0 million in 2004, an increase of $250.4 million or 28.1%. Revenue growth continued throughout this segment driven by revenue associated with acquisitions, higher transaction volumes in core processing activity, payment processing
and electronic banking and an increase in healthcare eligibility and payment card production. Revenue associated with the six acquisitions completed in 2005 and a full year of revenue from the six acquisitions completed in 2004 contributed a
significant portion of the revenue growth in 2005 compared to 2004. The acquisition-related revenue growth includes cross sales of acquired products to customers across the entire segment. Total buyout revenue, which varies from period to period,
amounted to $9.2 million in 2005 compared to $7.9 million in 2004.

Management expects Metavantes total revenue (internal and
external) in 2006 to be in the range of $1.4 billion to $1.5 billion. Organic revenue growth (as a percentage) and segment income growth are expected to continue to modestly improve. In any given year there is some customer attrition due to banking
consolidations. In addition, due to the focus of some of the acquired companies on software sales and the retail marketplace, revenue tends to be more cyclical and seasonal in nature especially in the fourth quarter. Management expects these trends
to continue.

Fees from trust services were $165.7 million in 2005 compared to $150.9 million in 2004, an increase of $14.8 million or
9.8%. Revenue growth was experienced across all areas of trust services with approximately 42.2% of the growth in fees from trust services in 2005 compared to 2004 being attributable to commercial trust fees. Assets under management were $18.9
billion at December 31, 2005 compared to $18.3 billion at December 31, 2004, an increase of $0.6 billion or 3.3%. On an average basis, assets under management increased approximately $1.2 billion or 6.9% in 2005 compared to 2004. Assets
under administration increased by $6.9 billion or 9.1% and amounted to $82.8 billion at December 31, 2005. Sales activity emphasizing cross-selling, integrated delivery and account retention continued to drive revenue growth in 2005.

Total mortgage banking revenue was $46.0 million in 2005 compared with $35.1 million in 2004, an increase of $10.9 million or 31.2%. The
increase in gains from the sale of residential mortgage and home equity loans was the primary contributor to the increase in mortgage banking revenue. During 2005, the Corporation sold $2.4 billion of residential mortgage and home equity loans to
the secondary market. Retained interests in the form of mortgage servicing rights amounted to $0.9 million. During 2004, the Corporation sold $1.6 billion of loans to the secondary market. Retained interests in the form of mortgage servicing rights
amounted to $1.4 million. As previously discussed, residential mortgage closings in 2005 were $1.5 billion or 35.8% higher than residential real estate loan closings in 2004. At December 31, 2005, the carrying value of mortgage servicing rights
was insignificant.

Net investment securities gains amounted to $45.4 million in 2005 compared to $35.4 million in 2004. During 2005, net
gains associated with the Corporations Capital Markets Group investments amounted to $32.3 million. Approximately $29.4 million of the net gain in 2005 was from a net realized gain recognized due to the sale of an entity associated with the
investment in an independent private equity and venture capital partnership. The Corporation realized a gain of $6.6 million due to an equity investment that the Corporation liquidated in a cash



36



---

##### Table of Contents

tender offer. During the first quarter of 2005, the Corporations banking segments investment in certain membership interests of PULSE was
liquidated due to a change in control. The cash received resulted in a gain of $5.6 million. During 2004, net gains associated with the Corporations Capital Markets Group investments amounted to $34.6 million. Approximately $34.1 million of
the net gain in 2004 was from a net gain recognized in the fourth quarter of 2004 from an investment in an independent private equity and venture capital partnership.

Other noninterest income amounted to $184.8 million in 2005 compared to $164.0 million in 2004, an increase of $20.8 million or 12.7%. Loan fees, which include prepayment charges especially on wholesale home equity
loans and card related fees increased $14.0 million. Other income in 2005 includes gains from the sale of certain trust custody businesses and gains from branch divestitures that aggregated $5.1 million.

Total other income amounted to $1,446.5 million in 2004 compared to $1,215.8 million in 2003, an increase of $230.7 million or 19.0%. The growth in other
income was driven by data processing services and trust services revenues and an increase in investment securities gains recognized primarily by the Corporations Capital Markets Group. Fee income growth in 2004 was offset by a decline in
mortgage banking income. Mortgage banking income was very robust in 2003 due in part to the increased refinancing activity in the low interest rate environment.

Total data processing services external revenue amounted to $891.0 million in 2004 compared to $657.8 million in 2003, an increase of $233.2 million or 35.5%. This strong annual revenue growth reflects the effect of
Metavantes six acquisitions completed in 2004, a full year of revenue from the acquisition completed in November of 2003 and organic revenue growth. The acquisitions completed in 2004 and a full year of revenue from the acquisition completed
in November of 2003 contributed a significant portion of the revenue growth in 2004 compared to 2003. Metavante had a very strong year in 2004 in terms of core outsourcing contract renewals and cross-sale results. Total buyout revenue, which varies
from period to period, amounted to $7.9 million in 2004 compared to $6.9 million in 2003.

Fees from trust services were $150.9 million in
2004 compared to $126.8 million in 2003, an increase of $24.1 million or 19.1%. Revenue associated with the segments of the employee benefit plan business purchased from a national banking association located in Missouri contributed approximately
$10.0 million to the revenue growth in 2004 compared to 2003. Assets under management were $18.3 billion at December 31, 2004 compared to $15.7 billion at December 31, 2003, an increase of $2.6 billion or 16.5%. Assets under administration
increased by $9.0 billion or 13.4% and amounted to $75.9 billion at December 31, 2004.

Total mortgage banking revenue was $35.1
million in 2004 compared with $70.3 million in 2003, a decrease of $35.2 million. The decline in gains from the sale of residential mortgage and home equity loans was the primary contributor to the lower mortgage banking revenue. During 2004, the
Corporation sold $1.6 billion of residential mortgage and home equity loans to the secondary market. Retained interests in the form of mortgage servicing rights amounted to $1.4 million. Approximately $0.3 billion of the loans sold and $6.2 million
of the gain on sale of mortgage loans recognized in 2004 was attributable to the AmerUs acquisition. During 2003, the Corporation sold $3.5 billion of loans to the secondary market. Retained interests in the form of mortgage servicing rights
amounted to $2.1 million. Residential real estate loan closings in 2004 were $1.3 billion or 23.6% lower than residential real estate loan closings in 2003. The increase in residential real estate loan closings and residential real estate loans sold
to the secondary market in 2003 was partially the result of a significant increase in refinancing activity due to the low interest rate environment.

Net investment securities gains amounted to $35.4 million in 2004 compared to $21.6 million in 2003. During 2004, net gains associated with the Corporations Capital Markets Group investments amounted to $34.6
million. Approximately $34.1 million of the net gain in 2004 was from a net unrealized gain recognized in the fourth quarter of 2004 due to the net increase in market value of an investment in an independent private equity and venture capital
partnership. During 2003, gains recognized by the Corporations Capital Markets Group amounted to $20.0 million. Approximately $16.2 million of the gain was from the sale of an investment in the third quarter of 2003. During 2003, the
Corporations banking segment sold $48.0 million of available for sale investment securities and recognized a gain of approximately $4.2 million. Impairment losses associated with retained interests held in the form of interest-only strips
associated with its auto securitization activities amounted to $4.1 million in 2003.

Other noninterest income amounted to $164.0 million
in 2004 compared to $163.5 million in 2003. Loan fees, which include prepayment charges, and other commissions and fees increased $12.8 million. Losses from the



37



---

##### Table of Contents

sale and securitization of auto loans including write-downs of auto loans held for sale amounted to $3.4 million in 2004 compared to gains from the sale and
securitization of auto loans of $2.7 million in 2003. The losses incurred in 2004 were primarily due to lower interest rate spreads associated with new auto loan production in a rising interest rate environment. Auto loans securitized and sold
amounted to $0.5 billion in 2004 compared to $0.8 billion in 2003. During 2003, the Corporation sold six branches and recognized $5.0 million in gains.

Other Expense

Total other expense amounted to $1,846.3 million in 2005 compared to $1,595.6 million
in 2004, an increase of $250.7 million or 15.7%.

The acquisitions by Metavante had a significant impact on the year-to-year comparability
of operating expenses in 2005 compared to 2004. Approximately $182.1 million of the 2005 versus 2004 operating expense growth was attributable to the acquisitions. As all acquisitions were accounted for using the purchase method of accounting, the
operating expenses of the acquired entities are included in the consolidated operating expenses from the dates the acquisitions were completed. Operating expenses associated with acquisitions completed in 2004 are reflected for the full year in 2005
as opposed to a partial year in 2004. Acquisitions completed in 2005 directly affect the current year but have no impact on the prior year.

Expense control is sometimes measured in the financial services industry by the efficiency ratio statistic. The efficiency ratio is calculated by dividing total other expense by the sum of total other income (including Capital Markets
Group-related investment gains but excluding other securities gains and losses) and net interest income on a fully taxable equivalent basis. The Corporations efficiency ratios for the years ended December 31, 2005, 2004, and 2003 were:



|                                             |  |      |   |  |      |   |  |      |  
|-------------------------------------------- |  | ---- | - |  | ---- | - |  | ---- | -
|Efficiency Ratios                            |  | 2005 |   |  | 2004 |   |  | 2003 |  
|Consolidated Corporation                     |  | 61.5 | % |  | 61.1 | % |  | 63.0 | %
|Consolidated Corporation Excluding Metavante |  | 48.4 |   |  | 48.4 |   |  | 52.4 |  

The Corporation estimates that its expense growth in 2005 compared to 2004, excluding the effect
of the acquisitions and the impact of the 2004 significant transactions previously discussed, was approximately $86.7 million or 5.9%.

Salaries and employee benefits expense amounted to $1,042.7 million in 2005 compared to $887.3 million in 2004, an increase of $155.4 million or 17.5%. Salaries and benefits expense related to the Metavante acquisitions contributed
approximately $92.8 million to the expense growth in 2005 compared to 2004. The remainder of the increase was primarily attributable to the banking segment which reflects increased incentive compensation associated with loan and deposit growth and
increased personnel to build out product lines in markets outside Wisconsin as well as increased personnel for de novo branch expansion. Management expects these activities will continue in 2006.

Net occupancy and equipment expense amounted to $215.6 million in 2005 compared to $192.9 million in 2004, an increase of $22.7 million. Net occupancy
and equipment expense related to the Metavante acquisitions contributed approximately $20.7 million to the expense growth in 2005 compared to 2004.

Software expenses amounted to $58.0 million in 2005 compared to $50.0 million in 2004, an increase of $8.0 million or 15.9%. Software expense related to the Metavante and banking acquisitions contributed approximately $4.5 million to the
expense growth in 2005 compared to 2004. The banking segment contributed $2.7 million to the growth in software expenses in 2005 compared to 2004.

Processing charges amounted to $62.6 million in 2005 compared to $52.2 million in 2004, an increase of $10.4 million or 19.9%. Processing charges related to the Metavante acquisitions contributed approximately $11.9 million to the expense
growth in 2005 compared to 2004.

Supplies and printing expense, professional services expense and shipping and handling expense amounted
to $149.8 million in 2005 compared to $135.1 million in 2004, an increase of $14.7 million or 10.8%. The Metavante acquisitions contributed approximately $11.8 million to the expense growth in 2005 compared to 2004.



38



---

##### Table of Contents

Amortization of intangibles amounted to $31.1 million in 2005 compared to $27.9 million in 2004.
Amortization and valuation reserves associated with mortgage servicing rights declined $1.3 million. At December 31, 2005, the carrying value of mortgage servicing rights amounted to $2.8 million. Amortization of intangibles increased $6.9
million in 2005 compared to 2004 due to Metavantes acquisitions. For the year ended December 31, 2005, $0.4 million of goodwill was included in the determination of the gains associated with the sale of certain trust custody businesses
and the gains from branch divestitures. Goodwill is subject to periodic tests for impairment. The Corporation has elected to perform its annual test for impairment during the second quarter. Accordingly, the Corporation updated the analysis to
June 30, 2005 and concluded that there continues to be no impairment with respect to goodwill at any reporting unit. At December 31, 2005, none of the Corporations other intangible assets were determined to have indefinite lives.

Other noninterest expenses amounted to $286.5 million in 2005 compared to $250.2 million in 2004, an increase of $36.3 million. The
Metavante acquisitions contributed approximately $32.5 million to the expense growth in 2005 compared to 2004. Excluding the impact of the Metavante acquisitions, advertising, travel and card related expenses increased by $16.7 million in 2005
compared to 2004. As previously discussed, during 2004 the Corporation prepaid and retired certain higher cost long-term debt and terminated some related receive floating / pay fixed interest rate swaps designated as cash flow hedges resulting in a
loss of $6.9 million. During 2004, Metavante sold its small business 401k Retirement Plan Services operations and also sold the direct customer base of Paytrust.com resulting in an aggregate loss of approximately $7.1 million. Charitable foundation
expense over and above normal levels amounted to $5.0 million in 2004.

Other expense is affected by the capitalization of costs, net of
amortization, associated with software development and data processing conversions. A lower amount of capitalized software development costs and capitalized conversion costs net of their respective amortization, write-offs of software and the
amortization associated with the software obtained in the acquisitions resulted in a net decrease in other noninterest expense of $8.3 million in 2005 compared to 2004. During 2004, Metavante determined that certain purchased and internally
developed software will no longer be used or was impaired and such software was written off. Capitalized software costs written off as a result of these decisions amounted to $8.7 million in 2004.

Total other expense amounted to $1,595.6 million in 2004 compared to $1,451.7 million in 2003, an increase of $143.9 million or 9.9%.

The acquisitions by both Metavante and the banking segment had an impact on the year-to-year comparability of operating expenses in 2004 compared to
2003. Approximately $148.9 million of the 2004 versus 2003 operating expense growth was attributable to the acquisitions. Operating expenses associated with acquisitions completed in 2003 are reflected for the full year in 2004 as opposed to a
partial year in 2003. Acquisitions completed in 2004 directly affect the current year but have no impact on the prior year.

Certain
transactions as previously described herein under Significant Transactions also affected the year-to-year comparability of operating expenses in 2004 compared to 2003. For the years ended December 31, 2004 and 2003, those
transactions increased other expense by $20.8 million and $82.2 million, respectively.

The Corporation estimates that its expense growth
in 2004 compared to 2003, excluding the effect of the acquisitions and the impact of the significant transactions previously discussed, was approximately $56.3 million or 4.1%.

Salaries and employee benefits expense amounted to $887.3 million in 2004 compared to $797.5 million in 2003, an increase of $89.8 million or 11.3%.
Salaries and benefits expense related to the Metavante and banking acquisitions contributed approximately $65.1 million to the expense growth in 2004 compared to 2003. The impact of the Paytrust transition costs to salaries and employee benefits
expense amounted to $2.7 million in 2003. In 2003, the Corporation restructured certain split dollar life insurance benefits due to a change in tax laws. Of the total net charge from this restructuring, $8.4 million was recorded in salaries and
benefits. Also included in salaries and employee benefits expense in 2003 is a reversal of $2.4 million of accrued severance associated with the decision to keep a facility operational that previously had been identified for closure.

Net occupancy and equipment expense amounted to $192.9 million in 2004 compared to $179.0 million in 2003, an increase of $13.9 million. Net occupancy
and equipment expense related to the Metavante and banking acquisitions contributed approximately $13.8 million to the expense growth in 2004 compared to 2003. The impact



39



---

##### Table of Contents

of the Paytrust transition costs to net occupancy and equipment expense amounted to $0.8 million in 2003. During 2003, $6.1 million of accrued lease
termination costs were reversed as a result of the decision to keep a facility operational as previously discussed.

Software expenses
amounted to $50.0 million in 2004 compared to $44.7 million in 2003, an increase of $5.3 million or 11.8%. Software expense related to the Metavante and banking acquisitions contributed approximately $2.2 million to the expense growth in 2004
compared to 2003. Excluding the expense growth due to acquisitions, Metavante and the banking segment contributed $1.7 million and $0.9 million, respectively to the growth in software expenses in 2004 compared to 2003.

Processing charges amounted to $52.2 million in 2004 compared to $48.3 million in 2003, an increase of $3.9 million or 8.2%. Processing charges related
to the Metavante and banking acquisitions contributed approximately $5.5 million to the expense growth in 2004 compared to 2003. Third-party processing charges associated with wholesale loan activity were lower in 2004 compared to 2003.

Supplies and printing expense, professional services expense and shipping and handling expense amounted to $135.1 million in 2004 compared to $118.3
million in 2003, an increase of $16.8 million or 14.2%. The Metavante and banking acquisitions net of Paytrust integration expenses contributed approximately $13.7 million to the expense growth in 2004 compared to 2003. The remainder of the increase
was primarily due to Metavantes increase in these expenses that was offset by the decrease in costs associated with the lower volume of mortgage loan production in 2004 compared to 2003.

Amortization of intangibles amounted to $27.9 million in 2004 compared to $23.8 million in 2003. Amortization and valuation reserves associated with
mortgage servicing rights declined $0.7 million. At December 31, 2004, the carrying value of mortgage servicing rights amounted to $3.5 million. Amortization associated with the 2004 acquisitions amounted to $7.6 million in the current year.
Goodwill is subject to periodic tests for impairment. Based upon an updated the analysis as of June 30, 2004, the Corporation concluded that there continued to be no impairment with respect to goodwill at any reporting unit. At
December 31, 2004, none of the Corporations other intangible assets were determined to have indefinite lives. For the year ended December 31, 2004, $2.0 million of goodwill and $8.5 million of customer intangibles were included by
Metavante in the determination of the loss associated with the sale of the small business 401k Retirement Plan Services operations and the direct customer base of Paytrust.com.

Other noninterest expenses amounted to $250.2 million in 2004 compared to $240.1 million in the prior year, an increase of $10.1 million. The Metavante
and banking acquisitions net of Paytrust integration expenses contributed approximately $38.7 million to the expense growth in 2004 compared to 2003. As previously discussed, during 2004 and 2003 the Corporation prepaid and retired certain higher
cost long-term debt and terminated some related receive floating / pay fixed interest rate swaps designated as cash flow hedges. The total debt retired in 2004 amounted to $355.0 million and the charge to earnings amounted to $6.9 million. The total
debt retired in 2003 amounted to $744.6 million and the charge to earnings amounted to $56.7 million. During 2004, Metavante sold its small business 401k Retirement Plan Services operations and also sold the direct customer base of Paytrust.com in
2004. These transactions resulted in an aggregate loss of approximately $7.1 million. Offsetting the net unrealized securities gain recognized in the fourth quarter of 2004 as previously discussed was charitable foundation expense over and above
normal levels that amounted to approximately $5.0 million.

Other expense is affected by the capitalization of costs, net of amortization,
associated with software development and data processing conversions. A lower amount of capitalized software development costs and capitalized conversion costs net of their respective amortization, write-offs of software and the amortization
associated with the software obtained in the acquisitions resulted in an increase in other noninterest expense and accounted for approximately $8.8 million of the total increase in other operating expense in 2004 compared to 2003. During 2004 and
2003, Metavante determined that certain purchased and internally developed software will no longer be used or was impaired and such software was written off. Capitalized software costs written off as a result of these decisions amounted to $8.7
million in 2004 and $22.8 million in 2003 and are included in other noninterest expense for the respective periods.



40



---

##### Table of Contents

Income Tax Provision

The provision for income taxes was $362.9 million in 2005, $317.9 million in 2004, and $214.3 million in 2003. The effective tax rate in 2005 was 33.3% compared to 33.6% in 2004 and 28.3% in 2003.

In the normal course of business, the Corporation and its affiliates are routinely subject to examinations from Federal and state tax authorities. During
2003, several income tax audits covering multiple tax jurisdictions were resolved which positively affected the banking segment by approximately $28.6 million and Metavante by $10.7 million and resulted in a lower provision for income taxes in the
Consolidated Statements of Income for the year ended December 31, 2003. Excluding the impact of the income tax audits, the pro forma effective income tax rate for year ended December 31, 2003 would have been 33.4%.

Liquidity and Capital Resources

Shareholders equity was $4.67 billion or 10.1% of total consolidated assets at December 31, 2005, compared to $3.89 billion or 9.6% of total consolidated assets at December 31, 2004. The increase at December 31, 2005
was primarily due to earnings net of dividends paid.

In the second quarter of 2005, the Corporations Board of Directors authorized
an increase in the quarterly cash dividend paid on the Corporations common stock, from $0.21 per share to $0.24 per share, or 14.3%.

Shareholders equity at December 31, 2005 includes the effect of certain common stock issuances during the current year. During 2005, the Corporation issued 5.3 million shares of its common stock valued at $241.1 million in
conjunction with five acquisitions completed by Metavante. In addition, the Corporation issued 0.7 million shares of its common stock valued at $25.1 million to fund its 2004 obligations under its retirement and employee stock ownership plans
and its employee stock purchase plan.

During the fourth quarter of 2005, the Corporation entered into an equity distribution agreement
whereby the Corporation may offer and sell up to 3.5 million shares of its common stock from time to time through certain designated sales agents. However, the Corporation will not sell more than the number of shares of its common stock
necessary for the aggregate gross proceeds from such sales to reach $150.0 million. During the fourth quarter of 2005, the Corporation issued 0.2 million shares of its common stock with net proceeds from the sales of $6.7 million. The proceeds
from these issuances were used for general corporate purposes, including maintaining capital at desired levels.

The Corporation has a
Stock Repurchase Program under which up to 12 million shares of the Corporations common stock can be repurchased annually. No shares were acquired under the program in 2005. During 2004, the Corporation repurchased 2.3 million shares
at an aggregate cost of $88.5 million. During 2003, the Corporation repurchased 6.0 million shares at an aggregate cost of $210.9 million.

At December 31, 2005 the net loss in accumulated other comprehensive income amounted to $37.3 million which represents a negative change in accumulated other comprehensive income of $60.6 million since December 31, 2004. Net
accumulated other comprehensive income associated with available for sale investment securities was a net loss of $36.3 million at December 31, 2005, compared to a net gain of $31.1 million at December 31, 2004, resulting in a net loss of
$67.4 million over the twelve month period. The unrealized loss associated with the change in fair value of the Corporations derivative financial instruments designated as cash flow hedges declined $6.8 million since December 31, 2004,
resulting in a net increase in shareholders equity.

During the third quarter of 2004, the Corporation and M&I Capital Trust B
issued 16,000,000 units of Common SPACESSMthat resulted in net proceeds to the Corporation of approximately $389.2
million. Each unit has a stated value of $25.00 for an aggregate value of $400.0 million. Each Common SPACES consists of (i) a stock purchase contract under which the investor agrees to purchase for $25, a fraction of a share of the
Corporations common stock on the stock purchase date and (ii) a 1/40, or 2.5%, undivided beneficial interest in a preferred security of M&I Capital Trust B, also referred to as the STACKSSM, with each share having an initial liquidation amount of $1,000. The stock purchase date is expected to be August 15, 2007, but could be deferred for
quarterly periods until August 15, 2008.

On the stock purchase date, the number of shares of common stock the Corporation will issue
upon settlement of the stock purchase contracts depends on the applicable market value per share of the Corporations



41



---

##### Table of Contents

common stock, which will be determined just prior to the stock purchase date, and other factors. The Corporation currently estimates that it will issue
approximately 8.7 million to 10.9 million common shares to settle shares issuable pursuant to the stock purchase contracts. Before issuance of the common shares upon settlement of the stock purchase contracts, the stock purchase contracts
will be reflected in diluted earnings per share calculations using the treasury stock method. Under the treasury stock method, the Corporation expects there will be some dilutive effect on earnings per share for periods when the average market price
of the Corporations common stock for the reporting period is above $46.28 and that there could be some dilutive effect on earnings per share for periods when the average market price of the Corporations common stock for the reporting
period is above the average market price of the Corporations common stock for the twenty trading days ending on the third trading day immediately preceding the end of the reporting period. There was no dilutive effect on earnings per share for
the years ended December 31, 2005 and 2004.

Federal and state banking laws place certain restrictions on the amount of dividends and
loans which a bank may make to its parent company. Such restrictions have not had, and are not expected to have, any material effect on the Corporations ability to meet its cash obligations.

M&I manages its liquidity to ensure that funds are available to each of its banks to satisfy the cash flow requirements of depositors and borrowers
and to ensure the Corporations own cash requirements are met. M&I maintains liquidity by obtaining funds from several sources.

The Corporations most readily available source of liquidity is its investment portfolio. Investment securities available for sale, which totaled $5.7 billion at December 31, 2005, represent a highly accessible source of
liquidity. The Corporations portfolio of held-to-maturity investment securities, which totaled $0.6 billion at December 31, 2005, provides liquidity from maturities and interest payments. The Corporations mortgage loans held for
sale provide additional liquidity. These loans represent recently funded home mortgage loans that are prepared for delivery to investors, which generally occurs within thirty to ninety days after the loan has been funded.

Depositors within M&Is defined markets are another source of liquidity. Core deposits (demand, savings, money market and consumer time
deposits) averaged $17.1 billion in 2005. The Corporations banking affiliates may also access the Federal funds markets or utilize collateralized borrowings such as treasury demand notes or FHLB advances.

The banking affiliates may use wholesale deposits, which include foreign (Eurodollar) deposits. Wholesale deposits, which averaged $6.7 billion in 2005,
are funds in the form of deposits generated through distribution channels other than the Corporations own banking branches. These deposits allow the Corporations banking affiliates to gather funds across a national geographic base and at
pricing levels considered attractive, where the underlying depositor may be retail or institutional. Access to wholesale deposits also provides the Corporation with the flexibility to not pursue single service time deposit relationships in markets
that have experienced some unprofitable pricing levels.

The Corporation utilizes certain financing arrangements to meet its balance sheet
management, funding, liquidity, and market or credit risk management needs. The majority of these activities are basic term or revolving securitization vehicles. These vehicles are generally funded through term-amortizing debt structures or with
short-term commercial paper designed to be paid off based on the underlying cash flows of the assets securitized. These facilities provide access to funding sources substantially separate from the general credit risk of the Corporation and its
subsidiaries.

M&I Bank has implemented a bank note program which permits it to issue up to $7.0 billion of short-term and medium-term
notes which are offered and sold only to institutional investors. This program is intended to enhance liquidity by enabling M&I Bank to sell its debt instruments in private markets in the future without the delays which would otherwise be
incurred. As shown and discussed in Note 13 in the Notes to the Consolidated Financial Statements, longer-term bank notes outstanding at December 31, 2005, amounted to $5.8 billion of which $1.3 billion is subordinated and qualifies as
supplementary capital for regulatory capital purposes.

The national capital markets represent a further source of liquidity for M&I.
M&I has filed a number of shelf registration statements that are intended to permit M&I to raise funds through sales of corporate debt and/or equity securities with a relatively short lead time.



42



---

##### Table of Contents

During the third quarter of 2005, the Corporation amended the shelf registration statement originally
filed with the Securities and Exchange Commission during the second quarter of 2004 to describe the equity distribution agreement previously discussed. That shelf registration statement enables the Corporation to issue various securities, including
debt securities, common stock, preferred stock, depositary shares, purchase contracts, units, warrants, and trust preferred securities, up to an aggregate amount of $3.0 billion. At December 31, 2005, approximately $1.3 billion was available
under the shelf registration statement for future securities issuances.

During the fourth quarter of 2004, the Corporation filed a shelf
registration statement with the Securities and Exchange Commission which will enable the Corporation to issue up to 6.0 million shares of its common stock which may be offered and issued from time to time in connection with the acquisition by
M&I, Metavante and/or other consolidated subsidiaries of businesses that the Corporation determines to be to its advantage as they become available. At December 31, 2005, there were 3.1 million shares of common stock available under
the shelf registration statement for future issuances.

Under another shelf registration statement, the Corporation may issue up to $0.6
billion of medium-term Series F notes with maturities ranging from 9 months to 30 years and at fixed or floating rates. At December 31, 2005, no Series F notes had been issued. The Corporation may issue up to $0.5 billion of medium-term MiNotes
with maturities ranging from 9 months to 30 years and at fixed or floating rates. The MiNotes are issued in smaller denominations to attract retail investors. At December 31, 2005, MiNotes issued amounted to $0.2 billion. Additionally, the
Corporation has a commercial paper program. At December 31, 2005, commercial paper outstanding amounted to $0.3 billion.



43



---

##### Table of Contents

Contractual Obligations

The following table summarizes the Corporations more significant contractual obligations at December 31, 2005. Excluded from the following
table are a number of obligations to be settled in cash. These items are reflected in the Corporations consolidated balance sheet and include deposits with no stated maturity, trade payables, accrued interest payable and derivative payables
that do not require physical delivery of the underlying instrument.



|                                                                       |  |         |   |  |                                        |          |                   |   |                   |  |                    |         |                      |   |         |  |   |        
|---------------------------------------------------------------------- |  | ------- | - |  | -------------------------------------- | -------- | ----------------- | - | ----------------- |  | ------------------ | ------- | -------------------- | - | ------- |  | - | -------
|                                                                       |  |         |   |  | Payments Due by Period ($ in millions)
|Contractual Obligations                                                |  | NoteRef |   |  | Total                                  |          | Less thanOne Year |   | One toThree Years |  | Three toFive Years |         | More than Five Years
|Certificate of Deposit and Other Time Deposit Obligations              |  | (1      | ) |  | $                                      | 11,705.5 |                   | $ | 7,812.8           |  | $                  | 2,653.4 |                      | $ | 451.8   |  | $ | 787.5  
|Short-term Debt Obligations                                            |  | (2      | ) |  |                                        | 3,020.0  |                   |   | 3,020.0           |  |                    |        |                      |   |        |  |   |       
|Long-term Debt Obligations                                             |  | (3      | ) |  |                                        | 11,879.8 |                   |   | 2,987.0           |  |                    | 2,818.5 |                      |   | 1,982.1 |  |   | 4,092.2
|Capital Lease Obligations                                              |  |         |   |  |                                        | 1.8      |                   |   | 1.7               |  |                    | 0.1     |                      |   |        |  |   |       
|Minimum Operating Lease Obligations                                    |  |         |   |  |                                        | 178.0    |                   |   | 36.7              |  |                    | 57.1    |                      |   | 36.5    |  |   | 47.7   
|Obligations to Purchase Foreign Currencies                             |  | (4      | ) |  |                                        | 338.7    |                   |   | 338.7             |  |                    |        |                      |   |        |  |   |       
|Purchase Obligations  Facilities (Additions, Repairs and Maintenance) |  |         |   |  |                                        | 30.6     |                   |   | 20.0              |  |                    | 0.9     |                      |   | 0.8     |  |   | 8.9    
|Purchase Obligations  Technology                                      |  |         |   |  |                                        | 89.8     |                   |   | 73.4              |  |                    | 10.3    |                      |   | 6.1     |  |   |       
|Purchase Obligations  Other                                           |  |         |   |  |                                        | 8.3      |                   |   | 6.3               |  |                    | 2.0     |                      |   |        |  |   |       
|Other Obligations:                                                     |  |         |   |  |                                        |          |                   |   |                   |  |                    |         |                      |   |         |  |   |        
|Unfunded Investment Obligations                                        |  | (5      | ) |  |                                        | 10.3     |                   |   | 6.7               |  |                    | 3.1     |                      |   | 0.4     |  |   | 0.1    
|Acquisition Obligations                                                |  | (6      | ) |  |                                        | 21.5     |                   |   | 21.5              |  |                    |        |                      |   |        |  |   |       
|Wholesale Loan Purchase Obligations                                    |  | (7      | ) |  |                                        | 400.0    |                   |   | 400.0             |  |                    |        |                      |   |        |  |   |       
|Defined Contribution Pension Obligations                               |  | (8      | ) |  |                                        | 64.2     |                   |   | 64.2              |  |                    |        |                      |   |        |  |   |       
|Health and Welfare Benefits                                            |  | (9      | ) |  |                                        |         |                   |   |                  |  |                    |        |                      |   |        |  |   |       
|Postretirement Benefit Obligations                                     |  |         |   |  |                                        | 7.0      |                   |   | 7.0               |  |                    |        |                      |   |        |  |   |       
|                                                                       |  |         |   |  |                                        |          |                   |   |                   |  |                    |         |                      |   |         |  |   |        
|Total                                                                  |  |         |   |  | $                                      | 27,755.5 |                   | $ | 14,796.0          |  | $                  | 5,545.4 |                      | $ | 2,477.7 |  | $ | 4,936.4
|                                                                       |  |         |   |  |                                        |          |                   |   |                   |  |                    |         |                      |   |         |  |   |        

---

Notes:

In the banking industry, interest-bearing obligations are principally utilized to fund interest-bearing assets. As such, interest charges on certificate
of deposit and other time deposit obligations and short-term debt obligations were excluded from amounts reported, as the potential cash outflows would have corresponding cash inflows from interest-bearing assets. The same, although to a lesser
extent, is the case with respect to interest charges on long-term debt obligations. As long-term debt obligations may be used for purposes other than to fund interest-bearing assets, an estimate of interest charges is included in the amounts
reported.



| | (1) | Certain retail certificates of deposit and other time deposits give customers rights to early withdrawal. Early withdrawals may be subject to penalties. The penalty amount depends
on the remaining time to maturity at the time of early withdrawal. Brokered certificates of deposits may be redeemed early upon the death or adjudication of incompetence of the holder.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | See Note 12 in Notes to Consolidated Financial Statements for a description of the Corporations various short-term borrowings. Many short-term borrowings such as Federal funds
purchased and security repurchase agreements and commercial paper are expected to be reissued and, therefore, do not necessarily represent an immediate need for cash.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | See Note 13 in Notes to Consolidated Financial Statements for a description of the Corporations various long-term borrowings. The amounts shown in the table include interest
on both fixed and variable rate obligations. The interest associated with variable rate obligations is based upon rates in effect at December 31, 2005. The contractual amounts to be paid on variable rate obligations are affected by changes in
market interest rates. Future changes in market interest rates could materially affect the contractual amounts to be paid.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | See Note 19 in Notes to Consolidated Financial Statements for a description of the Corporations foreign exchange activities. The Corporation generally matches commitments to
deliver foreign currencies with obligations to purchase foreign currencies which minimizes the immediate need for cash.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | The Corporation also has unfunded obligations for certain investments in investment funds. Under the obligations for certain investments in investment funds the
Corporation could be required to invest an additional $47.3 million if the investment funds identify and commit to invest
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



44



---

##### Table of Contents

| | in additional qualifying investments. The investment funds have limited lives and defined periods for investing in new qualifying investments or providing
additional funds to existing investments. As a result, the timing and amount of the funding requirements for these obligations are uncertain and could expire with no additional funding requirements.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | Represents contingent consideration that the Corporation has determined to be owed beyond a reasonable doubt.
| | --- | -------------------------------------------------------------------------------------------------------------

| | (7) | Represents an estimate of the minimum purchase obligation amount. The obligation to sell is on a best-efforts basis and may result in no purchases or more purchases than shown in
the table in any given period. In addition, the actual purchase price will be determined at the time of purchase.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (8) | See Note 17 in Notes to Consolidated Financial Statements for a description of the Corporations defined contribution program. The amount shown represents the unfunded
contribution for the year ended December 31, 2005.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (9) | The health and welfare benefit plans are periodically funded throughout each plan year with participant contributions and the Corporations portion of benefits expected to be
paid.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Corporation has generally financed its growth through the retention of earnings and the issuance of debt. It is
expected that future growth can be financed through internal earnings retention, additional debt offerings, or the issuance of additional common or preferred stock or other capital instruments.

OFF-BALANCE SHEET ARRANGEMENTS

The
term off-balance sheet arrangement describes the means through which companies typically structure off-balance sheet transactions or otherwise incur risks of loss that are not fully transparent to investors or other users of financial information.
For example, in many cases, in order to facilitate transfer of assets or otherwise finance the activities of an unconsolidated entity, a company may be required to provide financial support designed to reduce the risks to the entity or other third
parties. That financial support may take many different forms such as financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose the company to continuing risks or contingent
liabilities regardless of whether or not they are recorded on the balance sheet.

Certain guarantees may be a source of potential risk to
future liquidity, capital resources and results of operations. Guarantees may be in the form of contracts that contingently require the guarantor to make payments to the guaranteed party based on: (1) changes in an underlying instrument or
variable such as a financial standby letter of credit; (2) failure to perform under an obligating agreement such as a performance standby letter of credit; and (3) indemnification agreements that require the indemnifying party to make
payments to the indemnified party based on changes in an underlying instrument or variable that is related to an asset, a liability or an equity security of the indemnified party, such as an adverse judgment in a lawsuit. The Corporation, for a fee,
regularly enters into standby letters of credit transactions and provides certain indemnifications against loss in conjunction with software sales, merchant credit card processing and securities lending activities which are described in detail in
Notes 18 and 23 in Notes to Consolidated Financial Statements.

Companies may structure and facilitate off-balance sheet arrangements by
retaining an interest in assets transferred to an unconsolidated entity. Such interests may be in the form of a subordinated retained interest in a pool of receivables transferred to an unconsolidated entity, cash collateral accounts, recourse
obligations or other forms of credit, liquidity, or market risk support. These subordinated interests protect the senior interests in the unconsolidated entity in the event a portion of the underlying transferred assets becomes uncollectible or
there are insufficient funds to repay senior interest obligations. The Corporation uses such arrangements primarily in conjunction with its indirect automobile lending activities which are described in detail in Note 8 in Notes to Consolidated
Financial Statements and in the discussion of critical accounting policies which follows this discussion.

During the third quarter of
2004, the Corporation and M&I Capital Trust B issued 16,000,000 units of Common SPACESSMthat resulted in net
proceeds to the Corporation of approximately $389.2 million. Each unit has a stated value of $25.00 for an aggregate value of $400.0 million. Each Common SPACES consists of (i) a stock purchase contract under which the investor agrees to
purchase for $25, a fraction of a share of the Corporations common stock on the stock purchase date and (ii) a 1/40, or 2.5%, undivided beneficial interest in a preferred security of M&I Capital Trust B, also referred to as the
STACKSSM, with each share having an initial liquidation amount of $1,000. The stock purchase date is expected to be
August 15, 2007, but could be deferred for quarterly periods until August 15, 2008.



45



---

##### Table of Contents

On the stock purchase date, the number of shares of common stock the Corporation will issue upon
settlement of the stock purchase contracts depends on the applicable market value per share of the Corporations common stock, which will be determined just prior to the stock purchase date, and other factors. The Corporation currently
estimates that it will issue approximately 8.7 million to 10.9 million common shares to settle shares issuable pursuant to the stock purchase contracts.

Holders of the STACKS are entitled to receive quarterly cumulative cash distributions through the stock purchase date fixed initially at an annual rate of 3.90% of the liquidation amount of $1,000 per STACKS. In
addition, the Corporation will make quarterly contract payments under the stock purchase contract at the annual rate of 2.60% of the stated amount of $25 per stock purchase contract. The Corporation recognized the present value of the quarterly
contract payments under the stock purchase contract as a liability with an offsetting reduction in shareholders equity. That liability along with the allocated portion of the fees and expenses incurred for the offering of Common SPACES
resulted in a reduction in shareholders equity of $34.0 million.

Also at December 31, 2005, the Corporation did not hold any
material variable interests in entities that provide it liquidity, market risk or credit risk support, or engage in leasing, hedging or research and development services with the Corporation. As described in Note 13 in Notes to Consolidated
Financial Statements, the Corporation holds all of the common interest in M&I Capital Trust A and M&I Capital Trust B which issued cumulative preferred capital securities which are supported by junior subordinated deferrable interest
debentures and a full guarantee issued by the Corporation. The Corporation does not consolidate M&I Capital Trust A or M&I Capital Trust B.

Based on the off-balance sheet arrangements with which it is presently involved, the Corporation does not believe that such off-balance sheet arrangements either have, or are reasonably likely to have, a material impact to its current or
future financial condition, results of operations, liquidity or capital.

CRITICAL ACCOUNTING POLICIES

The Corporation has established various accounting policies that govern the application of accounting principles generally accepted in the United States
in the preparation of the Corporations consolidated financial statements. The significant accounting policies of the Corporation are described in the footnotes to the consolidated financial statements contained herein and updated as necessary
in its Quarterly Reports on Form 10-Q. Certain accounting policies involve significant judgments and assumptions by management that may have a material impact on the carrying value of certain assets and liabilities. Management considers such
accounting policies to be critical accounting policies. The judgments and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances. Because of the nature of
judgments and assumptions made by management, actual results could differ from these judgments and estimates which could have a material impact on the carrying values of assets and liabilities and the results of the operations of the Corporation.
Management continues to consider the following to be those accounting policies that require significant judgments and assumptions:

Allowance for Loan and Lease Losses

The allowance for loan and lease losses represents managements estimate of
probable losses inherent in the Corporations loan and lease portfolio. Management evaluates the allowance each quarter to determine that it is adequate to absorb these inherent losses. This evaluation is supported by a methodology that
identifies estimated losses based on assessments of individual problem loans and historical loss patterns of homogeneous loan pools. In addition, environmental factors, including economic conditions and regulatory guidance, unique to each
measurement date are also considered. This reserving methodology has the following components:

Specific Reserve. The
Corporations internal risk rating system is used to identify loans and leases that meet the criteria as being impaired under the definition in SFAS 114. A loan is impaired when, based on current information and events, it is
probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. For impaired loans, impairment is measured using one of three alternatives: (1) the present value of expected future
cash flows discounted at the loans



46



---

##### Table of Contents

effective interest rate; (2) the loans observable market price, if available; or (3) the fair value of the collateral for collateral
dependent loans and loans for which foreclosure is deemed to be probable. In general, these loans have been internally identified as credits requiring managements attention due to underlying problems in the borrowers business or
collateral concerns. Subject to a minimum size, a quarterly review of these loans is performed to identify the specific reserve necessary to be allocated to each of these loans. This analysis considers expected future cash flows, the value of
collateral and also other factors that may impact the borrowers ability to make payments when due.

Collective Loan Impairment.
This component of the allowance for loan and lease losses is comprised of two elements. First, the Corporation makes a significant number of loans and leases, which due to their underlying similar characteristics, are assessed for loss as
homogeneous pools. Included in the homogeneous pools are loans and leases from the retail sector and commercial loans under a certain size that have been excluded from the specific reserve allocation previously discussed. The Corporation segments
the pools by type of loan or lease and, using historical loss information, estimates a loss reserve for each pool.

The second element
reflects managements recognition of the uncertainty and imprecision underlying the process of estimating losses. The internal risk rating system is used to identify those loans within certain industry segments that based on financial, payment
or collateral performance, warrant closer ongoing monitoring by management. The specific loans mentioned earlier are excluded from this analysis. Based on managements judgment, reserve ranges are allocated to industry segments due to
environmental conditions unique to the measurement period. Consideration is given to both internal and external environmental factors such as economic conditions in certain geographic or industry segments of the portfolio, economic trends, risk
profile, and portfolio composition. Reserve ranges are then allocated using estimates of loss exposure that management has identified based on these economic trends or conditions.

The following factors were taken into consideration in determining the adequacy of the allowance for loan and lease losses at December 31, 2005:

In general, the Corporations borrowing customers appear to have successfully managed their businesses through the prior economic
downturn, the economy is improving and the Corporations customer base is showing signs of increased business activity as evidenced by the loan growth experienced in 2005 compared to 2004.

At December 31, 2005, allowances for loan and lease losses continue to be carried for exposures to manufacturing, healthcare, production agriculture
(including dairy and cropping operations), truck transportation, accommodation, general contracting, motor vehicle and parts dealers and the airline industries. The majority of the commercial charge-offs incurred in recent periods were in these
industry segments. While most loans in these categories are still performing, the Corporation continues to believe these sectors have been more adversely affected by the previous economic slowdown. Reduced revenues causing a declining utilization of
the industrys capacity levels have impacted manufacturing. As a result, collateral values and the amounts realized through the sale or liquidation of manufacturing plant and equipment have declined accordingly.

During the fourth quarter of 2005, the Corporations commitments to Shared National Credits were approximately $3.1 billion with usage averaging
around 45%. Many of the Corporations largest charge-offs have come from the Shared National Credit portfolio. Although these factors result in an increased risk profile, as of December 31, 2005, Shared National Credit nonperforming loans
amounted to $3.9 million. The Corporations exposure to Shared National Credits is monitored closely given this lending groups loss experience.

The Corporations primary lending areas are Wisconsin, Arizona, Minnesota and Missouri. Each of these regions has cultural and environmental factors that are unique to it. The uncertainty regarding the inherent
losses in their respective loan portfolios continue to present increased risks which have been mitigated by the implementation of the Corporations credit underwriting and monitoring processes. At December 31, 2005, total nonperforming
loans and leases as a percent of total loans and leases for the Minnesota and Missouri regions combined was somewhat higher than nonperforming loans and leases as a percent of total loans and leases for the other regions and the consolidated total.



47



---

##### Table of Contents

At December 31, 2005, nonperforming loans and leases amounted to $140.6 million or 0.41% of
consolidated loans and leases compared to $132.4 million or 0.45% at December 31, 2004 and $172.8 million or 0.69% at December 31, 2003. Nonaccrual loans and leases increased $7.0 million or 5.5% at year-end 2005 compared to year-end 2004.
The net increase was primarily due to increases in nonaccrual home equity lines of credit.

Net charge-offs amounted to $39.1 million or
0.12% of average loans and leases in 2005 compared to $29.4 million or 0.11% of average loans and leases in 2004 and $51.8 million or 0.21% of average loans and leases in 2003. Included in net charge-offs for 2003 was a $19.0 million charge-off
related to the carrying value of lease obligations to a regional airline.

Net charge-offs and nonperforming loans and leases in 2005 and
2004 were better than management had expected. The ratio of net charge-offs to average loans and leases to some extent reflect a higher than normal level of recoveries. The ratio of recoveries to charge-offs was 34.3% in 2005 and 42.1% in 2004
compared to a five year average of 27.9%. Although positive resolutions continue to be achieved on prior charge-offs, recoveries are expected to continue to trend downwards. Management expects net charge-offs and nonperforming loans to trend to
historical levels that would indicate net charge-offs as a percent of average loans and leases to be more in the range of 0.15% to 0.20% and nonperforming loans and leases as a percent of total loans and leases to range from current levels to 0.60%.

Based on the above loss estimates, management determined its best estimate of the required allowance for loans and leases.
Managements evaluation of the factors described above resulted in an allowance for loan and lease losses of $363.8 million or 1.06% of loans and leases outstanding at December 31, 2005. The allowance for loan and lease losses was $358.1
million or 1.21% of loans and leases outstanding at December 31, 2004. Consistent with the relatively stable credit quality trends noted above, the provision for loan and lease losses amounted to $44.8 million in 2005, compared to $38.0 million
and $63.0 million in 2004 and 2003, respectively. The resulting provisions for loan and lease losses are the amounts required to establish the allowance for loan and lease losses at the required level after considering charge-offs and recoveries.
Management recognizes there are significant estimates in the process and the ultimate losses could be significantly different from those currently estimated.

The Corporation has not materially changed any aspect of its overall approach in the determination of the allowance for loan and lease losses. There have been no material changes in assumptions or estimation
techniques as compared to prior periods that impacted the determination of the current period allowance. However, on an on-going basis the Corporation continues to refine the methods used in determining managements best estimate of the
allowance for loan and lease losses.

Capitalized Software and Conversion Costs

Direct costs associated with the production of computer software that will be licensed externally or used in a service bureau environment are
capitalized. Capitalization of such costs is subject to strict accounting policy criteria, although the appropriate time to initiate capitalization requires management judgment. Once the specific capitalized project is put into production, the
software cost is amortized over its estimated useful life, generally four years. Each quarter, the Corporation performs net realizable value tests to ensure the assets are recoverable. Such tests require management judgment as to the future sales
and profitability of a particular product which involves, in some cases, multi-year projections. Technology changes and changes in customer requirements can have a significant impact on the recoverability of these assets and can be difficult to
predict. Should significant adverse changes occur, estimates of useful life may have to be revised or write-offs would be required to recognize impairment. For the years ended December 31, 2005 and 2004, the amount of software costs capitalized
amounted to $40.8 million and $38.1 million, respectively. Amortization expense of software costs amounted to $57.7 million and $50.4 million for the years ended December 31, 2005 and 2004, respectively.

During 2004, Metavante determined that certain products had limited growth potential. As a result of strategic product reviews and the results of net
realizable tests on these products, Metavante determined that the capitalized software and other assets associated with the products were impaired. Total capitalized software costs written off amounted to $8.7 million and are included in other
noninterest expense in 2004.



48



---

##### Table of Contents

As a result of a change in product strategies, Metavante determined that certain purchased and internally
developed software would no longer be used and such software was written off in 2003. Total capitalized software costs written off as a result of these decisions amounted to $22.8 million and is included in other noninterest expense in 2003.

Direct costs associated with customer system conversions to the data processing operations are capitalized and amortized on a
straight-line basis over the terms, generally five to seven years, of the related servicing contracts.

Capitalization only occurs when
management is satisfied that such costs are recoverable through future operations or buyout fees in case of early termination. For the years ended December 31, 2005 and 2004, the amount of conversion costs capitalized amounted to $10.5 million
and $9.4 million, respectively. Amortization expense of conversion costs amounted to $10.5 million and $13.5 million for the years ended December 31, 2005 and 2004, respectively.

Net unamortized costs, which are included in Accrued Interest and Other Assets in the Consolidated Balance Sheets, at December 31, were ($ in
millions):



|            |  |      |       |      |   |      
|----------- |  | ---- | ----- | ---- | - | -----
|            |  | 2005 |       | 2004
|Software    |  | $    | 154.0 |      | $ | 161.1
|Conversions |  |      | 26.7  |      |   | 26.5 
|            |  |      |       |      |   |      
|Total       |  | $    | 180.7 |      | $ | 187.6
|            |  |      |       |      |   |      

The Corporation has not substantively changed any aspect to its overall approach in the
determination of the amount of costs that are capitalized for software development or conversion activities. There have been no material changes in assumptions or estimation techniques as compared to prior periods that impacted the determination of
the periodic amortization of such costs.

Financial Asset Sales and Securitizations

The Corporation utilizes certain financing arrangements to meet its balance sheet management, funding, liquidity, and market or credit risk management
needs. The majority of these activities are basic term or revolving securitization vehicles. These vehicles are generally funded through term-amortizing debt structures or with short-term commercial paper designed to be paid off based on the
underlying cash flows of the assets securitized. These financing entities are contractually limited to a narrow range of activities that facilitate the transfer of or access to various types of assets or financial instruments. In certain situations,
the Corporation provides liquidity and/or loss protection agreements. In determining whether the financing entity should be consolidated, the Corporation considers whether the entity is a qualifying special-purpose entity (QSPE) as
defined in Statement of Financial Accounting Standards (SFAS) No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. For non-consolidation, a QSPE must be demonstrably
distinct, have significantly limited permitted activities, hold assets that are restricted to transferred financial assets and related assets, and can sell or dispose of non-cash financial assets only in response to specified conditions.

In December 2003, the Corporation adopted Financial Accounting Standards Board Interpretation No. 46 (FIN 46R), Consolidation
of Variable Interest Entities (revised December 2003). This interpretation addresses consolidation by business enterprises of variable interest entities. Transferors to QSPEs and grandfathered QSPEs subject to the reporting
requirements of SFAS 140 are outside the scope of FIN 46R and do not consolidate those entities. With respect to the Corporations securitization activities, the adoption of FIN 46R did not have an impact on its consolidated financial
statements because its transfers are generally to QSPEs.

The Corporation sells financial assets in a two-step process that results in a
surrender of control over the assets, as evidenced by true-sale opinions from legal counsel, to unconsolidated entities that securitize the assets. The Corporation retains interests in the securitized assets in the form of interest-only strips and
cash reserve accounts. Gain or loss on sale of the assets depends in part on the carrying amount assigned to the assets sold allocated between the asset sold and retained interests based on their relative fair values at the date of transfer. The
value of the retained interests is based on the present value of expected cash flows estimated using managements best estimates of the key assumptions  credit losses, prepayment speeds, forward yield curves and discount rates
commensurate with the risks involved. Actual results can differ from expected results.



49



---

##### Table of Contents

The Corporation reviews the carrying values of the retained interests monthly to determine if there is a
decline in value that is other than temporary and periodically reviews the propriety of the assumptions used based on current historical experience as well as the sensitivities of the carrying value of the retained interests to adverse changes in
the key assumptions. The Corporation believes that its estimates result in a reasonable carrying value of the retained interests.

During
2003, the Corporation recognized impairment losses of $4.1 million that are included in net investment securities gains in the Consolidated Statements of Income. The impairment was a result of the differences between actual prepayments and credit
losses experienced compared to the expected prepayments and credit losses used in measuring the initial retained interests. The impairments on the retained interests, held in the form of interest-only strips, were deemed to be other than temporary.
No impairment losses were recognized in 2004 or 2005.

The Corporation regularly sells automobile loans to an unconsolidated multi-seller
special purpose entity commercial paper conduit in securitization transactions in which servicing responsibilities and subordinated interests are retained. The outstanding balances of automobile loans sold in these securitization transactions were
$954.2 million and $1,003.0 million at December 31, 2005 and 2004, respectively. At December 31, 2005 and 2004, the carrying amount of retained interests amounted to $25.9 million and $42.2 million, respectively.

The Corporation also sells, from time to time, debt securities classified as available for sale that are highly rated to an unconsolidated bankruptcy
remote QSPE whose activities are limited to issuing highly rated asset-backed commercial paper with maturities up to 180 days which is used to finance the purchase of the investment securities. The Corporation provides liquidity back-up in the form
of Liquidity Purchase Agreements. In addition, the Corporation acts as counterparty to interest rate swaps that enable the QSPE to hedge its interest rate risk. Such swaps are designated as free-standing derivative financial instruments in the
Corporations Consolidated Balance Sheet.

At December 31, 2005, highly rated investment securities in the amount of $270.0
million were outstanding in the QSPE to support the outstanding commercial paper.

Income Taxes

Income taxes are accounted for using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on tax assets and liabilities of a change in tax rates is recognized in the income statement in the period that includes
the enactment date.

The determination of current and deferred income taxes is based on complex analyses of many factors, including
interpretation of Federal and state income tax laws, the difference between tax and financial reporting basis of assets and liabilities (temporary differences), estimates of amounts currently due or owed, such as the timing of reversals of temporary
differences and current accounting standards. The Federal and state taxing authorities who make assessments based on their determination of tax laws periodically review the Corporations interpretation of Federal and state income tax laws. Tax
liabilities could differ significantly from the estimates and interpretations used in determining the current and deferred income tax liabilities based on the completion of taxing authority examinations.

During 2003, several income tax audits covering multiple tax jurisdictions were resolved which positively affected the banking segment by $28.6 million
and Metavante by $10.7 million and resulted in a lower provision for income taxes in the Consolidated Statements of Income for the year ended December 31, 2003.



50



---

##### Table of Contents

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk arises from exposure to
changes in interest rates, exchange rates, commodity prices, and other relevant market rate or price risk. The Corporation faces market risk through trading and other than trading activities. While market risk that arises from trading activities in
the form of foreign exchange and interest rate risk is immaterial to the Corporation, market risk from other than trading activities in the form of interest rate risk is measured and managed through a number of methods.

Interest Rate Risk

The Corporation
uses financial modeling techniques to identify potential changes in income under a variety of possible interest rate scenarios. Financial institutions, by their nature, bear interest rate and liquidity risk as a necessary part of the business of
managing financial assets and liabilities. The Corporation has designed strategies to limit these risks within prudent parameters and identify appropriate risk/reward tradeoffs in the financial structure of the balance sheet.

The financial models identify the specific cash flows, repricing timing and embedded option characteristics of the assets and liabilities held by the
Corporation. Policies are in place to assure that neither earnings nor fair value at risk exceed appropriate limits. The use of a limited array of derivative financial instruments has allowed the Corporation to achieve the desired balance sheet
repricing structure while simultaneously meeting the desired objectives of both its borrowing and depositing customers.

The models used
include measures of the expected repricing characteristics of administered rate (NOW, savings and money market accounts) and non-rate related products (demand deposit accounts, other assets and other liabilities). These measures recognize the
relative insensitivity of these accounts to changes in market interest rates, as demonstrated through current and historical experiences. However, during the second quarter of 2003, the Corporation increased the proportion of these accounts modeled
as rate sensitive, in order to recognize the instability of some of the recent balance growth in these accounts. This modeling treatment will be maintained until the incremental balances can be observed across a more complete interest rate cycle. In
addition to contractual payment information for most other assets and liabilities, the models also include estimates of expected prepayment characteristics for those items that are likely to materially change their payment structures in different
rate environments, including residential mortgage products, certain commercial and commercial real estate loans and certain mortgage-related securities. Estimates for these sensitivities are based on industry assessments and are substantially driven
by the differential between the contractual coupon of the item and current market rates for similar products.

This information is
incorporated into a model that allows the projection of future income levels in several different interest rate environments. Earnings at risk are calculated by modeling income in an environment where rates remain constant, and comparing this result
to income in a different rate environment, and then dividing this difference by the Corporations budgeted operating income before taxes for the calendar year. Since future interest rate moves are difficult to predict, the following table
presents two potential scenarios  a gradual increase of 100bp across the entire yield curve over the course of the year (+25bp per quarter), and a gradual decrease of 100bp across the entire yield curve over the course of the year
(-25bp per quarter) for the balance sheet as of December 31, 2005:



|                                         |  |                              |  
|---------------------------------------- |  | ---------------------------- | -
|Hypothetical Change in Interest Rates    |  | Impact to 2006 Pretax Income |  
|100 basis point gradual rise in rates    |  | -0.2                         | %
|100 basis point gradual decline in rates |  | 0.0                          | %

These results are based solely on the modeled parallel changes in market rates, and do not reflect
the earnings sensitivity that may arise from other factors such as changes in the shape of the yield curve and changes in spread between key market rates. These results also do not include any management action to mitigate potential income variances
within the simulation process. Such action could potentially include, but would not be limited to, adjustments to the repricing characteristics of any on- or off-balance sheet item with regard to short-term rate projections and current market value
assessments.



51



---

##### Table of Contents

Actual results will differ from simulated results due to the timing, magnitude, and frequency of interest
rate changes as well as changes in market conditions and management strategies.

Another component of interest rate risk is measuring the
fair value at risk for a given change in market interest rates. The Corporation also uses computer modeling techniques to determine the present value of all asset and liability cash flows (both on- and off-balance sheet), adjusted for prepayment
expectations, using a market discount rate. The net change in the present value of the asset and liability cash flows in different market rate environments is the amount of fair value at risk from those rate movements. As of December 31, 2005
the fair value of equity at risk for a gradual 100bp shift in rates was less than 2.0% of the market value of the Corporation.

Equity
Risk

In addition to interest rate risk, the Corporation incurs market risk in the form of equity risk. The Corporation invests
directly and indirectly through investment funds, in private medium-sized companies to help establish new businesses or recapitalize existing ones. These investments expose the Corporation to the change in equity values for the companies of the
portfolio companies. However, fair values are difficult to determine until an actual sale or liquidation transaction actually occurs. At December 31, 2005, the carrying value of total active capital markets investments amounted to approximately
$36.9 million.

At December 31, 2005, M&I Trust Services administered $82.8 billion in assets and directly managed $18.9 billion
in assets. Exposure exists to changes in equity values due to the fact that fee income is partially based on equity balances. Quantification of this exposure is difficult due to the number of other variables affecting fee income. Interest rate
changes can also have an effect on fee income for the above-stated reasons.



52



---

##### Table of Contents

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA FOR YEARS ENDED DECEMBER 31, 2005, 2004, AND 2003

Consolidated Balance Sheets

December 31 ($000s except share data)



|                                                                                                                     |  |      |            |   |      |   |           
|-------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ----------
|                                                                                                                     |  | 2005 |            |   | 2004
|Assets                                                                                                               |  |      |            |   |      |   |           
|Cash and Cash Equivalents:                                                                                           |  |      |            |   |      |   |           
|Cash and Due from Banks                                                                                              |  | $    | 1,155,263  |   |      | $ | 838,668   
|Federal Funds Sold and Security Resale Agreements                                                                    |  |      | 209,869    |   |      |   | 72,515    
|Money Market Funds                                                                                                   |  |      | 49,219     |   |      |   | 76,955    
|                                                                                                                     |  |      |            |   |      |   |           
|Total Cash and Cash Equivalents                                                                                      |  |      | 1,414,351  |   |      |   | 988,138   
|                                                                                                                     |  |     
|Investment Securities:                                                                                               |  |      |            |   |      |   |           
|Trading Securities, at Market Value                                                                                  |  |      | 29,779     |   |      |   | 18,418    
|Interest Bearing Deposits at Other Banks                                                                             |  |      | 40,659     |   |      |   | 23,105    
|Available for Sale, at Market Value                                                                                  |  |      | 5,701,703  |   |      |   | 5,358,999 
|Held to Maturity, Market Value $638,135 ($765,101 in 2004)                                                           |  |      | 618,554    |   |      |   | 726,386   
|                                                                                                                     |  |      |            |   |      |   |           
|Total Investment Securities                                                                                          |  |      | 6,390,695  |   |      |   | 6,126,908 
|Loans Held for Sale                                                                                                  |  |      | 277,847    |   |      |   | 81,662    
|                                                                                                                     |  |     
|Loans and Leases:                                                                                                    |  |      |            |   |      |   |           
|Loans and Leases, Net of Unearned Income of $107,244 ($85,025 in 2004)                                               |  |      | 33,889,066 |   |      |   | 29,455,110
|Less: Allowance for Loan and Lease Losses                                                                            |  |      | 363,769    |   |      |   | 358,110   
|Net Loans and Leases                                                                                                 |  |      | 33,525,297 |   |      |   | 29,097,000
|Premises and Equipment, Net                                                                                          |  |      | 490,687    |   |      |   | 467,225   
|Goodwill and Other Intangibles                                                                                       |  |      | 2,461,461  |   |      |   | 2,126,433 
|Accrued Interest and Other Assets                                                                                    |  |      | 1,652,379  |   |      |   | 1,550,036 
|                                                                                                                     |  |      |            |   |      |   |           
|Total Assets                                                                                                         |  | $    | 46,212,717 |   |      | $ | 40,437,402
|                                                                                                                     |  |      |            |   |      |   |           
|Liabilities and Shareholders Equity                                                                                 |  |      |            |   |      |   |           
|Deposits:                                                                                                            |  |      |            |   |      |   |           
|Noninterest Bearing                                                                                                  |  | $    | 5,525,019  |   |      | $ | 4,888,426 
|Interest Bearing                                                                                                     |  |      | 22,149,202 |   |      |   | 21,566,661
|                                                                                                                     |  |      |            |   |      |   |           
|Total Deposits                                                                                                       |  |      | 27,674,221 |   |      |   | 26,455,087
|Short-term Borrowings                                                                                                |  |      | 5,626,734  |   |      |   | 3,530,036 
|Accrued Expenses and Other Liabilities                                                                               |  |      | 1,575,282  |   |      |   | 1,535,866 
|Long-term Borrowings                                                                                                 |  |      | 6,668,670  |   |      |   | 5,026,599 
|                                                                                                                     |  |      |            |   |      |   |           
|Total Liabilities                                                                                                    |  |      | 41,544,907 |   |      |   | 36,547,588
|                                                                                                                     |  |     
|Shareholders Equity:                                                                                                |  |      |            |   |      |   |           
|Series A Convertible Preferred Stock, $1.00 par value, 2,000,000 Shares Authorized                                   |  |      |           |   |      |   |          
|Common Stock, $1.00 par value, 700,000,000 Shares Authorized; 244,587,222 Shares Issued (244,432,222 Shares in 2004) |  |      | 244,587    |   |      |   | 244,432   
|Additional Paid-in Capital                                                                                           |  |      | 767,328    |   |      |   | 671,815   
|Retained Earnings                                                                                                    |  |      | 4,021,158  |   |      |   | 3,508,477 
|Accumulated Other Comprehensive Income, Net of Related Taxes                                                         |  |      | (37,291    | ) |      |   | 23,338    
|Less: Treasury Stock, at Cost: 9,148,493 Shares (17,091,528 in 2004)                                                 |  |      | 277,423    |   |      |   | 518,231   
|Deferred Compensation                                                                                                |  |      | 50,549     |   |      |   | 40,017    
|                                                                                                                     |  |      |            |   |      |   |           
|Total Shareholders Equity                                                                                           |  |      | 4,667,810  |   |      |   | 3,889,814 
|                                                                                                                     |  |      |            |   |      |   |           
|Total Liabilities and Shareholders Equity                                                                           |  | $    | 46,212,717 |   |      | $ | 40,437,402
|                                                                                                                     |  |      |            |   |      |   |           

The accompanying notes are an integral part of the Consolidated Financial Statements.



53



---

##### Table of Contents

Consolidated Statements of Income

Years ended December 31 ($000s except share data)



|                                                              |  |      |           |      |   |           |  |   |          
|------------------------------------------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|                                                              |  | 2005 |           | 2004 |   | 2003     
|Interest Income                                               |  |      |           |      |   |           |  |   |          
|Loans and Leases                                              |  | $    | 1,926,377 |      | $ | 1,404,189 |  | $ | 1,304,060
|Investment Securities:                                        |  |      |           |      |   |           |  |   |          
|Taxable                                                       |  |      | 214,537   |      |   | 200,107   |  |   | 165,075  
|Exempt from Federal Income Taxes                              |  |      | 64,127    |      |   | 58,826    |  |   | 57,968   
|Trading Securities                                            |  |      | 229       |      |   | 271       |  |   | 258      
|Short-term Investments                                        |  |      | 8,675     |      |   | 2,397     |  |   | 2,559    
|                                                              |  |      |           |      |   |           |  |   |          
|Total Interest Income                                         |  |      | 2,213,945 |      |   | 1,665,790 |  |   | 1,529,920
|                                                              |  |      |          
|Interest Expense                                              |  |      |           |      |   |           |  |   |          
|Deposits                                                      |  |      | 544,920   |      |   | 276,102   |  |   | 228,216  
|Short-term Borrowings                                         |  |      | 106,333   |      |   | 61,256    |  |   | 81,070   
|Long-term Borrowings                                          |  |      | 330,144   |      |   | 196,440   |  |   | 163,348  
|                                                              |  |      |           |      |   |           |  |   |          
|Total Interest Expense                                        |  |      | 981,397   |      |   | 533,798   |  |   | 472,634  
|                                                              |  |      |           |      |   |           |  |   |          
|Net Interest Income                                           |  |      | 1,232,548 |      |   | 1,131,992 |  |   | 1,057,286
|Provision for Loan and Lease Losses                           |  |      | 44,795    |      |   | 37,963    |  |   | 62,993   
|                                                              |  |      |           |      |   |           |  |   |          
|Net Interest Income After Provision for Loan and Lease Losses |  |      | 1,187,753 |      |   | 1,094,029 |  |   | 994,293  
|                                                              |  |      |          
|Other Income                                                  |  |      |           |      |   |           |  |   |          
|Data Processing Services                                      |  |      | 1,141,371 |      |   | 891,005   |  |   | 657,827  
|Item Processing                                               |  |      | 43,685    |      |   | 43,148    |  |   | 42,814   
|Trust Services                                                |  |      | 165,679   |      |   | 150,917   |  |   | 126,759  
|Service Charges on Deposits                                   |  |      | 94,855    |      |   | 99,772    |  |   | 102,528  
|Gains on Sale of Mortgage Loans                               |  |      | 42,396    |      |   | 27,171    |  |   | 54,143   
|Other Mortgage Banking Revenue                                |  |      | 3,645     |      |   | 7,925     |  |   | 16,109   
|Net Investment Securities Gains                               |  |      | 45,414    |      |   | 35,352    |  |   | 21,572   
|Life Insurance Revenue                                        |  |      | 27,079    |      |   | 27,254    |  |   | 30,507   
|Other                                                         |  |      | 184,821   |      |   | 163,951   |  |   | 163,542  
|                                                              |  |      |           |      |   |           |  |   |          
|Total Other Income                                            |  |      | 1,748,945 |      |   | 1,446,495 |  |   | 1,215,801
|                                                              |  |      |          
|Other Expense                                                 |  |      |           |      |   |           |  |   |          
|Salaries and Employee Benefits                                |  |      | 1,042,744 |      |   | 887,279   |  |   | 797,518  
|Net Occupancy                                                 |  |      | 88,656    |      |   | 77,209    |  |   | 67,626   
|Equipment                                                     |  |      | 126,942   |      |   | 115,650   |  |   | 111,354  
|Software Expenses                                             |  |      | 57,987    |      |   | 50,021    |  |   | 44,747   
|Processing Charges                                            |  |      | 62,646    |      |   | 52,239    |  |   | 48,295   
|Supplies and Printing                                         |  |      | 23,933    |      |   | 23,581    |  |   | 22,118   
|Professional Services                                         |  |      | 53,641    |      |   | 43,763    |  |   | 44,429   
|Shipping and Handling                                         |  |      | 72,201    |      |   | 67,772    |  |   | 51,765   
|Amortization of Intangibles                                   |  |      | 31,103    |      |   | 27,852    |  |   | 23,785   
|Other                                                         |  |      | 286,478   |      |   | 250,192   |  |   | 240,070  
|                                                              |  |      |           |      |   |           |  |   |          
|Total Other Expense                                           |  |      | 1,846,331 |      |   | 1,595,558 |  |   | 1,451,707
|                                                              |  |      |           |      |   |           |  |   |          
|Income Before Income Taxes                                    |  |      | 1,090,367 |      |   | 944,966   |  |   | 758,387  
|Provision for Income Taxes                                    |  |      | 362,898   |      |   | 317,880   |  |   | 214,282  
|                                                              |  |      |           |      |   |           |  |   |          
|Net Income                                                    |  | $    | 727,469   |      | $ | 627,086   |  | $ | 544,105  
|                                                              |  |      |           |      |   |           |  |   |          
|Net Income Per Common Share                                   |  |      |           |      |   |           |  |   |          
|Basic                                                         |  | $    | 3.15      |      | $ | 2.81      |  | $ | 2.41     
|Diluted                                                       |  |      | 3.10      |      |   | 2.77      |  |   | 2.38     

The accompanying notes are an integral part of the Consolidated Financial Statements.



54



---

##### Table of Contents

Consolidated Statements of Cash Flows

Years ended December 31 ($000s)



|                                                                                  |  |      |            |   |      |   |            |      |  |   |             |  
|--------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ----------- | -
|                                                                                  |  | 2005 |            |   | 2004 |   |            | 2003 | 
|Cash Flows From Operating Activities:                                             |  |      |            |   |      |   |            |      |  |   |             |  
|Net Income                                                                        |  | $    | 727,469    |   |      | $ | 627,086    |      |  | $ | 544,105     |  
|Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: |  |      |            |   |      |   |            |      |  |   |             |  
|Depreciation and Amortization                                                     |  |      | 206,882    |   |      |   | 195,223    |      |  |   | 200,085     |  
|Provision for Loan and Lease Losses                                               |  |      | 44,795     |   |      |   | 37,963     |      |  |   | 62,993      |  
|(Benefit) Provision for Deferred Taxes                                            |  |      | (9,219     | ) |      |   | 9,344      |      |  |   | (45,823     | )
|Gains on Sales of Assets                                                          |  |      | (106,705   | ) |      |   | (32,502    | )    |  |   | (45,507     | )
|Proceeds from Sales of Trading Securities and Loans Held for Sale                 |  |      | 9,175,833  |   |      |   | 7,721,503  |      |  |   | 11,637,141  |  
|Purchases of Trading Securities and Loans Held for Sale                           |  |      | (9,136,336 | ) |      |   | (7,513,518 | )    |  |   | (11,240,640 | )
|Other                                                                             |  |      | (257,658   | ) |      |   | (37,666    | )    |  |   | (78,786     | )
|                                                                                  |  |      |            |   |      |   |            |      |  |   |             |  
|Total Adjustments                                                                 |  |      | (82,408    | ) |      |   | 380,347    |      |  |   | 489,463     |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |             |  
|Net Cash Provided by Operating Activities                                         |  |      | 645,061    |   |      |   | 1,007,433  |      |  |   | 1,033,568   |  
|                                                                                  |  |      |           
|Cash Flows From Investing Activities:                                             |  |      |            |   |      |   |            |      |  |   |             |  
|Proceeds from Sales of Securities Available for Sale                              |  |      | 104,280    |   |      |   | 12,467     |      |  |   | 41,838      |  
|Proceeds from Maturities of Securities Available for Sale                         |  |      | 1,260,242  |   |      |   | 1,265,998  |      |  |   | 2,840,754   |  
|Proceeds from Maturities of Securities Held to Maturity                           |  |      | 108,554    |   |      |   | 94,907     |      |  |   | 122,856     |  
|Purchases of Securities Available for Sale                                        |  |      | (1,792,054 | ) |      |   | (1,775,775 | )    |  |   | (3,449,841  | )
|Purchases of Securities Held to Maturity                                          |  |      |           |   |      |   |           |      |  |   | (1,000      | )
|Net Increase in Loans                                                             |  |      | (4,545,258 | ) |      |   | (4,571,125 | )    |  |   | (1,857,480  | )
|Purchases of Assets to be Leased                                                  |  |      | (281,991   | ) |      |   | (215,578   | )    |  |   | (243,955    | )
|Principal Payments on Lease Receivables                                           |  |      | 226,504    |   |      |   | 291,608    |      |  |   | 450,224     |  
|Purchases of Premises and Equipment, Net                                          |  |      | (93,624    | ) |      |   | (80,428    | )    |  |   | (62,125     | )
|Acquisitions, Net of Cash and Cash Equivalents Acquired                           |  |      | (94,399    | ) |      |   | (1,012,100 | )    |  |   | (29,395     | )
|Other                                                                             |  |      | (15,390    | ) |      |   | 25,142     |      |  |   | 18,002      |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |             |  
|Net Cash Used in Investing Activities                                             |  |      | (5,123,136 | ) |      |   | (5,964,884 | )    |  |   | (2,170,122  | )
|                                                                                  |  |      |           
|Cash Flows From Financing Activities:                                             |  |      |            |   |      |   |            |      |  |   |             |  
|Net Increase in Deposits                                                          |  |      | 1,295,837  |   |      |   | 4,200,843  |      |  |   | 1,886,561   |  
|Proceeds from Issuance of Commercial Paper                                        |  |      | 5,310,137  |   |      |   | 6,442,232  |      |  |   | 7,790,467   |  
|Principal Payments on Commercial Paper                                            |  |      | (5,241,685 | ) |      |   | (6,534,320 | )    |  |   | (7,737,360  | )
|Net Increase (Decrease) in Other Short-term Borrowings                            |  |      | 1,029,234  |   |      |   | (1,584,827 | )    |  |   | (842,636    | )
|Proceeds from Issuance of Long-term Borrowings                                    |  |      | 3,279,779  |   |      |   | 3,040,500  |      |  |   | 1,278,629   |  
|Payment of Long-term Borrowings                                                   |  |      | (604,735   | ) |      |   | (455,829   | )    |  |   | (1,164,025  | )
|Dividends Paid                                                                    |  |      | (214,788   | ) |      |   | (179,855   | )    |  |   | (158,007    | )
|Purchases of Common Stock                                                         |  |      |           |   |      |   | (98,385    | )    |  |   | (201,044    | )
|Proceeds from the Issuance of Common Stock                                        |  |      | 60,911     |   |      |   | 206,666    |      |  |   | 49,063      |  
|Other                                                                             |  |      | (10,402    | ) |      |   | (3,062     | )    |  |   |            |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |             |  
|Net Cash Provided by Financing Activities                                         |  |      | 4,904,288  |   |      |   | 5,033,963  |      |  |   | 901,648     |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |             |  
|Net Increase (Decrease) in Cash and Cash Equivalents                              |  |      | 426,213    |   |      |   | 76,512     |      |  |   | (234,906    | )
|Cash and Cash Equivalents, Beginning of Year                                      |  |      | 988,138    |   |      |   | 911,626    |      |  |   | 1,146,532   |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |             |  
|Cash and Cash Equivalents, End of Year                                            |  | $    | 1,414,351  |   |      | $ | 988,138    |      |  | $ | 911,626     |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |             |  
|                                                                                  |  |      |           
|Supplemental Cash Flow Information:                                               |  |      |            |   |      |   |            |      |  |   |             |  
|Cash Paid During the Year for:                                                    |  |      |            |   |      |   |            |      |  |   |             |  
|Interest                                                                          |  | $    | 906,308    |   |      | $ | 506,773    |      |  | $ | 500,698     |  
|Income Taxes                                                                      |  |      | 366,431    |   |      |   | 283,588    |      |  |   | 297,143     |  

The accompanying notes are an integral part of the Consolidated Financial Statements.



55



---

##### Table of Contents

Consolidated Statements of Shareholders Equity

($000s except share data)



|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                      |   |  |   |         |   |  |   |         |  
|----------------------------------------------------------------------------------------------------------------------------- |  | -------------------- | ------- | - | -------------- | - | ----------- |  | ------------------------ | ------- |  | ---------------- | ------- | - | ------------------- | - | --------- | --------------------- |  | - | ------------------------------------ | - |  | - | ------- | - |  | - | ------- | -
|                                                                                                                              |  | Compre-hensiveIncome |         |   | PreferredStock |   | CommonStock |  | AdditionalPaid-inCapital |         |  | RetainedEarnings |         |   | TreasuryCommonStock |   |           | DeferredCompen-sation |  |   | AccumulatedOtherCompre-hensiveIncome |  
|Balance, December 31, 2002                                                                                                    |  |                      |         |   |                | $ |            |  | $                        | 240,833 |  | $                | 569,162 |   |                     | $ | 2,675,148 |                       |  | $ | (381,878                             | ) |  | $ | (22,170 | ) |  | $ | (44,427 | )
|Comprehensive Income:                                                                                                         |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                      |   |  |   |         |   |  |   |         |  
|Net Income                                                                                                                    |  | $                    | 544,105 |   |                |   |            |  |                          |        |  |                  |        |   |                     |   | 544,105   |                       |  |   |                                     |   |  |   |        |   |  |   |        |  
|Unrealized Gains (Losses) on Securities:                                                                                      |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                      |   |  |   |         |   |  |   |         |  
|Arising During the Period Net of Taxes of $6,489                                                                              |  |                      | (12,016 | ) |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                     |   |  |   |        |   |  |   |        |  
|Reclassification for Securities Transactions Included in Net Income Net of Taxes of $2,008                                    |  |                      | (3,729  | ) |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                     |   |  |   |        |   |  |   |        |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                      |   |  |   |         |   |  |   |         |  
|Total Unrealized Gains (Losses) on Securities                                                                                 |  |                      | (15,745 | ) |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                     |   |  |   |        |   |  |   | (15,745 | )
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                      |   |  |   |         |   |  |   |         |  
|Net Gains (Losses) on Derivatives Hedging Variability of Cash Flows:                                                          |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                      |   |  |   |         |   |  |   |         |  
|Arising During the Period Net of Taxes of $3,635                                                                              |  |                      | (6,748  | ) |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                     |   |  |   |        |   |  |   |        |  
|Reclassification Adjustments For Hedging Activities Included in Net Income Net of Taxes of $37,485                            |  |                      | 69,614  |   |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                     |   |  |   |        |   |  |   |        |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                      |   |  |   |         |   |  |   |         |  
|Net Gains (Losses)                                                                                                            |  |                      | 62,866  |   |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                     |   |  |   |        |   |  |   | 62,866  |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                      |   |  |   |         |   |  |   |         |  
|Other Comprehensive Income                                                                                                    |  |                      | 47,121  |   |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                     |   |  |   |        |   |  |   |        |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                      |   |  |   |         |   |  |   |         |  
|Comprehensive Income                                                                                                          |  | $                    | 591,226 |   |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                     |   |  |   |        |   |  |   |        |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                      |   |  |   |         |   |  |   |         |  
|Issuance of 2,989,875 Treasury Common Shares Under Stock Option and Restricted Stock Plans                                    |  |                      |         |   |                |   |            |  |                          |        |  |                  | (16,396 | ) |                     |   |          |                       |  |   | 79,908                               |   |  |   | (5,589  | ) |  |   |        |  
|Acquisition of 5,996,799 Common Shares                                                                                        |  |                      |         |   |                |   |            |  |                          |        |  |                  | (112    | ) |                     |   |          |                       |  |   | (211,592                             | ) |  |   | 612     |   |  |   |        |  
|Dividends Declared on Common Stock$0.700 Per Share                                                                           |  |                      |         |   |                |   |            |  |                          |        |  |                  |        |   |                     |   | (158,007  | )                     |  |   |                                     |   |  |   |        |   |  |   |        |  
|Net Change in Deferred Compensation                                                                                           |  |                      |         |   |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                     |   |  |   | 360     |   |  |   |        |  
|Income Tax Benefit for Compensation Expense for Tax Purposes in Excess of Amounts Recognized for Financial Reporting Purposes |  |                      |         |   |                |   |            |  |                          |        |  |                  | 11,905  |   |                     |   |          |                       |  |   |                                     |   |  |   |        |   |  |   |        |  
|Other                                                                                                                         |  |                      |         |   |                |   |            |  |                          |        |  |                  | (290    | ) |                     |   |          |                       |  |   |                                     |   |  |   |        |   |  |   |        |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                      |   |  |   |         |   |  |   |         |  
|Balance, December 31, 2003                                                                                                    |  |                      |         |   |                | $ |            |  | $                        | 240,833 |  | $                | 564,269 |   |                     | $ | 3,061,246 |                       |  | $ | (513,562                             | ) |  | $ | (26,787 | ) |  | $ | 2,694   |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                      |   |  |   |         |   |  |   |         |  

The accompanying notes are an integral part of the Consolidated Financial Statements.



56



---

##### Table of Contents

Consolidated Statements of Shareholders Equity

($000s except share data)



|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                       |   |  |   |         |   |  |   |         |  
|----------------------------------------------------------------------------------------------------------------------------- |  | -------------------- | ------- | - | -------------- | - | ----------- |  | ------------------------ | ------- |  | ---------------- | ------- | - | ------------------- | - | --------- | --------------------- |  | - | ------------------------------------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                                                                              |  | Compre-hensiveIncome |         |   | PreferredStock |   | CommonStock |  | AdditionalPaid-InCapital |         |  | RetainedEarnings |         |   | TreasuryCommonStock |   |           | DeferredCompen-sation |  |   | AccumulatedOtherCompre- hensiveIncome |  
|Balance, December 31, 2003                                                                                                    |  |                      |         |   |                | $ |            |  | $                        | 240,833 |  | $                | 564,269 |   |                     | $ | 3,061,246 |                       |  | $ | (513,562                              | ) |  | $ | (26,787 | ) |  | $ | 2,694   |  
|Comprehensive Income:                                                                                                         |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                       |   |  |   |         |   |  |   |         |  
|Net Income                                                                                                                    |  | $                    | 627,086 |   |                |   |            |  |                          |        |  |                  |        |   |                     |   | 627,086   |                       |  |   |                                      |   |  |   |        |   |  |   |        |  
|Unrealized Gains (Losses) on Securities:                                                                                      |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                       |   |  |   |         |   |  |   |         |  
|Arising During the Period Net of Taxes of $5,692                                                                              |  |                      | (10,476 | ) |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                      |   |  |   |        |   |  |   |        |  
|Reclassification for Securities Transactions Included in Net Income Net of Taxes of $139                                      |  |                      | (258    | ) |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                      |   |  |   |        |   |  |   |        |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                       |   |  |   |         |   |  |   |         |  
|Total Unrealized Gains (Losses) on Securities                                                                                 |  |                      | (10,734 | ) |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                      |   |  |   |        |   |  |   | (10,734 | )
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                       |   |  |   |         |   |  |   |         |  
|Net Gains (Losses) on Derivatives Hedging Variability of Cash Flows:                                                          |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                       |   |  |   |         |   |  |   |         |  
|Arising During the Period Net of Taxes of $5,821                                                                              |  |                      | 10,810  |   |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                      |   |  |   |        |   |  |   |        |  
|Reclassification Adjustments For Hedging Activities Included in Net Income Net of Taxes of $11,075                            |  |                      | 20,568  |   |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                      |   |  |   |        |   |  |   |        |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                       |   |  |   |         |   |  |   |         |  
|Net Gains (Losses)                                                                                                            |  |                      | 31,378  |   |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                      |   |  |   |        |   |  |   | 31,378  |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                       |   |  |   |         |   |  |   |         |  
|Other Comprehensive Income                                                                                                    |  |                      | 20,644  |   |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                      |   |  |   |        |   |  |   |        |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                       |   |  |   |         |   |  |   |         |  
|Comprehensive Income                                                                                                          |  | $                    | 647,730 |   |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                      |   |  |   |        |   |  |   |        |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                       |   |  |   |         |   |  |   |         |  
|Issuance of 3,599,700 Common Shares                                                                                           |  |                      |         |   |                |   |            |  |                          | 3,599   |  |                  | 146,300 |   |                     |   |          |                       |  |   |                                      |   |  |   |        |   |  |   |        |  
|Present Value of Stock Purchase Contract and Allocated Fees and Expenses for Common SPACESSM                                  |  |                      |         |   |                |   |            |  |                          |        |  |                  | (34,039 | ) |                     |   |          |                       |  |   |                                      |   |  |   |        |   |  |   |        |  
|Issuance of 2,825,014 Treasury Common Shares Under Stock Option and Restricted Stock Plans                                    |  |                      |         |   |                |   |            |  |                          |        |  |                  | (20,466 | ) |                     |   |          |                       |  |   | 85,342                                |   |  |   | (7,167  | ) |  |   |        |  
|Acquisition of 2,310,053 Common Shares                                                                                        |  |                      |         |   |                |   |            |  |                          |        |  |                  | (41     | ) |                     |   |          |                       |  |   | (90,011                               | ) |  |   | 197     |   |  |   |        |  
|Dividends Declared on Common Stock$0.810 Per Share                                                                           |  |                      |         |   |                |   |            |  |                          |        |  |                  |        |   |                     |   | (179,855  | )                     |  |   |                                      |   |  |   |        |   |  |   |        |  
|Net Change in Deferred Compensation                                                                                           |  |                      |         |   |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                      |   |  |   | (6,260  | ) |  |   |        |  
|Income Tax Benefit for Compensation Expense for Tax Purposes in Excess of Amounts Recognized for Financial Reporting Purposes |  |                      |         |   |                |   |            |  |                          |        |  |                  | 16,064  |   |                     |   |          |                       |  |   |                                      |   |  |   |        |   |  |   |        |  
|Other                                                                                                                         |  |                      |         |   |                |   |            |  |                          |        |  |                  | (272    | ) |                     |   |          |                       |  |   |                                      |   |  |   |        |   |  |   |        |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                       |   |  |   |         |   |  |   |         |  
|Balance, December 31, 2004                                                                                                    |  |                      |         |   |                | $ |            |  | $                        | 244,432 |  | $                | 671,815 |   |                     | $ | 3,508,477 |                       |  | $ | (518,231                              | ) |  | $ | (40,017 | ) |  | $ | 23,338  |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                       |   |  |   |         |   |  |   |         |  

The accompanying notes are an integral part of the Consolidated Financial Statements.



57



---

##### Table of Contents

Consolidated Statements of Shareholders Equity

($000s except share data)



|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                        |   |  |   |         |   |  |   |         |  
|----------------------------------------------------------------------------------------------------------------------------- |  | -------------------- | ------- | - | -------------- | - | ----------- |  | ------------------------ | ------- |  | ---------------- | ------- | - | ------------------- | - | --------- | --------------------- |  | - | -------------------------------------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                                                                              |  | Compre-hensiveIncome |         |   | PreferredStock |   | CommonStock |  | AdditionalPaid-InCapital |         |  | RetainedEarnings |         |   | TreasuryCommonStock |   |           | DeferredCompen-sation |  |   | Accumula-ted OtherCompre-hensiveIncome |  
|Balance, December 31, 2004                                                                                                    |  |                      |         |   |                | $ |            |  | $                        | 244,432 |  | $                | 671,815 |   |                     | $ | 3,508,477 |                       |  | $ | (518,231                               | ) |  | $ | (40,017 | ) |  | $ | 23,338  |  
|Comprehensive Income:                                                                                                         |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                        |   |  |   |         |   |  |   |         |  
|Net Income                                                                                                                    |  | $                    | 727,469 |   |                |   |            |  |                          |        |  |                  |        |   |                     |   | 727,469   |                       |  |   |                                       |   |  |   |        |   |  |   |        |  
|Unrealized Gains (Losses) on Securities:                                                                                      |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                        |   |  |   |         |   |  |   |         |  
|Arising During the Period Net of Taxes of $36,387                                                                             |  |                      | (66,670 | ) |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                       |   |  |   |        |   |  |   |        |  
|Reclassification for Securities Transactions Included in Net Income Net of Taxes of $388                                      |  |                      | (722    | ) |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                       |   |  |   |        |   |  |   |        |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                        |   |  |   |         |   |  |   |         |  
|Total Unrealized Gains (Losses) on Securities                                                                                 |  |                      | (67,392 | ) |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                       |   |  |   |        |   |  |   | (67,392 | )
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                        |   |  |   |         |   |  |   |         |  
|Net Gains (Losses) on Derivatives Hedging Variability of Cash Flows:                                                          |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                        |   |  |   |         |   |  |   |         |  
|Arising During the Period Net of Taxes of $5,499                                                                              |  |                      | 10,211  |   |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                       |   |  |   |        |   |  |   |        |  
|Reclassification Adjustments For Hedging Activities Included in Net Income Net of Taxes of $1,857                             |  |                      | (3,448  | ) |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                       |   |  |   |        |   |  |   |        |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                        |   |  |   |         |   |  |   |         |  
|Net Gains (Losses)                                                                                                            |  |                      | 6,763   |   |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                       |   |  |   |        |   |  |   | 6,763   |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                        |   |  |   |         |   |  |   |         |  
|Other Comprehensive Income                                                                                                    |  |                      | (60,629 | ) |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                       |   |  |   |        |   |  |   |        |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                        |   |  |   |         |   |  |   |         |  
|Comprehensive Income                                                                                                          |  | $                    | 666,840 |   |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                       |   |  |   |        |   |  |   |        |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                        |   |  |   |         |   |  |   |         |  
|Issuance of 155,000 Common Shares                                                                                             |  |                      |         |   |                |   |            |  |                          | 155     |  |                  | 6,496   |   |                     |   |          |                       |  |   |                                       |   |  |   |        |   |  |   |        |  
|Issuance of 5,254,523 Treasury Common Shares in the 2005 Business Combinations                                                |  |                      |         |   |                |   |            |  |                          |        |  |                  | 81,778  |   |                     |   |          |                       |  |   | 159,317                                |   |  |   |        |   |  |   |        |  
|Issuance of 2,358,561 Treasury Common Shares Under Stock Option and Restricted Stock Plans                                    |  |                      |         |   |                |   |            |  |                          |        |  |                  | (9,605  | ) |                     |   |          |                       |  |   | 71,663                                 |   |  |   | (7,877  | ) |  |   |        |  
|Issuance of 355,046 Treasury Common Shares for Retirement Plan Funding                                                        |  |                      |         |   |                |   |            |  |                          |        |  |                  | 3,611   |   |                     |   |          |                       |  |   | 10,765                                 |   |  |   |        |   |  |   |        |  
|Acquisition of 25,095 Common Shares                                                                                           |  |                      |         |   |                |   |            |  |                          |        |  |                  | (66     | ) |                     |   |          |                       |  |   | (937                                   | ) |  |   | 281     |   |  |   |        |  
|Dividends Declared on Common Stock$0.930 Per Share                                                                           |  |                      |         |   |                |   |            |  |                          |        |  |                  |        |   |                     |   | (214,788  | )                     |  |   |                                       |   |  |   |        |   |  |   |        |  
|Net Change in Deferred Compensation                                                                                           |  |                      |         |   |                |   |            |  |                          |        |  |                  |        |   |                     |   |          |                       |  |   |                                       |   |  |   | (2,936  | ) |  |   |        |  
|Income Tax Benefit for Compensation Expense for Tax Purposes in Excess of Amounts Recognized for Financial Reporting Purposes |  |                      |         |   |                |   |            |  |                          |        |  |                  | 13,581  |   |                     |   |          |                       |  |   |                                       |   |  |   |        |   |  |   |        |  
|Other                                                                                                                         |  |                      |         |   |                |   |            |  |                          |        |  |                  | (282    | ) |                     |   |          |                       |  |   |                                       |   |  |   |        |   |  |   |        |  
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                        |   |  |   |         |   |  |   |         |  
|Balance, December 31, 2005                                                                                                    |  |                      |         |   |                | $ |            |  | $                        | 244,587 |  | $                | 767,328 |   |                     | $ | 4,021,158 |                       |  | $ | (277,423                               | ) |  | $ | (50,549 | ) |  | $ | (37,291 | )
|                                                                                                                              |  |                      |         |   |                |   |             |  |                          |         |  |                  |         |   |                     |   |           |                       |  |   |                                        |   |  |   |         |   |  |   |         |  

The accompanying notes are an integral part of the Consolidated Financial Statements.



58



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



Marshall & Ilsley Corporation (M&I or the Corporation) is a
financial holding company that provides diversified financial services to a wide variety of corporate, institutional, government and individual customers. M&Is largest affiliates and principal operations are in Wisconsin; however, it has
activities in other markets, particularly in certain neighboring Midwestern states, and in Arizona, Nevada and Florida. The Corporations principal activities consist of banking and data processing services. Banking services, lending and
accepting deposits from retail and commercial customers are provided through its lead bank, M&I Marshall & Ilsley Bank (M&I Bank), which is headquartered in Wisconsin, one federally chartered thrift headquartered in
Nevada, one state chartered bank headquartered in St. Louis, Missouri, and an asset-based lending subsidiary headquartered in Minneapolis, Minnesota. In addition to branches located throughout Wisconsin, banking services are provided in branches
located throughout Arizona, the Minneapolis, Minnesota and St. Louis, Missouri metropolitan areas, Duluth, Minnesota, Belleville, Illinois, Las Vegas, Nevada and Naples and Bonita Springs, Florida, as well as on the Internet. Financial and data
processing services and software sales are provided through the Corporations subsidiary Metavante Corporation (Metavante) and its nonbank subsidiaries primarily to financial institutions throughout the United States. Other
financial services provided by M&I include: personal property lease financing to consumer and commercial customers; investment management and advisory services; commercial and residential mortgage banking; venture capital and financial advisory
services; trust services to residents of Wisconsin, Arizona, Minnesota, Missouri, Florida, Nevada and Indiana; and brokerage and insurance services.

1.
Summary of Significant Accounting Policies

EstimatesThe preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates.

Consolidation principlesThe Consolidated Financial Statements include the accounts of the Corporation, its subsidiaries that are wholly or majority owned and/or over which it exercises substantive control and significant
variable interest entities for which the Corporation has determined that, based on the variable interests it holds, it is the primary beneficiary in accordance with Financial Accounting Standards Board (FASB) Interpretation No. 46
(FIN 46R), Consolidation of Variable Interest Entities an interpretation of Accounting Research Board (ARB) No. 51 (revised December 2003). The primary beneficiary of a variable interest entity is the party
that absorbs a majority of an entitys expected losses, receives a majority of an entitys expected residual returns, or both, as a result of holding variable interests. Variable interests are the ownership, contractual or other pecuniary
interests in an entity. Investments in unconsolidated affiliates, in which the Corporation has 20 percent or more ownership interest and has the ability to exercise significant influence, but not substantive control, over the affiliates
operating and financial policies, are accounted for using the equity method of accounting, unless the investment has been determined to be temporary. All significant intercompany balances and transactions are eliminated in consolidation.

The Corporation utilizes certain financing arrangements to meet its balance sheet management, funding, liquidity, and market or credit risk management
needs. The majority of these activities are basic term or revolving securitization facilities. These facilities are generally funded through term-amortizing debt structures or with short-term commercial paper designed to be paid off based on the
underlying cash flows of the assets securitized. These financing entities are contractually limited to a narrow range of activities that facilitate the transfer of or access to various types of assets or financial instruments. In certain situations,
the Corporation provides liquidity and/or loss protection agreements. In determining whether the financing entity should be consolidated, the Corporation considers whether the entity is a qualifying special-purpose entity (QSPE) as
defined in Statement of Financial Accounting Standards No. 140 (SFAS 140), Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. For non-consolidation, a QSPE must be
demonstrably distinct, have significantly limited permitted activities, hold assets that are restricted to transferred financial assets and related assets, and can sell or dispose of non-cash financial assets only in response to specified
conditions.



59



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



Certain amounts in the 2004 and 2003 Consolidated Financial Statements have been reclassified to
conform to the 2005 presentation.

Cash and cash equivalentsFor purposes of the Consolidated Financial Statements, the
Corporation defines cash and cash equivalents as short-term investments, which have an original maturity of three months or less and are readily convertible into cash.

SecuritiesSecurities, when purchased, are designated as Trading, Investment Securities Held to Maturity, or Investment Securities Available for Sale and remain in that category until they are sold or
mature. The specific identification method is used in determining the cost of securities sold.

Trading Securities are carried at fair
value, with adjustments to the carrying value reflected in the Consolidated Statements of Income. Investment Securities Held to Maturity are carried at cost, adjusted for amortization of premiums and accretion of discounts. The Corporation
designates investment securities as held to maturity only when it has the positive intent and ability to hold them to maturity. All other securities are classified as Investment Securities Available for Sale and are carried at fair value with fair
value adjustments net of the related income tax effects reported as a component of Accumulated Other Comprehensive Income in the Consolidated Balance Sheets.

Loans held for saleLoans held for sale are carried at the lower of cost or market, determined on an aggregate basis, based on outstanding firm commitments received for such loans or on current market
prices.

Loans and leasesInterest on loans, other than direct financing leases, is recognized as income based on the loan
principal outstanding during the period. Unearned income on financing leases is recognized over the lease term on a basis that results in an approximate level rate of return on the lease investment. Loans are generally placed on nonaccrual status
when they are past due 90 days as to either interest or principal. When a loan is placed on nonaccrual status, previously accrued and uncollected interest is charged to interest income on loans. A nonaccrual loan may be restored to an accrual basis
when interest and principal payments are brought current and collectibility of future payments is not in doubt.

The Corporation defers and
amortizes fees and certain incremental direct costs, primarily salary and employee benefit expenses, over the contractual term of the loan or lease as an adjustment to the yield. The unamortized net fees and costs are reported as part of the loan or
lease balance outstanding.

The Corporation periodically reviews the residual values associated with its leasing portfolios. Declines in
residual values that are judged to be other than temporary are recognized as a loss resulting in a reduction in the net investment in the lease.

Allowance for loan and lease lossesThe allowance for loan and lease losses is maintained at a level believed adequate by management to absorb estimated losses inherent in the loan and lease portfolio including loans that have
been determined to be impaired. For impaired loans, impairment is measured using one of three alternatives: (1) the present value of expected future cash flows discounted at the loans effective interest rate; (2) the loans
observable market price, if available; or (3) the fair value of the collateral for collateral dependent loans and loans for which foreclosure is deemed to be probable. Managements determination of the adequacy of the allowance is based on
a continual review of the loan and lease portfolio, loan and lease loss experience, economic conditions, growth and composition of the portfolio, and other relevant factors. As a result of managements continual review, the allowance is
adjusted through provisions for loan and lease losses charged against income.

Financial asset salesThe Corporation sells
financial assets, in a two-step process that results in a surrender of control over the assets, as evidenced by true-sale opinions from legal counsel, to unconsolidated entities that securitize the assets. The Corporation retains interests in the
securitized assets in the form of interest-only strips and cash reserve accounts. Gain or loss on sale of the assets depends in part on the carrying amount assigned to the assets sold allocated between the asset sold and retained interests based on
their relative fair values at the date of transfer. The value of the retained interests is based on the present value of expected cash flows estimated using managements best estimates of the key assumptions  credit losses, prepayment
speeds, forward yield curves and discount rates commensurate with the risks involved.



60



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



Premises and equipmentLand is recorded at cost. Premises and equipment are recorded at
cost and depreciated principally on the straight-line method with annual rates varying from 10 to 50 years for buildings and 3 to 10 years for equipment. Long-lived assets which are impaired are carried at fair value and long-lived assets to be
disposed of are carried at the lower of the carrying amount or fair value less cost to sell. Maintenance and repairs are charged to expense and betterments are capitalized.

Other real estate ownedOther real estate owned consists primarily of assets that have been acquired in satisfaction of debts. Other real
estate owned is recorded at fair value, less estimated selling costs, at the date of transfer. Valuation adjustments required at the date of transfer for assets acquired in satisfaction of debts are charged to the allowance for loan and lease
losses. Subsequent to transfer, other real estate owned is carried at the lower of cost or fair value, less estimated selling costs, based upon periodic evaluations. Rental income from properties and gains on sales are included in other income, and
property expenses, which include carrying costs, required valuation adjustments and losses on sales, are recorded in other expense. At December 31, 2005 and 2004, total other real estate owned amounted to $8,869 and $8,056, respectively.

Data processing servicesData processing and related revenues are recognized as services are performed based on amounts
billable under the contracts. Processing services performed that have not been billed to customers are accrued. Revenue includes shipping and handling costs associated with such income producing activities.

Revenues attributable to the licensing of software are generally recognized upon delivery and performance of certain contractual obligations, provided
that no significant vendor obligations remain and collection of the resulting receivable is deemed probable. Service revenues from customer maintenance fees for ongoing customer support and product updates are recognized ratably over the term of the
maintenance period. Service revenues from training and consulting are recognized when the services are performed. Conversion revenues associated with the conversion of customers processing systems to Metavantes processing systems are
deferred and amortized over the period of the related processing contract, which on average is approximately five years. Deferred revenues, which are included in Accrued Expenses and Other Liabilities in the Consolidated Balance Sheets, amounted to
$111,900 and $97,434 at December 31, 2005 and 2004, respectively.

Capitalized software and conversionsDirect costs
associated with the production of computer software which will be licensed externally or used in a service bureau environment are capitalized and amortized on the straight-line method over the estimated economic life of the product, generally four
years. Such capitalized costs are periodically evaluated for impairment and adjusted to net realizable value when impairment is indicated. Direct costs associated with customer system conversions to the data services operations are capitalized and
amortized on the straight-line method over the terms of the related servicing contract. Routine maintenance of software products, design costs and development costs incurred prior to establishment of a products technological feasibility for
software to be sold, are expensed as incurred.

Net unamortized costs, which are included in Accrued Interest and Other Assets in the
Consolidated Balance Sheets, at December 31 were:



|            |  |      |         |      |   |        
|----------- |  | ---- | ------- | ---- | - | -------
|            |  | 2005 |         | 2004
|Software    |  | $    | 154,058 |      | $ | 161,078
|Conversions |  |      | 26,666  |      |   | 26,524 
|            |  |      |         |      |   |        
|Total       |  | $    | 180,724 |      | $ | 187,602
|            |  |      |         |      |   |        

Amortization expense, which includes software write-downs, was $68,170, $72,527 and $82,076, for
2005, 2004 and 2003, respectively. During 2004, Metavante determined that certain products had limited growth potential. Based on strategic product reviews and the results of net realizable tests performed on these products, it was determined that
the capitalized software and other assets associated with those products were impaired. Total capitalized software costs written off amounted to $8,662 for the year ended December 31, 2004. As a result of a shift in product strategy, Metavante
determined that certain internally developed software would no longer be used and wrote-off $21,236 of such software in 2003.

The Corporation annually tests goodwill for impairment using a two-step process that begins with an estimation of the fair value of a reporting unit. For purposes of the test, the Corporations reporting units are the
operating segments as defined in Statement of Financial Accounting Standards No. 131, Disclosures about



61



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



Segments of an Enterprise and Related Information.The first step is a screen for potential impairment and the second step measures the
amount of impairment, if any. See Note 10 for additional information.

Identifiable intangibles arising from purchase acquisitions with a
finite useful life are amortized over their useful lives and consist of core deposit intangibles, contract rights, tradenames and customer lists.

Identifiable intangibles that have been determined to have an indefinite useful life are not amortized but are subject to periodic tests for impairment. At December 31, 2005, the Corporation did not have any identifiable intangibles
that have been determined to have an indefinite useful life.

Derivative financial instrumentsDerivative financial
instruments, including certain derivative instruments embedded in other contracts, are carried in the Consolidated Balance Sheets as either an asset or liability measured at its fair value. The fair value of the Corporations derivative
financial instruments is determined based on quoted market prices for comparable transactions, if available, or a valuation model that calculates the present value of expected future cash flows.

Changes in the fair value of derivative financial instruments are recognized currently in earnings unless specific hedge accounting criteria are met. For
derivative financial instruments designated as hedging the exposure to changes in the fair value of a recognized asset or liability (fair value hedge), the gain or loss is recognized in earnings in the period of change together with the offsetting
loss or gain on the hedged item attributable to the risk being hedged. For derivative financial instruments designated as hedging the exposure to variable cash flows of a forecasted transaction (cash flow hedge), the effective portion of the
derivative financial instruments gain or loss is initially reported as a component of accumulated other comprehensive income and is subsequently reclassified into earnings when the forecasted transaction affects earnings. The ineffective
portion of the gain or loss is reported in earnings immediately.

At inception of a hedge, the Corporation formally documents the hedging
relationship as well as the Corporations risk management objective and strategy for undertaking the hedge, including identification of the hedging instrument, the hedged transaction, the nature of the risk being hedged, and how the hedging
instruments effectiveness in hedging the exposure will be assessed.

The adjustment of the carrying amount of an interest bearing
hedged asset or liability in a fair value hedge is amortized into earnings when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.

If a cash flow hedge is discontinued because it is probable that the original forecasted transaction will not occur, the net gain or loss in accumulated
other comprehensive income is immediately reclassified into earnings. If the cash flow hedge is sold, terminated, expires or the designation of the cash flow hedge is removed, the net gain or loss in accumulated other comprehensive income is
reclassified into earnings in the same period or periods during which the hedged forecasted transaction affects earnings.

Cash flows from
derivative financial instruments are reported in the Consolidated Statements of Cash Flows as operating activities.

Foreign exchange
contractsForeign exchange contracts include such commitments as foreign currency spot, forward, future and option contracts. Foreign exchange contracts and the premiums on options written or sold are carried at market value with changes in
market value included in other income.

Treasury stockTreasury stock acquired is recorded at cost and is carried as a
reduction of shareholders equity in the Consolidated Balance Sheets. Treasury stock issued is valued based on average cost. The difference between the consideration received upon issuance and the average cost is charged or credited to
additional paid-in capital.

New accounting pronouncementsIn May 2005, the FASB issued Statement of Financial Accounting
Standards No. 154, Accounting Changes and Error Corrections (SFAS 154). This statement is effective for accounting changes and corrections of errors made after January 1, 2006. SFAS 154 generally requires
retrospective application of prior periods financial statements of a voluntary change in accounting principle. However, this statement does not change the transition provisions of any existing accounting pronouncement, including those that are
in a transition phase as of the effective date of SFAS 154.



62



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123 (revised
2004), Share-Based Payment(SFAS 123(R)). SFAS 123(R) replaces FASB statement No.123, Accounting for Stock-Based Compensation (SFAS 123), and supercedes Accounting Principles Board Opinion
No. 25 (APBO 25), Accounting for Stock Issued to Employees. Statement 123(R) requires that compensation cost relating to share-based payment transactions be recognized in financial statements. That cost is
measured based on the fair value of the equity or liability instruments issued. Statement 123(R) covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share
appreciation rights, and employee share purchase plans. Statement 123(R) also provides guidance on measuring the fair value of share-based payment awards.

The Corporation was originally required to adopt SFAS 123(R) beginning in the third quarter of 2005. In April 2005, the Securities and Exchange Commission (SEC) announced the adoption of a new rule that
amends the compliance dates for SFAS 123(R). The new rule allows companies to implement SFAS 123(R) at the beginning of their next fiscal year.

In March 2005 the SEC released Staff Accounting Bulletin No. 107, Share-based Payment (SAB 107). SAB 107 is intended to assist both public entities in applying the provisions of SFAS 123(R) and
investors and other users of financial statements in analyzing the information provided under SFAS 123(R).

The following FASB Staff
positions (FSP) were issued to provide guidance in implementing SFAS 123(R). The guidance in these FSPs should be applied in accordance with the effective date and transition provisions of SFAS 123(R).

In May 2005, the FASB issued FSP EITF 00-19-1, Application of EITF Issue No. 00-19 to Freestanding Financial Instruments Originally Issued as
Employee Compensation. This FSP clarifies that a requirement to deliver registered shares, in and of itself, will not result in liability classification for freestanding financial instruments originally issued as employee compensation.

In August 2005, the FASB issued FSP FAS 123(R)-1,Classification and Measurement of Freestanding Financial Instruments Originally
Issued in Exchange for Employee Services under SFAS 123(R). This FSP defers the requirements under SFAS 123(R) that make a freestanding financial instrument subject to the recognition and measurement requirements of other generally accepted
accounting principles when the rights conveyed by the instrument are no longer dependent on the holder being an employee.

In October 2005,
the FASB issued FSP FAS 123(R)-2, Practical Accommodation to the Application of Grant Date as defined in FASB Statement 123(R). One of the criteria for determining that a share-based payment award has been granted under SFAS 123(R) is
a mutual understanding by the employer and employee of the key terms and conditions of a share-based payment award. Considering the practical difficulties of personally communicating the key terms and conditions of a share-based payment award, this
FSP establishes criteria such that a mutual understanding of the key terms of an award to an individual employee shall be presumed to exist at the date the award is approved in accordance with the relevant corporate governance requirements if
certain criteria are met.

In November 2005, the FASB issued FSP FAS 123(R)-3, Transition Election Related to Accounting for the Tax
Effects of Share-Based Payment Awards. Some entities do not have, and may not be able to re-create, information about the net excess tax benefits that would have qualified as such had those entities adopted SFAS 123 for recognition purposes.
This FSP provides a practical elective alternative transition method that is comprised of (a) a computational component that establishes the beginning balance of the Additional Paid-In Capital (APIC) pool related to employee
compensation and (b) a simplified method to determine the subsequent impact on the APIC pool of employee awards that are fully vested and outstanding upon the adoption of SFAS 123(R). An entity that adopts SFAS 123(R) using either the modified
retrospective application or modified prospective application may make a one-time election to adopt the transition method described in this FSP and may take up to one year from the later of its initial adoption of SFAS 123(R) or the effective date
of this FSP to evaluate its available transition alternatives and make its one-time election.



63



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



In February 2006, the FASB issued FSP FAS 123(R)-4, Classification of Options and Similar
Instruments Issued as Employee Compensation That Allow for Cash Settlement upon the Occurrence of a Contingent Event. Certain provisions in some share-based payment plans may require an entity to settle outstanding options in cash upon the
occurrence of certain contingent events. Under SFAS 123(R), options or similar instruments were required to be classified as liabilities if the entity can be required under any circumstances to settle the option or similar instruments by
transferring cash or other assets. This FSP amends SFAS 123(R) such that a cash settlement feature that can be exercised only upon the occurrence of a contingent event that is outside the employees control is not classified as a liability
until it becomes probable that the event will occur.

As permitted under SFAS 123, the Corporation elected to measure and account for
share-based compensation cost using the intrinsic value based method of accounting prescribed in APBO 25 and provide the required pro forma disclosures. Under the intrinsic value based method, compensation cost is the excess, if any, of the quoted
market price of the stock at grant date or other measurement date over the amount paid to acquire the stock.

The largest differences
between SFAS 123(R) and APBO 25 as it relates to the Corporation is the amount of compensation cost attributable to the Corporations fixed stock option plans and employee stock purchase plan (ESPP). Under APBO 25 no compensation
cost is recognized for fixed stock option plans because the exercise price is equal to the quoted market price at the date of grant and therefore there is no intrinsic value. SFAS 123(R) compensation cost would equal the calculated fair value of the
options granted. Under APBO 25 no compensation cost is recognized for the ESPP because the discount and the plan meets the definition of a qualified plan of the Internal Revenue Code and meets the requirements of APBO 25. Under SFAS 123(R) the
Corporations ESPP is compensatory because the plan has a provision that establishes the purchase price as an amount based on the lesser of the Corporations common stock price at date of grant or at date of purchase. SFAS 123(R)
compensation cost would be approximately equal to the sum of: the initial discount (15% of beginning of plan period price per share) plus; the value of a one year call option on 85% of a share of common stock and; the value of a one year put option
on 15% of a share of common stock for each share purchased.

In contemplation of the adoption of SFAS 123(R) the Corporation, with the
assistance of an independent valuation firm, reviewed the various permitted methods of determining the estimated fair value of its fixed stock option plans and concluded that a form of lattice stock option pricing model produces the most
representative estimate of fair value for its fixed stock option plans. For purposes of providing the required pro forma disclosures under SFAS 123 and recording compensation cost under SFAS 123(R), all fixed stock options granted after
September 30, 2004 were valued using the form of lattice stock option pricing model. Fixed stock options granted before September 30, 2004 were valued using a Black-Scholes closed form option-pricing model.

The Corporation adopted SFAS 123(R) on January 1, 2006 and has elected the Modified Retrospective Application to implement the new standard. Under
this method all prior periods will be restated to reflect the effect of expensing stock options and the employee stock purchase plan.

See
Note 16 for a description of the Corporations plans and the pro forma effect of the fair-value-based method of accounting for awards granted, modified, or settled in cash in fiscal years beginning after December 15, 1994. In addition to
the effect on net income and earnings per share as shown in Note 16, the Corporation estimates that the impact to Shareholders Equity at December 31, 2005 as a result of applying the Modified Retrospective Application method to adopt SFAS
123(R) is as follows:



|                                       |  |                   |          |  
|-------------------------------------- |  | ----------------- | -------- | -
|                                       |  | December 31, 2005 |         
|Decrease to Retained Earnings          |  | $                 | (149,544 | )
|Increase to Additional Paid-in Capital |  |                   | 217,205  |  
|                                       |  |                   |          |  
|Net Increase to Shareholders Equity   |  | $                 | 67,661   |  
|                                       |  |                   |          |  

The net increase to Shareholders Equity represents the deferred income tax benefit
outstanding at December 31, 2005 associated with the cumulative effect on net income from 1995 to 2005 from recognizing share-based compensation previously not reported.

In November 2005, the FASB issued FSP FAS 115-1 and FAS 124-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments. The guidance in this FSP amends SFAS No.



64



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



115, Accounting for Certain Investments in Debt and Equity Securities, SFAS 124, Accounting for
Certain Investments Held by Not-for-Profit Organizationsand APBO No. 18, The Equity Method of Accounting for Investments in Common Stock. The guidance in this FSP also nullifies certain requirements of Emerging Issues
Task Force (EITF) Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments and supersedes EITF Topic No. D-44, Recognition of Other-than Temporary Impairment upon
the Planned Sale of a Security Whose Cost Exceeds Fair Value. This FSP addresses the determination as to when an investment is considered impaired, whether that impairment is other than temporary, and the measurement of an impairment loss.
This FSP also includes accounting considerations subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than temporary impairments. See Note
5 in Notes to Consolidated Financial Statements.

In December 2005, the FASB issued FSP SOP 94-6-1, Terms of Loan Products That May
Give Rise to a Concentration of Credit Risk. This FSP was issued to emphasize the requirement to assess the adequacy of disclosures for all lending products especially loan products whose contractual features may increase the exposure of the
originator, holder, investor, guarantor, or servicer to risk of nonpayment or realization. See Note 6 in Notes to Consolidated Financial Statements.

2.
Earnings Per Share

The following presents a reconciliation of the numerators and denominators of the basic and diluted per share
computations (dollars and shares in thousands, except per share data):



|                                               |  |                              |         |                            |         |                |   |     
|---------------------------------------------- |  | ---------------------------- | ------- | -------------------------- | ------- | -------------- | - | ----
|                                               |  | Year Ended December 31, 2005
|                                               |  | Income(Numerator)            |         | AverageShares(Denominator) |         | PerShareAmount
|Basic earnings per share:                      |  |                              |         |                            |         |                |   |     
|Income available to common shareholders        |  | $                            | 727,469 |                            | 230,849 |                | $ | 3.15
|                                               |  |                              |         |                            |         |                |   |     
|Effect of dilutive securities:                 |  |                              |         |                            |         |                |   |     
|Stock option, restricted stock and other plans |  |                              |        |                            | 4,033   |                |   |     
|                                               |  |                              |         |                            |         |                |   |     
|Diluted earnings per share:                    |  |                              |         |                            |         |                |   |     
|Income available to common shareholders        |  | $                            | 727,469 |                            | 234,882 |                | $ | 3.10
|                                               |  |                              |         |                            |         |                |   |     



|                                               |  |                              |         |                            |         |                |   |     
|---------------------------------------------- |  | ---------------------------- | ------- | -------------------------- | ------- | -------------- | - | ----
|                                               |  | Year Ended December 31, 2004
|                                               |  | Income(Numerator)            |         | AverageShares(Denominator) |         | PerShareAmount
|Basic earnings per share:                      |  |                              |         |                            |         |                |   |     
|Income available to common shareholders        |  | $                            | 627,086 |                            | 222,801 |                | $ | 2.81
|                                               |  |                              |         |                            |         |                |   |     
|Effect of dilutive securities:                 |  |                              |         |                            |         |                |   |     
|Stock option, restricted stock and other plans |  |                              |        |                            | 3,750   |                |   |     
|                                               |  |                              |         |                            |         |                |   |     
|Diluted earnings per share:                    |  |                              |         |                            |         |                |   |     
|Income available to common shareholders        |  | $                            | 627,086 |                            | 226,551 |                | $ | 2.77
|                                               |  |                              |         |                            |         |                |   |     



|                                               |  |                              |         |                            |         |                |   |     
|---------------------------------------------- |  | ---------------------------- | ------- | -------------------------- | ------- | -------------- | - | ----
|                                               |  | Year Ended December 31, 2003
|                                               |  | Income(Numerator)            |         | AverageShares(Denominator) |         | PerShareAmount
|Basic earnings per share:                      |  |                              |         |                            |         |                |   |     
|Income available to common shareholders        |  | $                            | 544,105 |                            | 226,139 |                | $ | 2.41
|                                               |  |                              |         |                            |         |                |   |     
|Effect of dilutive securities:                 |  |                              |         |                            |         |                |   |     
|Stock option, restricted stock and other plans |  |                              |        |                            | 2,146   |                |   |     
|                                               |  |                              |         |                            |         |                |   |     
|Diluted earnings per share:                    |  |                              |         |                            |         |                |   |     
|Income available to common shareholders        |  | $                            | 544,105 |                            | 228,285 |                | $ | 2.38
|                                               |  |                              |         |                            |         |                |   |     



65



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



Options to purchase shares of common stock not included in the computation of diluted net income per
share because the options exercise price was greater than the average market price of the common shares for the years ended December 31, are as follows:



|                        |  |                   |  |       
|----------------------- |  | ----------------- |  | ------
|Year Ended December 31, |  | Price Range       |  | Shares
|2005                    |  | $43.310  $47.020 |  | 62    
|2004                    |  | 39.910    44.200 |  | 3,474 
|2003                    |  | 31.045    38.250 |  | 7,021 

3. Business Combinations

The following acquisitions, which are not considered to be material business combinations, were announced during the fourth quarter of 2005:

In December 2005, the Corporation announced the signing of a definitive agreement to acquire Trustcorp Financial, Inc. (Trustcorp), a bank
holding company headquartered in St. Louis, Missouri. Trustcorp, with consolidated assets of $746.2 million at December 31, 2005, is the parent company of Missouri State Bank & Trust, a bank with seven offices in the St. Louis
metropolitan area. Missouri State Bank & Trust offices will become offices of M&Is affiliate Southwest Bank of St. Louis. Under the terms of the definitive agreement, Trustcorp shareholders will receive 0.7011 of a share of
M&I common stock and $7.70 in cash for each Trustcorp share. Based on the price of M&Is shares when the agreement was executed, the transaction value is approximately $181 million. The acquisition is expected to close in the second
quarter of 2006, subject to shareholder and regulatory approvals and other customary closing conditions.

In November 2005, Metavante
announced that it signed a definitive agreement to acquire AdminiSource Corporation (AdminiSource) of Carrollton, Texas. AdminiSource is a provider of health care payment distribution services, providing printed and electronic payment
and remittance advice distribution services for payer organizations nationwide. Metavante completed its acquisition of AdminiSource in January 2006. Total consideration in this transaction consisted of 527,864 shares of M&I common stock valued
at $23.2 million and $5.0 million in cash.

In November 2005, the Corporation announced the signing of a definitive agreement to acquire
Gold Banc Corporation, Inc. (Gold Banc), a bank holding company headquartered in Leawood, Kansas, a part of the Kansas City metropolitan area with consolidated assets at December 31, 2005 of $4.2 billion. Gold Banc is the holding
company for Gold Bank, with 11 branches in Kansas, nine of which are in the Kansas City area, and six branches in Missouri, four of which are in the Kansas City area. In addition, Gold Bank has 11 branches in Florida and three branches in Tulsa,
Oklahoma. The consideration to Gold Banc shareholders is expected to be $18.50 per Gold Banc share, consisting of $2.78 in cash and $15.72 in the form of M&I common stock. Based on the price of M&Is shares when the agreement was
executed, the total transaction value is approximately $700 million. The current Gold Bank branches are expected to become M&I Bank branches in the second quarter of 2006. The transaction is expected to close in the second quarter of 2006
pending regulatory approval and other customary closing conditions.

In October 2005, Marshall & Ilsley Trust Company, N.A. signed
a definitive agreement to acquire the trust and asset management business assets of FirstTrust Indiana of Indianapolis, Indiana, a division of First Indiana Bank, N.A. FirstTrust Indiana offers asset management, trust administration and estate
planning services to high net-worth individuals and institutional customers. The FirstTrust Indiana business, with nearly $1 billion in assets under administration, will be integrated into the Corporations Trust reporting unit.
Marshall & Ilsley Trust Company, N.A. completed the acquisition of FirstTrust Indiana in January 2006 for cash consideration of $15.9 million.

The following acquisitions, which are not considered to be material business combinations individually or in the aggregate, were completed during 2005:

On November 18, 2005, Metavante completed the acquisition of all of the outstanding stock of LINK2GOV Corp. (LINK2GOV) of Nashville,
Tennessee for $63.5 million in cash. LINK2GOV is a provider of electronic payment processing services for federal, state and local government agencies in the United States, including the Internal Revenue Service. Initial goodwill, subject to the
completion of appraisals and valuation of the assets acquired and liabilities assumed, amounted to $53.2 million. The estimated identifiable intangible asset to be amortized (customer relationships) with an estimated useful life of 10 years amounted
to $13.4 million. The goodwill and intangibles resulting from this transaction are not deductible for tax purposes.



66



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



On October 6, 2005, Metavante acquired the membership interests of Brasfield Holdings, LLC
(Brasfield) and associated members. Brasfield of Birmingham, Alabama provides core processing products and services to community banks which license and use Bankway software from Kirchman Corporation, an indirect subsidiary of Metavante.
Total consideration consisted of 335,462 shares of M&Is common stock valued at $14.6 million and $0.2 million in cash, with up to an additional $25.0 million to be paid based on meeting certain performance criteria. Initial goodwill,
subject to the completion of appraisals and valuation of the assets acquired and liabilities assumed, amounted to $19.1 million. The estimated identifiable intangible asset to be amortized (customer relationships) with an estimated useful life of 9
years amounted to $4.0 million. The goodwill and intangibles resulting from this transaction are not deductible for tax purposes.

On
August 11, 2005, Metavante completed the acquisition of GHR Systems, Inc. (GHR) of Wayne, Pennsylvania for $63.6 million. Total consideration consisted of 1,152,144 shares of M&Is common stock valued at $52.2 million and
$11.4 million in cash. GHR provides loan origination technologies for the residential mortgage and consumer finance industries, offers point of sale products for any channel and comprehensive underwriting, processing and closing technologies.
Initial goodwill, subject to the completion of appraisals and valuation of the assets acquired and liabilities assumed, amounted to $42.0 million. The estimated identifiable intangible asset to be amortized (customer relationships) with an estimated
useful life of 10 years amounted to $10.5 million. The goodwill and intangibles resulting from this transaction are not deductible for tax purposes.

On August 8, 2005, Metavante completed the acquisition of all of the outstanding capital stock of TREEV LLC (TREEV) of Herndon, Virginia for $19.4 million. Total consideration consisted of 353,073
shares of M&Is common stock valued at $16.4 million and $3.0 million in cash. TREEV provides browser-based document imaging, storage and retrieval products and services for the financial services industry in both lending and deposit
environments. TREEV would complement Metavantes check-imaging products and services by providing solutions for document storage and retrieval, including electronic report storage. Initial goodwill, subject to the completion of appraisals and
valuations of the assets acquired and liabilities assumed, amounted to $16.9 million. The estimated identifiable intangible asset to be amortized (customer relationships) with an estimated useful life of 10 years amounted to $5.2 million. The
goodwill and intangibles resulting from this transaction are not deductible for tax purposes.

On July 22, 2005, Metavante completed
the acquisition of all of the outstanding capital stock of Med-i-Bank, Inc. (MBI) of Waltham, Massachusetts for $150.5 million. Total consideration consisted of 2,850,730 shares of M&Is common stock valued at $133.8 million and
$16.7 million in cash. MBI provides electronic payment processing services for employee benefit and consumer-directed healthcare accounts, such as flexible spending accounts, health reimbursement arrangements and health savings account systems.
Initial goodwill, subject to the completion of appraisals and valuations of the assets acquired and liabilities assumed, amounted to $117.8 million. The estimated identifiable intangible asset to be amortized (customer relationships) with an
estimated useful life of 10 years amounted to $25.0 million. The goodwill and intangibles resulting from this transaction are not deductible for tax purposes.

In February 2005, Metavante completed the acquisition of all of the outstanding stock of Prime Associates, Inc. (Prime) of Clark, New Jersey, for $24.6 million. Total consideration consisted of 563,114
shares of M&Is common stock valued at $24.0 million and $0.6 million in cash. Prime is a provider of anti-money laundering and fraud interdiction software and data products for financial institutions, insurance companies and securities
firms. Additional consideration up to $4.0 million may be paid based upon attainment of certain earnings levels in the year ending December 31, 2005. Contingent payments, if made, would be reflected as adjustments to goodwill. Initial goodwill,
subject to the completion of appraisals and valuations of the assets acquired and liabilities assumed, amounted to $24.6 million. The estimated identifiable intangible asset to be amortized (customer relationships) with an estimated useful life of
10 years amounted to $4.6 million. The goodwill and intangibles resulting from this transaction are not deductible for tax purposes.

There
was no in-process research and development acquired in any of the acquisitions completed by Metavante for the year ended December 31, 2005.



67



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



The following acquisitions, which were not considered material business combinations individually or
in the aggregate, were completed during 2004:

On November 22, 2004, Metavante completed the acquisition of all of the outstanding
common stock of VECTORsgi Holdings, Inc. (VECTORsgi). VECTORsgi, based in Addison, Texas, is a provider of banking transaction applications, including electronic check-image processing and image exchange, item processing, dispute
resolution and e-commerce for financial institutions and corporations. The aggregate cash purchase price for VECTORsgi was $100.0 million, with up to an additional $35.0 million to be paid based on meeting certain performance criteria. Goodwill
amounted to $83.5 million. The estimated identifiable intangible asset to be amortized (customer relationships) with an estimated useful life of 12 years amounted to $12.4 million. The goodwill and intangibles resulting from this transaction are not
deductible for tax purposes.

On October 20, 2004, Metavante acquired all of the outstanding membership interests of NuEdge Systems
LLC (NuEdge) for approximately $1.4 million in cash. NuEdge is engaged in the business of providing customer relationship management solutions for enterprise marketing automation. The estimated identifiable intangible asset to be
amortized (customer relationships) with an estimated useful life of 8 years amounted to $1.4 million. The intangible resulting from this transaction is deductible for tax purposes.

On September 8, 2004, Metavante acquired certain assets of Response Data Corp. (RDC), for approximately $35.0 million in cash. RDC is a
New Jersey-based provider of credit card balance transfer, bill pay and convenience check processing. Goodwill amounted to $26.4 million. The estimated identifiable intangible asset to be amortized (customer relationships) with an estimated useful
life of 10 years amounted to $6.4 million. The goodwill and intangibles resulting from this transaction are deductible for tax purposes.

On July 30, 2004, Metavante completed the acquisition of all of the outstanding common stock of the NYCE Corporation (NYCE), for $613.0 million in cash, subject to certain adjustments that may include a return of a portion
of the purchase price based on certain future revenue measures. NYCE owns and operates one of the largest electronic funds transfer networks in the United States and provides debit card authorization processing services for automated teller machines
(ATMs) and on-line and off-line signature based debit card transactions. At December 31, 2005 goodwill amounted to $448.7 million. The estimated identifiable intangible asset to be amortized (customer relationships and trademark) with an
estimated useful life of 20 years for both the customer relationships intangible and for the trademark intangible amounted to $185.0 million. The goodwill and intangibles resulting from this transaction are not deductible for tax purposes.

On July 1, 2004, Metavante completed the acquisition of all of the outstanding common stock of Advanced Financial Solutions, Inc. and
its affiliated companies (collectively AFS), of Oklahoma City, Oklahoma for $141.9 million in cash. AFS is a provider of image-based payment, transaction and document software technologies. AFS also operates an electronic check-clearing
network through one of its affiliates. Additional contingent consideration may be paid based on the attainment of certain performance objectives each year, beginning on the date of closing and ending December 31, 2004, and each year thereafter
through 2007. Contingent payments, if made, would be reflected as adjustments to goodwill. At December 31, 2005, goodwill amounted to $102.6 million. The estimated identifiable intangible assets to be amortized (customer relationships and
non-compete agreements) with an estimated useful life of 12 years for customer relationships and 4 years for non-compete agreements, amounted to $21.5 million. The goodwill and intangibles resulting from this transaction are partially deductible for
tax purposes.

On May 27, 2004, Metavante completed the purchase of certain assets and the assumption of certain liabilities of
Kirchman Corporation (Kirchman), of Orlando, Florida for $157.4 million in cash. Kirchman is a provider of automation software and compliance services to the banking industry. Goodwill amounted to $160.3 million. The estimated
identifiable intangible assets to be amortized (customer relationships and non-compete agreements) with an estimated useful life of 10 years for customer relationships and 5 years for non-compete agreements amounted to $15.8 million. The goodwill
and intangibles resulting from this transaction are deductible for tax purposes.

There was no in-process research and development acquired
in any of the acquisitions completed by Metavante for the year ended December 31, 2004.



68



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



On January 1, 2004, the Banking segment completed the purchase of certain assets and the
assumption of certain liabilities of AmerUs Home Lending, Inc. (AmerUs), an Iowa-based corporation engaged in the business of brokering and servicing mortgage and home equity loans for $15.0 million in cash. Goodwill amounted to $5.3
million. The estimated identifiable intangible asset to be amortized (customer relationships) with an estimated useful life of 3 years amounted to $0.3 million. The goodwill and intangibles resulting from this transaction are deductible for tax
purposes.

The following acquisitions, which were not considered material business combinations individually or in the aggregate, were
completed during 2003:

In November 2003, Metavante acquired the assets of Printing For Systems, Inc., a Connecticut corporation engaged in
the business of printing and delivery of identification cards and other documents for the healthcare insurance industry, including non-financial data processing and direct mail services in connection with such services. The total original cost of
this acquisition was $25.0 million which was paid in cash. For three years beginning in 2004, additional contingent payments may be made each year if certain annual revenue and profitability targets are achieved subject to certain other conditions.
The maximum total contingent consideration over the three-year contingency period is $25.0 million. There was no in-process research and development acquired in this acquisition. The estimated identifiable intangible to be amortized (customer list)
with an estimated life of 8 years amounted to $4.0 million. Goodwill at December 31, 2005 amounted to $40.9 million which includes contingent consideration of $22.5 million. The goodwill and intangibles resulting from this transaction are
deductible for tax purposes.

In May 2003, the Corporations Trust subsidiary entered into an agreement to purchase for cash certain
segments of the employee benefit plan business of a national banking association located in Missouri. This acquisition enhances the Trust subsidiarys presence in Missouri and complements the Missouri acquisition by the Banking segment in
October 2002. The acquired segments were transferred to the Corporations Trust subsidiary in accordance with an established conversion schedule that was completed in the first quarter of 2004. The total cost of this acquisition was $4.0
million subject to additional payments up to $7.0 million contingent upon achieving certain revenue targets one year from the completion date of the acquisition. The identifiable intangible to be amortized (customer list) with an estimated life of
6.2 years amounted to $4.0 million. Goodwill at December 31, 2005 amounted to $4.3 million which includes contingent consideration of $3.6 million. The intangibles resulting from this transaction are deductible for tax purposes.

The results of operations of the acquired entities have been included in the consolidated results since the dates the transactions were closed.

4. Cash and Due from Banks

At
December 31, 2005 and 2004, $81,009 and $106,911, respectively, of cash and due from banks was restricted, primarily due to requirements of the Federal Reserve System to maintain certain reserve balances.

5. Securities

The book and market values of selected
securities at December 31 were:



|                                          |  |               |           |             |   |               |  |             |           |  |   |          
|----------------------------------------- |  | ------------- | --------- | ----------- | - | ------------- |  | ----------- | --------- |  | - | ---------
|                                          |  | 2005          |           | 2004       
|                                          |  | AmortizedCost |           | MarketValue |   | AmortizedCost |  | MarketValue
|Investment Securities Available for Sale: |  |               |           |             |   |               |  |             |           |  |   |          
|U.S. Treasury and government agencies     |  | $             | 4,456,610 |             | $ | 4,379,148     |  | $           | 4,147,593 |  | $ | 4,157,374
|States and political subdivisions         |  |               | 690,849   |             |   | 703,892       |  |             | 479,326   |  |   | 504,027  
|Mortgage backed securities                |  |               | 118,693   |             |   | 116,464       |  |             | 151,061   |  |   | 150,658  
|Other                                     |  |               | 491,928   |             |   | 502,199       |  |             | 533,229   |  |   | 546,940  
|                                          |  |               |           |             |   |               |  |             |           |  |   |          
|Total                                     |  | $             | 5,758,080 |             | $ | 5,701,703     |  | $           | 5,311,209 |  | $ | 5,358,999
|                                          |  |               |           |             |   |               |  |             |           |  |   |          
|Investment Securities Held to Maturity:   |  |               |           |             |   |               |  |             |           |  |   |          
|States and political subdivisions         |  | $             | 616,554   |             | $ | 636,135       |  | $           | 724,086   |  | $ | 762,801  
|Other                                     |  |               | 2,000     |             |   | 2,000         |  |             | 2,300     |  |   | 2,300    
|                                          |  |               |           |             |   |               |  |             |           |  |   |          
|Total                                     |  | $             | 618,554   |             | $ | 638,135       |  | $           | 726,386   |  | $ | 765,101  
|                                          |  |               |           |             |   |               |  |             |           |  |   |          



69



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



The unrealized gains and losses of selected securities at December 31 were:



|                                          |  |                 |        |                  |   |                 |  |                  |        |  |   |       
|----------------------------------------- |  | --------------- | ------ | ---------------- | - | --------------- |  | ---------------- | ------ |  | - | ------
|                                          |  | 2005            |        | 2004            
|                                          |  | UnrealizedGains |        | UnrealizedLosses |   | UnrealizedGains |  | UnrealizedLosses
|Investment Securities Available for Sale: |  |                 |        |                  |   |                 |  |                  |        |  |   |       
|U.S. Treasury and government agencies     |  | $               | 4,263  |                  | $ | 81,725          |  | $                | 23,654 |  | $ | 13,873
|States and political subdivisions         |  |                 | 18,010 |                  |   | 4,967           |  |                  | 26,023 |  |   | 1,322 
|Mortgage backed securities                |  |                 |       |                  |   | 2,229           |  |                  | 227    |  |   | 630   
|Other                                     |  |                 | 10,743 |                  |   | 472             |  |                  | 13,790 |  |   | 79    
|                                          |  |                 |        |                  |   |                 |  |                  |        |  |   |       
|Total                                     |  | $               | 33,016 |                  | $ | 89,393          |  | $                | 63,694 |  | $ | 15,904
|                                          |  |                 |        |                  |   |                 |  |                  |        |  |   |       
|Investment Securities Held to Maturity:   |  |                 |        |                  |   |                 |  |                  |        |  |   |       
|States and political subdivisions         |  | $               | 19,610 |                  | $ | 29              |  | $                | 38,832 |  | $ | 117   
|Other                                     |  |                 |       |                  |   |                |  |                  |       |  |   |      
|                                          |  |                 |        |                  |   |                 |  |                  |        |  |   |       
|Total                                     |  | $               | 19,610 |                  | $ | 29              |  | $                | 38,832 |  | $ | 117   
|                                          |  |                 |        |                  |   |                 |  |                  |        |  |   |       

The book value and market value of selected securities by contractual maturity at
December 31, 2005 were:



|                            |  |                                         |           |                                       |   |               |  |             |         |  |   |        
|--------------------------- |  | --------------------------------------- | --------- | ------------------------------------- | - | ------------- |  | ----------- | ------- |  | - | -------
|                            |  | Investment SecuritiesAvailable for Sale |           | Investment SecuritiesHeld to Maturity
|                            |  | AmortizedCost                           |           | Market Value                          |   | AmortizedCost |  | MarketValue
|Within one year             |  | $                                       | 206,940   |                                       | $ | 209,633       |  | $           | 91,604  |  | $ | 92,440 
|From one through five years |  |                                         | 4,092,439 |                                       |   | 4,025,145     |  |             | 233,974 |  |   | 241,443
|From five through ten years |  |                                         | 537,124   |                                       |   | 534,065       |  |             | 166,648 |  |   | 172,693
|After ten years             |  |                                         | 921,577   |                                       |   | 932,860       |  |             | 126,328 |  |   | 131,559
|                            |  |                                         |           |                                       |   |               |  |             |         |  |   |        
|Total                       |  | $                                       | 5,758,080 |                                       | $ | 5,701,703     |  | $           | 618,554 |  | $ | 638,135
|                            |  |                                         |           |                                       |   |               |  |             |         |  |   |        

The following table provides the gross unrealized losses and fair value, aggregated by investment
category and the length of time the individual securities have been in a continuous unrealized loss position, at December 31, 2005:



|                                      |  |                     |           |                   |   |            |  |                  |           |            |   |                   |  |   |           |  |   |       
|------------------------------------- |  | ------------------- | --------- | ----------------- | - | ---------- |  | ---------------- | --------- | ---------- | - | ----------------- |  | - | --------- |  | - | ------
|                                      |  | Less than 12 Months |           | 12 Months or More |   | Total     
|                                      |  | Fair Value          |           | Unrealized Losses |   | Fair Value |  | UnrealizedLosses |           | Fair Value |   | Unrealized Losses
|U.S. Treasury and government agencies |  | $                   | 2,782,907 |                   | $ | 44,829     |  | $                | 1,202,390 |            | $ | 36,896            |  | $ | 3,985,297 |  | $ | 81,725
|State and political subdivisions      |  |                     | 201,436   |                   |   | 3,249      |  |                  | 49,171    |            |   | 1,747             |  |   | 250,607   |  |   | 4,996 
|Mortgage backed securities            |  |                     | 78,900    |                   |   | 1,247      |  |                  | 37,564    |            |   | 982               |  |   | 116,464   |  |   | 2,229 
|Other                                 |  |                     | 57,568    |                   |   | 386        |  |                  | 4,276     |            |   | 86                |  |   | 61,844    |  |   | 472   
|                                      |  |                     |           |                   |   |            |  |                  |           |            |   |                   |  |   |           |  |   |       
|Total                                 |  | $                   | 3,120,811 |                   | $ | 49,711     |  | $                | 1,293,401 |            | $ | 39,711            |  | $ | 4,414,212 |  | $ | 89,422
|                                      |  |                     |           |                   |   |            |  |                  |           |            |   |                   |  |   |           |  |   |       

The investment securities in the above table were temporarily impaired at December 31, 2005.
This temporary impairment represents the amount of loss that would have been realized if the investment securities had been sold on December 31, 2005. The temporary impairment in the investment securities portfolio is predominantly the result
of increases in market interest rates since the investment securities were acquired and not from deterioration in the creditworthiness of the issuer.

The gross investment securities gains and losses, including Capital Markets Group transactions, amounted to $48,012 and $2,598 in 2005, $44,008 and $8,656 in 2004, and $36,784 and $15,212 in 2003, respectively. See
the Consolidated Statements of Cash Flows for the proceeds from the sale of investment securities.

Income tax expense related to net
securities transactions amounted to $15,901, $12,373, and $7,543 in 2005, 2004, and 2003, respectively.



70



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



At December 31, 2005, securities with a value of approximately $1,421,352 were pledged to secure
public deposits, short-term borrowings, and for other purposes required by law.

6. Loans and Leases

Loans and leases at December 31 were:



|                                            |  |      |            |   |      |   |            |  
|------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                            |  | 2005 |            |   | 2004 |  
|Commercial, financial and agricultural      |  | $    | 9,599,361  |   |      | $ | 8,483,046  |  
|Cash flow hedging instruments at fair value |  |      | (33,886    | ) |      |   | (1,583     | )
|                                            |  |      |            |   |      |   |            |  
|Commercial, financial and agricultural      |  |      | 9,565,475  |   |      |   | 8,481,463  |  
|Real estate:                                |  |      |            |   |      |   |            |  
|Construction                                |  |      | 3,641,942  |   |      |   | 2,265,227  |  
|Residential mortgage                        |  |      | 5,050,803  |   |      |   | 3,398,790  |  
|Home equity loans and lines of credit       |  |      | 4,833,480  |   |      |   | 5,149,239  |  
|Commercial mortgage                         |  |      | 8,825,104  |   |      |   | 8,164,099  |  
|                                            |  |      |            |   |      |   |            |  
|Total Real Estate                           |  |      | 22,351,329 |   |      |   | 18,977,355 |  
|Personal Personal                           |  |      | 1,617,761  |   |      |   | 1,540,024  |  
|Lease financing                             |  |      | 632,348    |   |      |   | 537,930    |  
|                                            |  |      |            |   |      |   |            |  
|Total loans and leases                      |  | $    | 34,166,913 |   |      | $ | 29,536,772 |  
|                                            |  |      |            |   |      |   |            |  

Included in residential mortgages in the table previously presented are residential mortgage loans
held for sale. Residential mortgage loans held for sale amounted to $198,716 and $67,897 at December 31, 2005 and 2004, respectively. Auto loans held for sale, which are included in personal loans in the table previously presented, amounted to
$79,131 and $13,765 at December 31, 2005 and 2004, respectively.

Commercial loans and commercial mortgages are evaluated for the
adequacy of repayment sources at the time of approval and are regularly reviewed for any possible deterioration in the ability of the borrower to repay the loan.

The Corporation evaluates the credit risk of each commercial customer on an individual basis and, where deemed appropriate, collateral is obtained. Collateral varies by the type of loan and individual loan customer
and may include accounts receivable, inventory, real estate, equipment, deposits, personal and government guarantees, and general security agreements. The Corporations access to collateral is dependent upon the type of collateral obtained.

Policies have been established that set standards for the maximum commercial mortgage loan amount by type of property, loan terms, pricing
structures, loan-to-value limits by property type, minimum requirements for initial investment and maintenance of equity by the borrower, borrower net worth, property cash flow and debt service coverage as well as policies and procedures for
granting exceptions to established underwriting standards.

The Corporations residential real estate lending policies require all
loans to have viable repayment sources. Residential real estate loans are evaluated for the adequacy of these repayment sources at the time of approval, using such factors as credit scores, debt-to-income ratios and collateral values. Home equity
loans and lines of credit are generally governed by the same lending policies.

Origination activities for commercial construction loans
and residential construction loans are similar to those described above for commercial mortgages and residential real estate lending.

The
Corporations lending activities are concentrated primarily in the Midwest. Approximately 51% of the portfolio consists of loans granted to customers located in Wisconsin, 14% of the loans are to customers located in Arizona, 11% of the loans
are to customers in Minnesota and 5% are to customers located in Missouri. The Corporations loan portfolio consists of business loans extending across many industry types, as well as loans to individuals. As of December 31, 2005, total
loans to any group of customers engaged in similar activities and having similar economic characteristics, as defined by the North American Industry Classification System, did not exceed 10% of total loans.



71



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



Federal banking regulatory agencies have established guidelines in the form of supervisory limits for
loan- to-value ratios (LTV) in real estate lending. The supervisory limits are based on the type of real estate collateral and loan type (1-4 family residential and non-residential). The guidelines permit financial institutions to grant
or purchase loans with LTV ratios in excess of the supervisory LTV limits (High LTV or HLTV) provided such exceptions are supported by appropriate documentation or the loans have additional credit support. Federal banking regulatory
agencies have also established aggregate limits on the amount of HLTV loans a financial institution may hold. HLTV loans as defined by the supervisory limits, amounted to $3,630 million at December 31, 2005. Approximately $2,120 million of
these HLTV loans at December 31, 2005 were secured by owner-occupied residential properties. At December 31, 2005, all of the Corporations banking affiliates were in compliance with the aggregate limits for HLTV loans.

Federal banking regulatory agencies have recently expressed concerns that concentrations of loans secured by raw land, land development and construction
(including 1-4 family residential construction), multi-family property and non-farm nonresidential property where the primary or a significant source of repayment is derived from rental income associated with the property or the proceeds of the
sale, refinancing or permanent financing of the property may make financial institutions more vulnerable to cyclical real estate markets. Loans secured by vacant land and loans secured by multi-family properties each represented less than 10% of
total real estate loans outstanding at December 31, 2005, respectively. Loans secured by non-farm nonresidential properties amounted to $5,114 million with approximately 40% of those loans secured by owner-occupied properties at
December 31, 2005. Loans secured by owner-occupied properties generally have risk profiles that are less influenced by the condition of the general real estate market.

The Corporation offers a variety of loan products with payment terms and rate structures that have been designed to meet the needs of its customers
within an established framework of acceptable credit risk. Payment terms range from fully amortizing loans that require periodic principal and interest payments to terms that require periodic payments of interest-only with principal due at maturity.
Interest-only loans are typical in commercial and business line-of-credit or revolving line-of-credit loans, home equity lines-of-credit and construction loans (residential and commercial). At December 31, 2005, loans with below market or
so-called teaser interest rates amounted to less than $3 million. At December 31, 2005, the Corporation did not offer, hold or service option adjustable rate mortgages that may expose the borrowers to future increase in repayments in excess of
changes resulting solely from increases in the market rate of interest (loans subject to negative amortization).

The Corporation
periodically reviews the residual values associated with its leasing portfolios. Declines in residual values that are judged to be other than temporary are recognized as a loss resulting in a reduction in the net investment in the lease. No residual
impairment losses were incurred for the years ended December 31, 2005 and 2004.

An analysis of loans outstanding to directors and
officers, including their related interests, of the Corporation and its significant subsidiaries for 2005 is presented in the following table. All of these loans were made in the ordinary course of business with normal credit terms, including
interest rates and collateral. The beginning balance has been adjusted to reflect the activity of newly-appointed directors and executive officers.

Loans to directors and executive officers:



|                           |  |   |          |  
|-------------------------- |  | - | -------- | -
|Balance, beginning of year |  | $ | 168,746  |  
|New loans                  |  |   | 313,887  |  
|Repayments                 |  |   | (354,160 | )
|                           |  |   |          |  
|Balance, end of year       |  | $ | 128,473  |  
|                           |  |   |          |  

7. Allowance for Loan and Lease Losses

An analysis of the allowance for loan and lease losses follows:



|                                       |  |      |         |   |      |   |         |      |  |   |         |  
|-------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                       |  | 2005 |         |   | 2004 |   |         | 2003 | 
|Balance, beginning of year             |  | $    | 358,110 |   |      | $ | 349,561 |      |  | $ | 338,409 |  
|Allowance of loans and leases acquired |  |      |        |   |      |   | 27      |      |  |   |        |  
|Provision charged to expense           |  |      | 44,795  |   |      |   | 37,963  |      |  |   | 62,993  |  
|Charge-offs                            |  |      | (59,524 | ) |      |   | (50,855 | )    |  |   | (69,663 | )
|Recoveries                             |  |      | 20,388  |   |      |   | 21,414  |      |  |   | 17,822  |  
|                                       |  |      |         |   |      |   |         |      |  |   |         |  
|Balance, end of year                   |  | $    | 363,769 |   |      | $ | 358,110 |      |  | $ | 349,561 |  
|                                       |  |      |         |   |      |   |         |      |  |   |         |  



72



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



As of December 31, 2005 and 2004, nonaccrual loans and leases totaled $134,718 and $127,722,
respectively.

At December 31, 2005 and 2004 the Corporations recorded investment in impaired loans and leases and the related
valuation allowance are as follows:



|                                                     |  |                     |         |      |                     |   |                     |  |   |                     |   |  |   |       
|---------------------------------------------------- |  | ------------------- | ------- | ---- | ------------------- | - | ------------------- |  | - | ------------------- | - |  | - | ------
|                                                     |  | 2005                |         | 2004
|                                                     |  | RecordedInvest-ment |         |      | ValuationAllow-ance |   | RecordedInvest-ment |  |   | ValuationAllow-ance
|Total impaired loans and leases                      |  | $                   | 134,861 |      |                     |   |                     |  | $ | 128,398             |   |  |   |       
|Loans and leases excluded from individual evaluation |  |                     | (61,090 | )    |                     |   |                     |  |   | (54,481             | ) |  |   |       
|                                                     |  |                     |         |      |                     |   |                     |  |   |                     |   |  |   |       
|Impaired loans evaluated                             |  | $                   | 73,771  |      |                     |   |                     |  | $ | 73,917              |   |  |   |       
|                                                     |  |                     |         |      |                     |   |                     |  |   |                     |   |  |   |       
|Valuation allowance required                         |  | $                   | 50,113  |      |                     | $ | 18,235              |  | $ | 54,862              |   |  | $ | 21,203
|No valuation allowance required                      |  |                     | 23,658  |      |                     |   |                    |  |   | 19,055              |   |  |   |      
|                                                     |  |                     |         |      |                     |   |                     |  |   |                     |   |  |   |       
|Impaired loans evaluated                             |  | $                   | 73,771  |      |                     | $ | 18,235              |  | $ | 73,917              |   |  | $ | 21,203
|                                                     |  |                     |         |      |                     |   |                     |  |   |                     |   |  |   |       

The recorded investment in impaired loans for which no allowance is required is net of
applications of cash interest payments and net of previous direct write-downs of $31,505 in 2005 and $18,380 in 2004 against the loan balances outstanding. Loans less than $250 are excluded from individual evaluation, but are collectively evaluated
as homogeneous pools. The required valuation allowance is included in the allowance for loan and lease losses in the Consolidated Balance Sheets.

The average recorded investment in total impaired loans and leases for the years ended December 31, 2005 and 2004 amounted to $135,584 and $145,598, respectively.

Interest payments received on impaired loans and leases are recorded as interest income unless collection of the remaining recorded investment is
doubtful at which time payments received are recorded as reductions of principal. Interest income recognized on total impaired loans and leases amounted to $8,528 in 2005, $6,591 in 2004 and $7,841 in 2003. The gross income that would have been
recognized had such loans and leases been performing in accordance with their original terms would have been $10,954 in 2005, $10,047 in 2004 and $12,378 in 2003.

8. Variable Interest Entities and Financial Asset Sales

The Corporation sells indirect automobile loans to an
unconsolidated multi-seller asset-backed commercial paper conduit or basic term facilities, in securitization transactions in accordance with SFAS 140. Servicing responsibilities and subordinated interests are retained. The Corporation receives
annual servicing fees based on the loan balances outstanding and rights to future cash flows arising after investors in the securitization trusts have received their contractual return and after certain administrative costs of operating the trusts.
The investors and the securitization trusts have no recourse to the Corporations other assets for failure of debtors to pay when due. The Corporations retained interests are subordinate to investors interests. Their value is
subject to credit, prepayment and interest rate risks on the transferred financial assets.

During 2005, 2004 and 2003, the Corporation
recognized net gains/(losses) of $(1,957), $(3,440) and $2,726, respectively, on the sale and securitization of automobile loans. Net trading (losses)/gains associated with related interest swaps amounted to $(1,078), $(357) and $162 in 2005, 2004,
and 2003, respectively.

During 2004 and 2005, there were no impairment losses. For the year ended December 31, 2003, the Corporation
recognized impairment losses of $4,082, which is included in net investment securities gains in the Consolidated Statements of Income. The impairment was a result of the differences between actual prepayments



73



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



and credit losses experienced compared to the expected prepayments and credit losses used in initially measuring retained interests. The impairment of the
retained interests, held in the form of interest-only strips, was deemed to be other than temporary.

The values of retained interests are
based on cash flow models, which incorporate key assumptions. Key economic assumptions used in measuring the retained interests at the date of securitization resulting from securitizations of automobile loans completed during the year were as
follows (rate per annum):



|                                                   |  |                                     |  |           
|-------------------------------------------------- |  | ----------------------------------- |  | ----------
|                                                   |  | 2005                                |  | 2004      
|Prepayment speed (CPR)                             |  | 15-40%                              |  | 19-35%    
|Weighted average life (in months)                  |  | 21.2                                |  | 20.0      
|Expected credit losses (based on original balance) |  | 0.22-0.74%                          |  | 0.20-0.74%
|Residual cash flow discount rate                   |  | 12.0%                               |  | 12.0%     
|Variable returns to transferees                    |  | Forward one month LIBOR yield curve

For 2005, the prepayment speed and expected credit loss estimates are based on historical
prepayment rates, credit losses on similar assets and considers current environmental factors. The prepayment speed curve ramps to its maximum near the end of the fourth year. The expected credit losses are based in part on whether the loan is on a
new or used vehicle. The credit loss estimates ramp to their maximum levels near the end of the third year. The expected credit losses presented are based on the original loan balances. The Corporation has not changed any aspect of its overall
approach to determining the key economic assumptions. However, on an ongoing basis the Corporation continues to refine the assumptions used in measuring retained interests.

Retained interests and other assets consisted of the following at December 31:



|                         |  |      |        |      |   |       
|------------------------ |  | ---- | ------ | ---- | - | ------
|                         |  | 2005 |        | 2004
|Interest  only strips   |  | $    | 10,659 |      | $ | 24,092
|Cash collateral accounts |  |      | 15,050 |      |   | 17,969
|Servicing advances       |  |      | 237    |      |   | 143   
|                         |  |      |        |      |   |       
|Total retained interests |  | $    | 25,946 |      | $ | 42,204
|                         |  |      |        |      |   |       

At December 31, 2005 key economic assumptions and the sensitivity of the current fair value
of residual cash flows to immediate 10 percent and 20 percent adverse changes in those assumptions are as follows ($ in millions):



|                                                   |  |             |  |                              |     |     |   |    
|-------------------------------------------------- |  | ----------- |  | ---------------------------- | --- | --- | - | ---
|                                                   |  |             |  | Adverse Changein Assumptions
|                                                   |  |             |  | 10%                          |     | 20%
|Weighted average life (in months)                  |  | 14.1        |  |                              |     |     |   |    
|Prepayment speed                                   |  | 17-42%      |  | $                            | 0.5 |     | $ | 1.1
|Expected credit losses (based on original balance) |  | 0.20-1.028% |  |                              | 0.6 |     |   | 1.1
|Residual cash flows discount rate (annual)         |  | 12.0%       |  |                              | 0.1 |     |   | 0.2

These sensitivities are hypothetical and should be used with caution. As the figures indicate,
changes in fair value based on a 10 percent adverse variation in assumptions generally can not be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, the effect of an adverse
variation in a particular assumption on the fair value of the retained interest is calculated without changing any other assumption. Realistically, changes in one factor may result in changes in another (for example, increases in market interest
rates may result in lower prepayments and increased credit losses), which might magnify or counteract the sensitivities.

Actual and
projected net credit losses represented 0.56% of total automobile loans that have been securitized at December 31, 2005, based on balances at the time of the initial securitization.

The following table summarizes certain cash flows received from and paid to the securitization trusts for the years ended December 31:



74



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



|                                                     |  |      |         |   |      |   |         |  
|---------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                     |  | 2005 |         |   | 2004 |  
|Proceeds from new securitizations                    |  | $    | 498,858 |   |      | $ | 494,624 |  
|Servicing fees received                              |  |      | 5,765   |   |      |   | 6,176   |  
|Net charge-offs                                      |  |      | (2,489  | ) |      |   | (2,298  | )
|Cash collateral account transfers, net               |  |      | (2,919  | ) |      |   | (7,587  | )
|Other cash flows received on retained interests, net |  |      | 17,385  |   |      |   | 32,748  |  

At December 31, 2005 securitized automobile loans and other automobile loans managed together
with them along with delinquency and credit loss information consisted of the following:



|                                                    |  |             |         |           |   |         |  |   |          
|--------------------------------------------------- |  | ----------- | ------- | --------- | - | ------- |  | - | ---------
|                                                    |  | Securitized |         | Portfolio |   | Managed
|Loan balances                                       |  | $           | 954,209 |           | $ | 245,046 |  | $ | 1,199,255
|Principal amounts of loans 60 days or more past due |  |             | 855     |           |   | 1,173   |  |   | 2,028    
|Net credit losses                                   |  |             | 2,411   |           |   | 1,431   |  |   | 3,842    

The Corporation also sells, from time to time, debt securities classified as available for sale
that are highly rated to an unconsolidated bankruptcy remote qualifying special purpose entity (QSPE) whose activities are limited to issuing highly rated asset-backed commercial paper with maturities up to 180 days which is used to
finance the purchase of the investment securities. The Corporation provides liquidity back-up in the form of Liquidity Purchase Agreements. In addition, the Corporation acts as counterparty to interest rate swaps that enable the QSPE to hedge its
interest rate risk. Such swaps are designated as trading in the Corporations Consolidated Balance Sheets.

A subsidiary of the
Corporation has entered into interest rate swaps with the QSPE designed to counteract the interest rate risk associated with third party beneficial interest (commercial paper) and the transferred assets. The beneficial interests in the form of
commercial paper have been issued by the QSPE to parties other than the Corporation and its subsidiary or any other affiliates. The notional amounts do not exceed the amount of beneficial interests. The swap agreements do not provide the QSPE or its
administrative agent any decision-making authority other than those specified in the standard ISDA Master Agreement.

Highly rated
investment securities in the amount of $270.0 million and $280.2 million were outstanding at December 31, 2005 and 2004, respectively, in the QSPE to support the outstanding commercial paper.

The Corporation also holds other variable interests in variable interest entities.

The Corporation is committed to community reinvestment and is required under federal law to take affirmative steps to meet the credit needs of the local
communities it serves. The Corporation regularly invests in or lends to entities that: own residential facilities that provide housing for low-to-moderate income families (affordable housing projects); own commercial properties that are involved in
historical preservations (rehabilitation projects); or provide funds for qualified low income community investments. These projects are generally located within the geographic markets served by the Corporations banking segment. The
Corporations involvement in these entities is limited to providing funding in the form of subordinated debt or equity interests. At December 31, 2005, investments in the form of subordinated debt represented an insignificant involvement
in five unrelated entities.

Generally, the economic benefit from the equity investments consists of the income tax benefits obtained from
the Corporations allocated operating losses from the partnership that are tax deductible, allocated income tax credits for projects that qualify under the Internal Revenue Code and in some cases, participation in the proceeds from the eventual
disposition of the property. The Corporation uses the equity method of accounting to account for these investments. To the extent a project qualifies for income tax credits, the project must continue to qualify as an affordable housing project for
fifteen years, a rehabilitation project for five years, or a qualified low income community investment for seven years in order to avoid recapture of the income tax credit which generally defines the time the Corporation will be involved in a
project.

The Corporations maximum exposure to loss as a result of its involvement with these entities is generally limited to the
carrying value of these investments plus any unfunded commitments on projects that are not completed. At December 31, 2005, the aggregate carrying value of the subordinated debt and equity investments was $23,308 and the amount of unfunded
commitments outstanding was $10,346.



75



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



9. Premises and Equipment

The composition of premises and equipment at December 31 was:



|                                    |  |      |           |      |   |          
|----------------------------------- |  | ---- | --------- | ---- | - | ---------
|                                    |  | 2005 |           | 2004
|Land                                |  | $    | 90,834    |      | $ | 77,211   
|Building and leasehold improvements |  |      | 493,655   |      |   | 488,586  
|Furniture and equipment             |  |      | 533,728   |      |   | 519,969  
|                                    |  |      |           |      |   |          
|                                    |  |      | 1,118,217 |      |   | 1,085,766
|Less: Accumulated depreciation      |  |      | 627,530   |      |   | 618,541  
|                                    |  |      |           |      |   |          
|Total premises and equipment, net   |  | $    | 490,687   |      | $ | 467,225  
|                                    |  |      |           |      |   |          

Depreciation expense was $76,477 in 2005, $71,489 in 2004, and $68,247 in 2003.

The Corporation leases certain of its facilities and equipment. Rent expense under such operating leases was $80,195 in 2005, $70,644 in 2004, and
$68,882 in 2003, respectively.

The future minimum lease payments under operating leases that have initial or remaining noncancellable
lease terms in excess of one year for 2006 through 2010 are $36,719, $32,153, $24,925, $19,541, and $17,007, respectively.

10. Goodwill and Intangibles

SFAS 142, Goodwill and Other Intangible Assets adopts an aggregate view of goodwill and bases the accounting for goodwill
on the units of the combined entity into which an acquired entity is integrated (those units are referred to as Reporting Units). A Reporting Unit is an operating segment as defined in SFAS 131 or one level below an operating segment.

SFAS 142 provides specific guidance for testing goodwill and intangible assets that are not amortized for impairment. Goodwill is tested for impairment
at least annually using a two-step process that begins with an estimation of the fair value of a Reporting Unit. The first step is a screen for potential impairment and the second step measures the amount of impairment, if any. Intangible assets
that are not amortized are also tested annually.

With the assistance of a nationally recognized independent appraisal firm, the
Corporation has elected to perform its annual test for goodwill impairment during the second quarter. Accordingly, the Corporation updated the analysis to June 30, 2005 and concluded that there continues to be no impairment with respect to
goodwill at any reporting unit.

The changes in the carrying amount of goodwill for the twelve months ended December 31, 2005 and 2004
are as follows:



|                                         |  |         |         |   |           |   |           |        |  |       |       |  |   |           |  
|---------------------------------------- |  | ------- | ------- | - | --------- | - | --------- | ------ |  | ----- | ----- |  | - | --------- | -
|                                         |  | Banking |         |   | Metavante |   |           | Others |  | Total |      
|Goodwill balance as of December 31, 2003 |  | $       | 809,772 |   |           | $ | 155,329   |        |  | $     | 4,687 |  | $ | 969,788   |  
|Goodwill acquired during the period      |  |         | 5,314   |   |           |   | 823,989   |        |  |       |      |  |   | 829,303   |  
|Purchase accounting adjustments          |  |         |        |   |           |   | (900      | )      |  |       | 725   |  |   | (175      | )
|                                         |  |         |         |   |           |   |           |        |  |       |       |  |   |           |  
|Goodwill balance as of December 31, 2004 |  |         | 815,086 |   |           |   | 978,418   |        |  |       | 5,412 |  |   | 1,798,916 |  
|Goodwill acquired during the period      |  |         |        |   |           |   | 273,610   |        |  |       |      |  |   | 273,610   |  
|Purchase accounting adjustments          |  |         | (5,710  | ) |           |   | 20,011    |        |  |       | 2,392 |  |   | 16,693    |  
|                                         |  |         |         |   |           |   |           |        |  |       |       |  |   |           |  
|Goodwill balance as of December 31, 2005 |  | $       | 809,376 |   |           | $ | 1,272,039 |        |  | $     | 7,804 |  | $ | 2,089,219 |  
|                                         |  |         |         |   |           |   |           |        |  |       |       |  |   |           |  

Purchase accounting adjustments are the adjustments to the initial goodwill recorded at the time
an acquisition is completed. Such adjustments generally consist of adjustments to the assigned fair value of the assets acquired and liabilities assumed resulting from the completion of appraisals or other valuations, adjustments to initial
estimates recorded for transaction costs or exit liabilities, if any, contingent consideration when paid or received from escrow arrangements at the end of a contractual contingency period and the reduction of goodwill allocated to sale
transactions. For the year ended December 31, 2005, purchase accounting adjustments for the Banking segment represent adjustments relating to the resolution of tax issues resulting from the acquisitions of



76



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



National City Bancorporation, Richfield State Agency, Inc. and Mississippi Valley Bancshares, Inc. Purchase accounting adjustments for the Banking segment
also include a reduction of goodwill allocated to branch divestitures. Purchase accounting adjustments for Metavante represent adjustments to the initial estimates of fair value associated with the acquisitions of Kirchman Corporation, Advanced
Financial Solutions, Inc. and its affiliated companies, NYCE Corporation, Response Data Corp., NuEdge Systems LLC and VECTORsgi Holdings, Inc. In addition, purchase accounting adjustments for Metavante include the effect of $22.5 million of
contingent consideration associated with the Printing For Systems, Inc. acquisition. Purchase accounting adjustments for the Others include the effect of a contingent payment made for an acquisition made by the Corporations Trust subsidiary,
net of the reduction of goodwill allocated to the sale of two small Trust business lines.

For the year ended 2004, the reduction of
goodwill relating to Metavantes divestitures amounted to $2,014 which was offset by purchase accounting adjustments from initial estimates of fair values associated with acquisitions.

The Corporations other intangible assets consisted of the following at December 31, 2005:



|                                               |  |                    |         |                          |   |                  |  |                                         |         |  |     
|---------------------------------------------- |  | ------------------ | ------- | ------------------------ | - | ---------------- |  | --------------------------------------- | ------- |  | ----
|                                               |  | GrossCarryingValue |         | AccumulatedAmortiza-tion |   | NetCarryingValue |  | WeightedAverageAmortiza-tionPeriod(Yrs)
|Other intangible assets:                       |  |                    |         |                          |   |                  |  |                                         |         |  |     
|Core deposit intangible                        |  | $                  | 152,816 |                          | $ | 79,616           |  | $                                       | 73,200  |  | 6.3 
|Data processing contract rights/customer lists |  |                    | 317,223 |                          |   | 32,832           |  |                                         | 284,391 |  | 15.9
|Trust customers                                |  |                    | 4,750   |                          |   | 1,229            |  |                                         | 3,521   |  | 6.8 
|Tradename                                      |  |                    | 8,275   |                          |   | 750              |  |                                         | 7,525   |  | 19.4
|Other intangibles                              |  |                    | 1,250   |                          |   | 414              |  |                                         | 836     |  | 4.6 
|                                               |  |                    |         |                          |   |                  |  |                                         |         |  |     
|                                               |  | $                  | 484,314 |                          | $ | 114,841          |  | $                                       | 369,473 |  | 12.8
|                                               |  |                    |         |                          |   |                  |  |                                         |         |  |     
|Mortgage loan servicing rights                 |  |                    |         |                          |   |                  |  | $                                       | 2,769   |  |     
|                                               |  |                    |         |                          |   |                  |  |                                         |         |  |     

The Corporations other intangible assets consisted of the following at December 31,
2004:



|                                               |  |                    |         |                          |   |                  |  |                                         |         |  |     
|---------------------------------------------- |  | ------------------ | ------- | ------------------------ | - | ---------------- |  | --------------------------------------- | ------- |  | ----
|                                               |  | GrossCarryingValue |         | AccumulatedAmortiza-tion |   | NetCarryingValue |  | WeightedAverageAmortiza-tionPeriod(Yrs)
|Other intangible assets:                       |  |                    |         |                          |   |                  |  |                                         |         |  |     
|Core deposit intangible                        |  | $                  | 159,474 |                          | $ | 76,024           |  | $                                       | 83,450  |  | 6.4 
|Data processing contract rights/customer lists |  |                    | 252,088 |                          |   | 17,428           |  |                                         | 234,660 |  | 13.8
|Trust customers                                |  |                    | 4,750   |                          |   | 792              |  |                                         | 3,958   |  | 6.8 
|Tradename                                      |  |                    | 2,775   |                          |   | 1,967            |  |                                         | 808     |  | 3.0 
|Other intangibles                              |  |                    | 1,250   |                          |   | 140              |  |                                         | 1,110   |  | 4.6 
|                                               |  |                    |         |                          |   |                  |  |                                         |         |  |     
|                                               |  | $                  | 420,337 |                          | $ | 96,351           |  | $                                       | 323,986 |  | 10.8
|                                               |  |                    |         |                          |   |                  |  |                                         |         |  |     
|Mortgage loan servicing rights                 |  |                    |         |                          |   |                  |  | $                                       | 3,531   |  |     
|                                               |  |                    |         |                          |   |                  |  |                                         |         |  |     

Amortization expense of other intangible assets amounted to $31,103, $27,852 and $23,785 in 2005,
2004 and 2003, respectively.

The estimated amortization expense of other intangible assets and mortgage loan servicing rights for the next
five years are:



|     |  |   |       
|---- |  | - | ------
|2006 |  | $ | 33,382
|2007 |  |   | 31,352
|2008 |  |   | 29,562
|2009 |  |   | 28,403
|2010 |  |   | 27,481



77



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



Mortgage loan servicing rights are subject to the prepayment risk inherent in the underlying loans
that are being serviced. The actual remaining life could be significantly different due to actual prepayment experience in future periods.

At December 31, 2005 and 2004, none of the Corporations other intangible assets were determined to have indefinite lives.

11.
Deposits

The composition of deposits at December 31 was:



|                                    |  |      |            |   |      |   |            |  
|----------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                    |  | 2005 |            |   | 2004 |  
|Noninterest bearing demand          |  | $    | 5,525,019  |   |      | $ | 4,888,426  |  
|                                    |  |     
|Savings and NOW                     |  |      | 10,462,831 |   |      |   | 10,118,415 |  
|Cash flow hedge  Brokered MMDA     |  |      | (5,326     | ) |      |   | (1,445     | )
|                                    |  |      |            |   |      |   |            |  
|Total Savings and NOW               |  |      | 10,457,505 |   |      |   | 10,116,970 |  
|                                    |  |     
|CDs $100,000 and over               |  |      | 5,652,359  |   |      |   | 5,592,947  |  
|Cash flow hedge  Institutional CDs |  |      | (13,767    | ) |      |   | (8,977     | )
|                                    |  |      |            |   |      |   |            |  
|Total CDs $100,000 and over         |  |      | 5,638,592  |   |      |   | 5,583,970  |  
|                                    |  |     
|Other time deposits                 |  |      | 3,434,476  |   |      |   | 2,721,214  |  
|Foreign deposits                    |  |      | 2,618,629  |   |      |   | 3,144,507  |  
|                                    |  |      |            |   |      |   |            |  
|Total deposits                      |  | $    | 27,674,221 |   |      | $ | 26,455,087 |  
|                                    |  |      |            |   |      |   |            |  

At December 31, 2005 and 2004, brokered deposits amounted to $4,892 million and $5,737
million, respectively.

At December 31, 2005, the scheduled maturities for CDs $100,000 and over, other time deposits, and foreign
deposits were:



|                    |  |   |           
|------------------- |  | - | ----------
|2006                |  | $ | 7,812,750 
|2007                |  |   | 1,926,161 
|2008                |  |   | 727,237   
|2009                |  |   | 309,388   
|2010 and thereafter |  |   | 929,928   
|                    |  |   |           
|                    |  | $ | 11,705,464
|                    |  |   |           

12. Short-term Borrowings

Short-term borrowings at December 31 were:



|                                                           |  |      |           |      |   |          
|---------------------------------------------------------- |  | ---- | --------- | ---- | - | ---------
|                                                           |  | 2005 |           | 2004
|Federal funds purchased and security repurchase agreements |  | $    | 2,325,863 |      | $ | 1,478,103
|Cash flow hedge  Federal funds                            |  |      | 1,394     |      |   | 10,752   
|                                                           |  |      |           |      |   |          
|Federal funds purchased and security repurchase agreements |  |      | 2,327,257 |      |   | 1,488,855
|                                                           |  |     
|U.S. Treasury demand notes                                 |  |      | 306,564   |      |   | 98,369   
|                                                           |  |     
|Commercial paper                                           |  |      | 380,551   |      |   | 312,098  
|Other                                                      |  |      | 5,597     |      |   | 34,918   
|                                                           |  |      |           |      |   |          
|                                                           |  |      | 3,019,969 |      |   | 1,934,240
|Current maturities of long-term borrowings                 |  |      | 2,606,765 |      |   | 1,595,796
|                                                           |  |      |           |      |   |          
|Total short-term borrowings                                |  | $    | 5,626,734 |      | $ | 3,530,036
|                                                           |  |      |           |      |   |          



78



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



Unused lines of credit, primarily to support commercial paper borrowings, were $75.0 million at
December 31, 2005 and 2004.

13. Long-term Borrowings

Long-term borrowings at December 31 were:



|                                                         |  |      |           |   |      |   |           |  
|-------------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                                                         |  | 2005 |           |   | 2004 |  
|Corporation:                                             |  |      |           |   |      |   |           |  
|Medium-term notes Series E and MiNotes                   |  | $    | 423,796   |   |      | $ | 526,850   |  
|4.375% senior notes                                      |  |      | 598,007   |   |      |   | 597,505   |  
|3.90% junior subordinated debt securities                |  |      | 396,014   |   |      |   | 395,018   |  
|7.65% junior subordinated deferrable interest debentures |  |      | 204,983   |   |      |   | 213,574   |  
|                                                         |  |     
|Subsidiaries:                                            |  |      |           |   |      |   |           |  
|Borrowings from Federal Home Loan Bank (FHLB):           |  |      |           |   |      |   |           |  
|Floating rate advances                                   |  |      | 1,220,000 |   |      |   | 670,000   |  
|Cash flow hedge                                          |  |      | (21,847   | ) |      |   | (6,644    | )
|                                                         |  |      |           |   |      |   |           |  
|Floating rate advances                                   |  |      | 1,198,153 |   |      |   | 663,356   |  
|Fixed rate advances                                      |  |      | 700,946   |   |      |   | 1,151,506 |  
|Senior bank notes:                                       |  |      |           |   |      |   |           |  
|Floating rate bank notes                                 |  |      | 723,818   |   |      |   |          |  
|Cash flow hedge                                          |  |      | (1,168    | ) |      |   |          |  
|                                                         |  |      |           |   |      |   |           |  
|Floating rate bank notes                                 |  |      | 722,650   |   |      |   |          |  
|Fixed rate bank notes                                    |  |      | 1,859,858 |   |      |   | 710,003   |  
|Senior bank notes  Amortizing bank notes                |  |      | 145,301   |   |      |   | 181,550   |  
|Senior bank notes  EXLs                                 |  |      | 249,995   |   |      |   | 249,956   |  
|Senior bank notes  Extendible Monthly Securities        |  |      | 499,803   |   |      |   |          |  
|Senior bank notes  Puttable Reset Securities            |  |      | 1,000,480 |   |      |   | 1,001,108 |  
|Subordinated bank notes                                  |  |      | 1,269,410 |   |      |   | 919,551   |  
|Nonrecourse notes                                        |  |      | 3,505     |   |      |   | 6,298     |  
|9.75% obligation under capital lease due through 2006    |  |      | 457       |   |      |   | 1,089     |  
|Other                                                    |  |      | 2,077     |   |      |   | 5,031     |  
|                                                         |  |      |           |   |      |   |           |  
|Total long-term borrowing including current maturities   |  |      | 9,275,435 |   |      |   | 6,622,395 |  
|Less current maturities                                  |  |      | 2,606,765 |   |      |   | 1,595,796 |  
|                                                         |  |      |           |   |      |   |           |  
|Total long-term borrowings                               |  | $    | 6,668,670 |   |      | $ | 5,026,599 |  
|                                                         |  |      |           |   |      |   |           |  

At December 31, 2005, Series E notes outstanding amounted to $278,425 with fixed rates of
4.50% to 5.75%. Series E notes outstanding mature at various times and amounts through 2023. In May 2002, the Corporation filed a prospectus supplement with the Securities and Exchange Commission to issue up to $500 million of medium-term MiNotes.
The MiNotes, issued in minimum denominations of one-thousand dollars or integral multiples of one-thousand dollars, may have maturities ranging from nine months to 30 years and may be at fixed or floating rates. At December 31, 2005, MiNotes
outstanding amounted to $145,371 with fixed rates of 2.55% to 6.00%. MiNotes outstanding mature at various times through 2030. The Corporation has filed a shelf registration statement under which it may issue up to $569 million of medium-term Series
F notes with maturities ranging from nine months to 30 years and at fixed or floating rates. At December 31, 2005 no Series F notes have been issued.

The Corporation has filed a shelf registration statement with the Securities and Exchange Commission which will enable the Corporation to issue various securities, including debt securities, common stock, preferred
stock, depositary shares, purchase contracts, units, warrants, and trust preferred securities, up to an aggregate amount of $3.0 billion. At December 31, 2005 and 2004, approximately $1.30 billion and $1.45 billion, respectively was available
for future securities issuances.



79



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



During 2004, the Corporation issued $600 million of 4.375% senior notes. Interest is paid
semi-annually and the notes mature on August 1, 2009.

During 2004, the Corporation, through its unconsolidated subsidiary, M&I
Capital Trust B, issued 16,000,000 units of Common SPACESSM.Each unit has a stated value of $25 for an aggregate
value of $400 million. Each Common SPACES consists of (i) a stock purchase contract under which the investor agrees to purchase for $25, a fraction of a share of the Corporations common stock on the stock purchase date and (ii) a
1/40, or 2.5%, undivided beneficial interest in a preferred security of M&I Capital Trust B, also referred to as the STACKSSM,with each share having an initial liquidation amount of $1,000. The stock purchase date is expected to be August 15, 2007, but could be deferred for quarterly periods until August 15, 2008. Holders of the STACKS are
entitled to receive quarterly cumulative cash distributions through the stock purchase date fixed initially at an annual rate of 3.90% of the liquidation amount of $1,000 per STACKS. In addition, the Corporation will make quarterly contract payments
under the stock purchase contract at the annual rate of 2.60% of the stated amount of $25 per stock purchase contract.

Concurrently with
the issuance of the STACKS, M&I Capital Trust B invested the proceeds in junior subordinated debt securities that were issued by the Corporation. The subordinated debt, which represents the sole asset of M&I Capital Trust B bears interest at
an initial annual rate of 3.90% payable quarterly and matures on August 15, 2038.

The interest payment provisions for the junior
subordinated debt securities correspond to the distribution provisions of the STACKS and automatically reset to equal the distribution rate on the STACKS as and when the distribution rate on the STACKS is reset. In addition, the interest payment
dates on the junior subordinated debt securities may be changed, and the maturity of the junior subordinated debt securities may be shortened in connection with a remarketing of the STACKS, in which case the distribution payment dates and final
redemption date of the STACKS will automatically change as well.

The Corporation has the right to defer payments of interest on the junior
subordinated debt securities at any time or from time to time. The Corporation may not defer interest payments for any period of time that exceeds five years with respect to any deferral period or that extends beyond the stated final maturity date
of the junior subordinated debt securities. As a consequence of the Corporations extension of the interest payment period, distributions on the STACKS would be deferred. In the event the Corporation exercises its right to extend an interest
payment period, the Corporation is prohibited from paying dividends or making any distributions on, or redeeming, purchasing, acquiring or making a liquidation payment with respect to, shares of the Corporations capital stock.

The junior subordinated debt securities are junior in right of payment to all present and future senior indebtedness of the Corporation. The Corporation
may elect at any time effective on or after the stock purchase date, including in connection with a remarketing of the STACKS, that the Corporations obligations under the junior subordinated debt securities and under the Corporations
guarantee of the STACKS shall be senior obligations instead of subordinated obligations.

The payment of distributions, liquidation of
M&I Capital Trust B and payment upon the redemption of the capital securities of M&I Capital Trust B are guaranteed by the Corporation.

The junior subordinated debt securities qualify as Tier 1 capital for regulatory capital purposes.

In December 1996,
the Corporation formed M&I Capital Trust A, which issued $200 million in liquidation or principal amount of cumulative preferred capital securities. Holders of the capital securities are entitled to receive cumulative cash distributions at an
annual rate of 7.65% payable semiannually.

Concurrently with the issuance of the capital securities, M&I Capital Trust A invested the
proceeds, together with the consideration paid by the Corporation for the common interest in M&I Capital Trust A, in junior subordinated deferrable interest debentures (subordinated debt) issued by the Corporation. The subordinated
debt, which represents the sole asset of M&I Capital Trust A, bears interest at an annual rate of 7.65% payable semiannually and matures on December 1, 2026.



80



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



The subordinated debt is junior in right of payment to all present and future senior indebtedness of
the Corporation. The Corporation may redeem the subordinated debt in whole or in part at any time on or after December 1, 2006 at specified call premiums, and at par on or after December 1, 2016. In addition, in certain circumstances the
subordinated debt may be redeemed at par upon the occurrence of certain events. The Corporations right to redeem the subordinated debt is subject to regulatory approval.

The Corporation has the right, subject to certain conditions, to defer payments of interest on the subordinated debt for extension periods, each period
not exceeding ten consecutive semiannual periods. As a consequence of the Corporations extension of the interest payment period, distributions on the capital securities would be deferred. In the event the Corporation exercises its right to
extend an interest payment period, the Corporation is prohibited from making dividend or any other equity distributions during such extension period.

The payment of distributions, liquidation of M&I Capital Trust A and payment upon the redemption of the capital securities of M&I Capital Trust A are guaranteed by the Corporation.

The junior subordinated deferrable interest debentures qualify as Tier 1 capital for regulatory capital purposes.

Floating rate FHLB advances mature at various times between 2006 and 2011. The interest rate is reset monthly based on the London Interbank Offered Rate
(LIBOR). During 2004, M&I Bank prepaid $300.0 million of floating rate FHLB advances and terminated certain receive floating / pay fixed interest rate swaps designated as cash flow hedges against the forecasted interest payments on
certain FHLB advances. The termination of the interest rate swaps resulted in a charge to earnings of $2.0 million. The charge to earnings resulting from this transaction is reported in other expense in the Consolidated Statements of Income for the
year ended December 31, 2004.

Fixed rate FHLB advances have interest rates, which range from 2.07% to 8.47% and mature at various
times in 2006 through 2017. During 2004, a fixed rate advance from the FHLB aggregating $55.0 million with an annual coupon interest rate of 5.06% was prepaid and retired resulting in a charge to earnings of $4.9 million. The charge to earnings
resulting from this transaction is reported in other expense in the Consolidated Statements of Income for the year ended December 31, 2004.

The Corporation is required to maintain unencumbered first mortgage loans and mortgage-related securities such that the outstanding balance of FHLB advances does not exceed 85% (70% for multi-family) of the book value of this collateral. In
addition, a portion of these advances are collaterized by all FHLB stock.

The floating rate senior bank notes have interest rates based on
3-month LIBOR with a spread that ranges from a minus 0.015% to a plus 0.13%. Interest payments are quarterly. The floating rate senior bank notes outstanding mature at various times and amounts from 2007 to 2010.

The fixed rate senior bank notes have interest rates, which range from 2.63% to 5.52% and pay interest semi-annually. The fixed rate senior bank notes
outstanding mature at various times and amounts from 2007 through 2017.

The senior bank notes  Amortizing have a maturity date of
August 18, 2009. The senior bank notes pay interest semi-annually at a fixed semi-annual coupon interest rate of 2.90%. In addition, principal in the amount of $18,182 is paid every coupon payment period beginning on August 18, 2004 and
ending on August 18, 2009.

The senior bank notes  Extendible Liquidity Securities (EXLs) are indexed to one month
LIBOR plus a stated spread. EXL noteholders have the ability to extend the maturity date through 2006. The stated spread is 0.10% to maturity in 2006.

The senior bank notes  Extendible Monthly Securities have an initial stated maturity date of December 15, 2006. The noteholders may elect to extend the maturity date through 2011. The interest rate is
floating based upon LIBOR plus an applicable spread and is reset monthly. The applicable spread is initially minus 0.02%, 0.00% in year two, and is plus for the remaining term, consisting of: 0.01% in year three, 0.03% in years four and five and
0.04% to maturity in 2011.



81



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



The senior bank notes  Puttable Reset Securities have a maturity date of December 15,
2016. However in certain circumstances, the notes will be put back to the issuing bank at par prior to final maturity. The notes are also subject to the exercise of a call option by a certain broker-dealer. Beginning December 15, 2003 and each
December 15 thereafter until and including December 15, 2015, the broker-dealer has the right to purchase all of the outstanding notes from the noteholders at a price equal to 100% of the principal amount of the notes and then remarket the
notes. However, if the broker-dealer does not purchase the notes on the aforementioned date(s), each holder of outstanding notes will be deemed to have put all of the holders notes to the issuing bank at a price equal to 100% of the principal
amount of the notes and the notes will be completely retired. The current interest rate is 5.18% and, to the extent the notes are purchased and remarketed, the interest rate will reset each date the notes are remarketed, subject to a floor of 5.17%.
The call and put are considered clearly and closely related for purposes of recognition and measurement under SFAS 133. The fair value of the call option at December 31, 2005 and 2004, as determined by the holder of the call option, was
approximately $62 million and $84 million, respectively.

The subordinated bank notes have fixed rates that range from 4.85% to 7.88% and
mature at various times in 2010 through 2017. Interest is paid semi-annually. The subordinated bank notes qualify as Tier 2 or supplementary capital for regulatory capital purposes.

The nonrecourse notes are reported net of prepaid interest and represent borrowings by the commercial leasing subsidiary from banks and other financial
institutions. These notes have a weighted average interest rate of 6.35% at December 31, 2005 and are due in installments over varying periods through 2009. Lease financing receivables at least equal to the amount of the notes are pledged as
collateral.

Scheduled maturities of long-term borrowings are $1,306,192, $993,522, $847,096, and $769,180 for 2007 through 2010,
respectively.

14. Shareholders Equity

The Corporation has 5,000,000 shares of preferred stock authorized, of which the Board of Directors has designated 2,000,000 shares as Series A Convertible Preferred Stock (the Series A), with a $100 value per share for
conversion and liquidation purposes. Series A is nonvoting preferred stock. The same cash dividends will be paid on Series A as would have been paid on the common stock exchanged for Series A. At December 31, 2005 and 2004 there were no shares
of Series A outstanding.

During 2004, the Corporation and M&I Capital Trust B issued 16,000,000 units of Common SPACESSM.Each unit has a stated value of $25.00 for an aggregate value of $400.0 million. Each Common SPACES consists of (i) a
stock purchase contract under which the investor agrees to purchase for $25, a fraction of a share of the Corporations common stock on the stock purchase date and (ii) a 1/40, or 2.5%, undivided beneficial interest in a preferred security
of M&I Capital Trust B, also referred to as the STACKSSM,with each share having an initial liquidation amount
of $1,000. The stock purchase date is expected to be August 15, 2007, but could be deferred for quarterly periods until August 15, 2008. Holders of the STACKS are entitled to receive quarterly cumulative cash distributions through the
stock purchase date fixed initially at an annual rate of 3.90% of the liquidation amount of $1,000 per STACKS. In addition, the Corporation will make quarterly contract payments under the stock purchase contract at the annual rate of 2.60% of the
stated amount of $25 per stock purchase contract.

The Corporation recognized the present value of the quarterly contract payments under
the stock purchase contract as a liability with an offsetting reduction in Shareholders Equity. That liability along with the allocated portion of the fees and expenses incurred for the offering of Common SPACES resulted in a reduction in
Shareholders Equity of $34,039 in 2004.

On the stock purchase date, the number of shares of common stock the Corporation will issue
upon settlement of the stock purchase contracts depends on the applicable market value per share of the Corporations common stock, which will be determined just prior to the stock purchase date, and other factors. The Corporation currently
estimates that it will issue approximately 8.7 million to 10.9 million common shares to settle shares issuable pursuant to the stock purchase contracts.



82



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



Holders of Common SPACES have pledged their ownership interests in the STACKS as collateral for the
benefit of the Corporation to secure their obligations under the stock purchase contract. Holders of Common SPACES have the option to elect to substitute pledged treasury securities for the pledged ownership interests in the STACKS.

The Corporation issues treasury common stock in conjunction with exercises of stock options and restricted stock, acquisitions, and conversions of
convertible securities. Treasury shares are acquired from restricted stock forfeitures, shares tendered to cover tax withholding associated with stock option exercises and vesting of key restricted stock, mature shares tendered for stock option
exercises in lieu of cash and open market purchases in accordance with the Corporations approved share repurchase program. The Corporation is currently authorized to repurchase up to 12 million shares per year. There were no shares
repurchased in accordance with the approved plan during 2005. The Corporation repurchased 2.3 million shares with an aggregate cost of $88.5 million in 2004.

During 2005, the Corporation entered into an equity distribution agreement that is described in the Prospectus Supplement dated October 17, 2005. The proceeds from these issuances will be used for general
corporate purposes, including maintaining capital at desired levels. Under the equity distribution agreement, the Corporation may offer and sell up to 3.5 million shares of its common stock from time to time through certain designated sales
agents. However, the Corporation will not sell more than the number of shares of its common stock necessary for the aggregate gross proceeds from such sales to reach $150.0 million. During 2005, the Corporation issued 155,000 shares of its common
stock. The net proceeds from the sale amounted to $6,651.

The Corporation sponsors a deferred compensation plan for its non-employee
directors and the non-employee directors and advisory board members of its affiliates. Participants may elect to have their deferred fees used to purchase M&I common stock with dividend reinvestment. Such shares will be distributed to plan
participants in accordance with the plan provisions. At December 31, 2005 and 2004, 611,318 and 620,624 shares of M&I common stock, respectively, were held in a grantor trust. The aggregate cost of such shares is included in Deferred
Compensation as a reduction of Shareholders equity in the Consolidated Balance Sheets and amounted to $16,759 at December 31, 2005 and $16,735 at December 31, 2004.

During 2003, the Corporation amended its deferred compensation plan for its non-employee directors and selected key employees to permit participants to
defer the gain from the exercise of nonqualified stock options. In addition, the gain upon vesting of restricted common stock to participating executive officers may be deferred. Shares of M&I common stock, which represent the aggregate value of
the gains deferred are maintained in a grantor trust with dividend reinvestment. Such shares will be distributed to plan participants in accordance with the plan provisions. At December 31, 2005 and 2004, 451,923 and 270,352 shares of M&I
common stock, respectively, were held in the grantor trust. The aggregate cost of such shares is included in Deferred Compensation as a reduction of Shareholders Equity in the Consolidated Balance Sheets and amounted to $18,724 at
December 31, 2005 and $10,731 at December 31, 2004.

In conjunction with previous acquisitions, the Corporation assumed certain
deferred compensation and nonqualified retirement plans for former directors and executive officers of acquired companies. At December 31, 2005 and 2004, 59,796 and 87,557 common shares of M&I stock, respectively, were maintained in a
grantor trust with such shares to be distributed to plan participants in accordance with the provisions of the plans. The aggregate cost of such shares of $1,272 and $1,824 at December 31, 2005 and 2004, respectively, is included in Deferred
Compensation as a reduction of Shareholders Equity in the Consolidated Balance Sheets.

Federal banking regulatory agencies have
established capital adequacy rules which take into account risk attributable to balance sheet assets and off-balance sheet activities. All banks and bank holding companies must meet a minimum total risk-based capital ratio of 8%. Of the 8% required,
at least half must be comprised of core capital elements defined as Tier 1 capital. The Federal banking agencies also have adopted leverage capital guidelines which banking organizations must meet. Under these guidelines, the most highly
rated banking organizations must meet a minimum leverage ratio of at least 3% Tier 1 capital to total assets, while lower rated banking organizations must maintain a ratio of at least 4% to 5%. Failure to meet minimum capital
requirements can result in certain mandatoryand possibly additional discretionaryactions by regulators that, if undertaken, could have a direct material effect on the Consolidated Financial Statements.



83



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



At December 31, 2005 and 2004, the most recent notification from the Federal Reserve Board
categorized the Corporation as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Corporations category.

To be well capitalized under the regulatory framework, the Tier 1 capital ratio must meet or exceed 6%, the total capital ratio must meet
or exceed 10% and the leverage ratio must meet or exceed 5%.

The Corporations risk-based capital and leverage ratios are as follows
($ in millions):



|                                            |  |                           |          |       |                         |   |        |   |          |  |       |  
|------------------------------------------- |  | ------------------------- | -------- | ----- | ----------------------- | - | ------ | - | -------- |  | ----- | -
|                                            |  | Risk-Based Capital Ratios |         
|                                            |  | As of December 31, 2005   |          |       | As of December 31, 2004 |  
|                                            |  | Amount                    |          | Ratio |                         |   | Amount |   | Ratio    | 
|Tier 1 capital                              |  | $                         | 3,046.4  |       | 7.67                    | % |        | $ | 2,519.5  |  | 7.42  | %
|Tier 1 capital adequacy minimum requirement |  |                           | 1,587.9  |       | 4.00                    |   |        |   | 1,357.9  |  | 4.00  |  
|                                            |  |                           |          |       |                         |   |        |   |          |  |       |  
|Excess                                      |  | $                         | 1,458.5  |       | 3.67                    | % |        | $ | 1,161.6  |  | 3.42  | %
|                                            |  |                           |          |       |                         |   |        |   |          |  |       |  
|Total capital                               |  | $                         | 4,658.7  |       | 11.74                   | % |        | $ | 3,802.1  |  | 11.20 | %
|Total capital adequacy minimum requirement  |  |                           | 3,175.8  |       | 8.00                    |   |        |   | 2,715.9  |  | 8.00  |  
|                                            |  |                           |          |       |                         |   |        |   |          |  |       |  
|Excess                                      |  | $                         | 1,482.9  |       | 3.74                    | % |        | $ | 1,086.2  |  | 3.20  | %
|                                            |  |                           |          |       |                         |   |        |   |          |  |       |  
|Risk-adjusted assets                        |  | $                         | 39,698.1 |       |                         |   |        | $ | 33,948.4 |  |       |  
|                                            |  |                           |          |       |                         |   |        |   |          |  |       |  



|                                        |  |                         |                  |       |                         |   |        |   |                  |  |           |  
|--------------------------------------- |  | ----------------------- | ---------------- | ----- | ----------------------- | - | ------ | - | ---------------- |  | --------- | -
|                                        |  | Leverage Ratio          |                 
|                                        |  | As of December 31, 2005 |                  |       | As of December 31, 2004 |  
|                                        |  | Amount                  |                  | Ratio |                         |   | Amount |   | Ratio            | 
|Tier 1 capital to adjusted total assets |  | $                       | 3,046.4          |       | 7.08                    | % |        | $ | 2,519.5          |  | 6.72      | %
|Minimum leverage adequacy requirement   |  |                         | 1,291.2 -2,152.0 |       | 3.00-5.00               |   |        |   | 1,125.3 -1,875.5 |  | 3.00-5.00 |  
|                                        |  |                         |                  |       |                         |   |        |   |                  |  |           |  
|Excess                                  |  | $                       | 1,755.2 - 894.4  |       | 4.08-2.08               | % |        | $ | 1,394.2 - 644.0  |  | 3.72-1.72 | %
|                                        |  |                         |                  |       |                         |   |        |   |                  |  |           |  
|Adjusted average total assets           |  | $                       | 43,039.2         |       |                         |   |        | $ | 37,509.2         |  |           |  
|                                        |  |                         |                  |       |                         |   |        |   |                  |  |           |  

All of the Corporations banking subsidiaries risk-based capital and leverage ratios
meet or exceed the defined minimum requirements, and have been deemed well capitalized as of December 31, 2005 and 2004. The following table presents the risk-based capital ratios for the Corporations lead banking subsidiary:



|                           |  |        |   |  |       |   |  |          |  
|-------------------------- |  | ------ | - |  | ----- | - |  | -------- | -
|                           |  | Tier 1 |   |  | Total |   |  | Leverage |  
|M&I Marshall & Ilsley Bank |  |        |   |  |       |   |  |          |  
|December 31, 2005          |  | 7.47   | % |  | 12.00 | % |  | 6.88     | %
|December 31, 2004          |  | 7.03   |   |  | 11.22 |   |  | 6.32     |  

Banking subsidiaries are restricted by banking regulations from making dividend distributions
above prescribed amounts and are limited in making loans and advances to the Corporation. At December 31, 2005, the retained earnings of subsidiaries available for distribution as dividends without regulatory approval, while maintaining well
capitalized risk-based capital and leverage ratios, was approximately $928.2 million.

15. Income Taxes

Total income tax expense for the years ended December 31, 2005, 2004, and 2003 was allocated as follows:



|                                                                                                       |  |      |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------------------------------------------------ |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                       |  | 2005 |         |   | 2004 |   |         | 2003 | 
|Income before income taxes                                                                             |  | $    | 362,898 |   |      | $ | 317,880 |      |  | $ | 214,282 |  
|Shareholders Equity:                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Compensation expense for tax purposes in excess of amounts recognized for financial reporting purposes |  |      | (13,581 | ) |      |   | (16,064 | )    |  |   | (11,905 | )
|Unrealized gains (losses) on accumulated other comprehensive income                                    |  |      | (33,133 | ) |      |   | 11,065  |      |  |   | 25,353  |  
|                                                                                                       |  |      |         |   |      |   |         |      |  |   |         |  
|                                                                                                       |  | $    | 316,184 |   |      | $ | 312,881 |      |  | $ | 227,730 |  
|                                                                                                       |  |      |         |   |      |   |         |      |  |   |         |  



84



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



The current and deferred portions of the provision for income taxes were:



|                                 |  |      |         |   |      |   |         |      |  |   |         |  
|-------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                 |  | 2005 |         |   | 2004 |   |         | 2003 | 
|Current:                         |  |      |         |   |      |   |         |      |  |   |         |  
|Federal                          |  | $    | 337,705 |   |      | $ | 272,028 |      |  | $ | 238,825 |  
|State                            |  |      | 34,412  |   |      |   | 36,508  |      |  |   | 21,280  |  
|                                 |  |      |         |   |      |   |         |      |  |   |         |  
|Total current                    |  |      | 372,117 |   |      |   | 308,536 |      |  |   | 260,105 |  
|Deferred:                        |  |      |         |   |      |   |         |      |  |   |         |  
|Federal                          |  |      | (9,044  | ) |      |   | 10,171  |      |  |   | (43,107 | )
|State                            |  |      | (175    | ) |      |   | (827    | )    |  |   | (2,716  | )
|                                 |  |      |         |   |      |   |         |      |  |   |         |  
|Total deferred                   |  |      | (9,219  | ) |      |   | 9,344   |      |  |   | (45,823 | )
|                                 |  |      |         |   |      |   |         |      |  |   |         |  
|Total provision for income taxes |  | $    | 362,898 |   |      | $ | 317,880 |      |  | $ | 214,282 |  
|                                 |  |      |         |   |      |   |         |      |  |   |         |  

The following is a reconciliation between the amount of the provision for income taxes and the
amount of tax computed by applying the statutory Federal income tax rate (35%):



|                                               |  |      |         |   |      |   |         |      |  |   |         |  
|---------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                               |  | 2005 |         |   | 2004 |   |         | 2003 | 
|Tax computed at statutory rates                |  | $    | 381,628 |   |      | $ | 330,738 |      |  | $ | 265,435 |  
|Increase (decrease) in taxes resulting from:   |  |      |         |   |      |   |         |      |  |   |         |  
|Federal tax-exempt income                      |  |      | (21,498 | ) |      |   | (20,834 | )    |  |   | (20,485 | )
|State income taxes, net of Federal tax benefit |  |      | 22,254  |   |      |   | 23,193  |      |  |   | 14,193  |  
|Bank owned life insurance                      |  |      | (9,478  | ) |      |   | (9,539  | )    |  |   | (10,677 | )
|Resolution of income tax audits                |  |      |        |   |      |   |        |      |  |   | (39,312 | )
|Other                                          |  |      | (10,008 | ) |      |   | (5,678  | )    |  |   | 5,128   |  
|                                               |  |      |         |   |      |   |         |      |  |   |         |  
|Total provision for income taxes               |  | $    | 362,898 |   |      | $ | 317,880 |      |  | $ | 214,282 |  
|                                               |  |      |         |   |      |   |         |      |  |   |         |  

The tax effects of temporary differences that give rise to significant elements of the deferred
tax assets and deferred tax liabilities at December 31 are as follows:



|                                                        |  |      |         |   |      |   |         |  
|------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                        |  | 2005 |         |   | 2004 |  
|Deferred tax assets:                                    |  |      |         |   |      |   |         |  
|Deferred compensation                                   |  | $    | 54,919  |   |      | $ | 50,180  |  
|Allowance for loan and lease losses                     |  |      | 147,877 |   |      |   | 142,651 |  
|Accrued postretirement benefits                         |  |      | 27,543  |   |      |   | 29,507  |  
|Accrued expenses                                        |  |      | 31,988  |   |      |   | 30,937  |  
|State NOLs                                              |  |      | 29,821  |   |      |   | 23,464  |  
|Accumulated other comprehensive income                  |  |      | 20,584  |   |      |   |        |  
|Other                                                   |  |      | 90,557  |   |      |   | 77,888  |  
|                                                        |  |      |         |   |      |   |         |  
|Total deferred tax assets before valuation allowance    |  |      | 403,289 |   |      |   | 354,627 |  
|Valuation allowance                                     |  |      | (39,060 | ) |      |   | (40,228 | )
|                                                        |  |      |         |   |      |   |         |  
|Net deferred tax assets                                 |  |      | 364,229 |   |      |   | 314,399 |  
|Deferred tax liabilities:                               |  |      |         |   |      |   |         |  
|Lease revenue reporting                                 |  |      | 119,112 |   |      |   | 124,401 |  
|Conversion cost deferred                                |  |      | 52,261  |   |      |   | 57,093  |  
|Premises and equipment, principally due to depreciation |  |      | 22,931  |   |      |   | 13,941  |  
|Deductible goodwill                                     |  |      | 42,407  |   |      |   | 29,555  |  
|Purchase accounting adjustments                         |  |      | 123,434 |   |      |   | 103,422 |  
|Accumulated other comprehensive income                  |  |      |        |   |      |   | 12,549  |  
|Other                                                   |  |      | 58,599  |   |      |   | 49,694  |  
|                                                        |  |      |         |   |      |   |         |  
|Total deferred tax liabilities                          |  |      | 418,744 |   |      |   | 390,655 |  
|                                                        |  |      |         |   |      |   |         |  
|Net deferred tax liability                              |  | $    | 54,515  |   |      | $ | 76,256  |  
|                                                        |  |      |         |   |      |   |         |  



85



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



The Corporation continues to carry a valuation allowance to reduce certain state deferred tax assets
which include, in part, certain state net operating loss carryforwards which expire at various times through 2020. At December 31, 2005, the Corporation believes it is more likely than not that these items will not be realized. However, as time
passes the Corporation will be able to better assess the amount of tax benefit it will realize from using these items.

16. Stock Option, Restricted
Stock and Employee Stock Purchase Plans

The Corporation has Executive Stock Option and Restricted Stock Plans which provide for the
grant of nonqualified and incentive stock options, stock appreciation rights and rights to purchase restricted shares to key employees and directors of the Corporation at prices ranging from zero to the market value of the shares at the date of
grant.

The Corporation also has a qualified employee stock purchase plan which gives employees, who elect to participate in the plan, the
right to acquire shares of the Corporations Common Stock at the purchase price which is 85 percent of the lesser of the fair market value of the Corporations Common Stock on the first or last day of the one-year offering period.

The nonqualified and incentive stock option plans generally provide for the grant of options to purchase shares of the Corporations
common stock for a period of ten years from the date of grant. Options granted generally become exercisable over a period of three years from the date of grant. However, options granted to directors of the Corporation vest immediately and options
granted after 1996 provide accelerated or immediate vesting for grants to individuals who meet certain age and years of service criteria at the date of grant.

Activity relating to nonqualified and incentive stock options was:



|                                         |  |                 |   |  |                       |             |                               |   |      
|---------------------------------------- |  | --------------- | - |  | --------------------- | ----------- | ----------------------------- | - | -----
|                                         |  | Number ofShares |   |  | Option PricePer Share |             | Weighted-AverageExercisePrice
|Shares under option at December 31, 2002 |  | 20,946,401      |   |  | $                     | 7.69-33.94  |                               | $ | 25.69
|Options granted                          |  | 3,794,250       |   |  |                       | 25.93-38.25 |                               |   | 34.48
|Options lapsed or surrendered            |  | (478,454        | ) |  |                       | 9.63-34.79  |                               |   | 29.42
|Options exercised                        |  | (2,479,381      | ) |  |                       | 7.69-34.79  |                               |   | 19.75
|                                         |  |                 |   |  |                       |             |                               |   |      
|Shares under option at December 31, 2003 |  | 21,782,816      |   |  | $                     | 9.63-38.25  |                               | $ | 27.81
|Options granted                          |  | 3,758,145       |   |  |                       | 36.76-44.20 |                               |   | 41.64
|Options lapsed or surrendered            |  | (343,070        | ) |  |                       | 15.94-41.95 |                               |   | 32.12
|Options exercised                        |  | (2,319,794      | ) |  |                       | 9.63-34.79  |                               |   | 21.09
|                                         |  |                 |   |  |                       |             |                               |   |      
|Shares under option at December 31, 2004 |  | 22,878,097      |   |  | $                     | 10.13-44.20 |                               |   | 30.70
|Options granted                          |  | 3,911,980       |   |  |                       | 40.49-47.02 |                               |   | 42.81
|Options lapsed or surrendered            |  | (284,399        | ) |  |                       | 22.80-42.82 |                               |   | 36.76
|Options exercised                        |  | (1,850,361      | ) |  |                       | 10.13-41.95 |                               |   | 23.49
|                                         |  |                 |   |  |                       |             |                               |   |      
|Shares under option at December 31, 2005 |  | 24,655,317      |   |  | $                     | 15.94-47.02 |                               | $ | 33.09
|                                         |  |                 |   |  |                       |             |                               |   |      



86



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



The range of options outstanding at December 31, 2005 were:



|             |  |                  |  |                                 |  |                                                     |       |             |   |       |  |    
|------------ |  | ---------------- |  | ------------------------------- |  | --------------------------------------------------- | ----- | ----------- | - | ----- |  | ---
|             |  | Number of Shares |  | Weighted-Average Exercise Price |  | Weighted-AverageRemainingContractualLife (In Years)
|Price Range  |  | Outstanding      |  | Exercisable                     |  | Outstanding                                         |       | Exercisable |  
|$15.00-23.99 |  | 2,731,449        |  | 2,731,449                       |  | $                                                   | 20.98 |             | $ | 20.98 |  | 4.2
|24.00-26.99  |  | 1,797,503        |  | 1,793,335                       |  |                                                     | 25.82 |             |   | 25.82 |  | 3.3
|27.00-29.99  |  | 4,360,486        |  | 4,334,067                       |  |                                                     | 28.57 |             |   | 28.57 |  | 5.6
|30.00-32.99  |  | 5,013,488        |  | 4,985,935                       |  |                                                     | 31.41 |             |   | 31.41 |  | 5.2
|33.00-35.99  |  | 3,193,560        |  | 2,359,724                       |  |                                                     | 34.77 |             |   | 34.76 |  | 7.7
|36.00-41.99  |  | 3,749,601        |  | 1,711,652                       |  |                                                     | 41.59 |             |   | 41.45 |  | 8.8
|Over $42.00  |  | 3,809,230        |  | 535,131                         |  |                                                     | 42.84 |             |   | 42.82 |  | 9.8
|             |  |                  |  |                                 |  |                                                     |       |             |   |       |  |    
|             |  | 24,655,317       |  | 18,451,293                      |  | $                                                   | 33.09 |             | $ | 30.35 |  | 6.6
|             |  |                  |  |                                 |  |                                                     |       |             |   |       |  |    

Options exercisable at December 31, 2004 and 2003 were 16,845,530 and 15,810,384,
respectively. The weighted-average exercise price for options exercisable was $28.32 at December 31, 2004 and $26.19 at December 31, 2003.

Statement of Financial Accounting Standards No. 123 (SFAS 123), Accounting for Stock-Based Compensation, establishes financial accounting and reporting standards for stock based employee
compensation plans.

SFAS 123 defines a fair value based method of accounting for employee stock option or similar equity instruments.
Under the fair value based method, compensation cost is measured at the grant date based on the fair value of the award using an option-pricing model that takes into account the stock price at the grant date, the exercise price, the expected life of
the option, the volatility of the underlying stock, expected dividends and the risk-free interest rate over the expected life of the option. The resulting compensation cost is recognized over the service period, which is usually the vesting period.

Compensation cost can also be measured and accounted for using the intrinsic value based method of accounting prescribed in Accounting
Principles Board Opinion No. 25 (APBO 25), Accounting for Stock Issued to Employees. Under the intrinsic value based method, compensation cost is the excess, if any, of the quoted market price of the stock at grant
date or other measurement date over the amount paid to acquire the stock.

The largest differences between SFAS 123 and APBO 25 as it
relates to the Corporation is the amount of compensation cost attributable to the Corporations fixed stock option plans and employee stock purchase plan (ESPP). Under APBO 25 no compensation cost is recognized for fixed stock
option plans because the exercise price is equal to the quoted market price at the date of grant and therefore there is no intrinsic value. SFAS 123 compensation cost would equal the calculated fair value of the options granted. Under APBO 25 no
compensation cost is recognized for the ESPP because the discount (15%) and the plan meets the definition of a qualified plan of the Internal Revenue Code and meets the requirements of APBO 25. Under SFAS 123 the safe-harbor discount threshold
was 5% for a plan to be non-compensatory. SFAS 123 compensation cost would be approximately equal to the sum of: the initial discount (15% of beginning of plan period price per share) plus; the value of a one year call option on 85% of a share of
common stock and; the value of a one year put option on 15% of a share of common stock for each share purchased.

As permitted by SFAS 123,
the Corporation continues to measure compensation cost for such plans using the accounting method prescribed by APBO 25.



87



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



Had compensation cost for the Corporations ESPP and options granted after January 1, 1995
been determined consistent with SFAS 123, the Corporations net income and earnings per share would have been reduced to the following pro forma amounts:



|                                                                                                                          |  |                                  |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                                          |  | For the Years Ended December 31, |        
|                                                                                                                          |  | 2005                             |         |   | 2004 |   |         | 2003 | 
|Net income as reported                                                                                                    |  | $                                | 727,469 |   |      | $ | 627,086 |      |  | $ | 544,105 |  
|Add: Stock-based employee compensation expense included in reported net income, net of tax                                |  |                                  | 8,520   |   |      |   | 9,466   |      |  |   | 7,139   |  
|Less: Total stock-based employee compensation expense determined under fair value based method for all awards, net of tax |  |                                  | (29,799 | ) |      |   | (30,699 | )    |  |   | (28,797 | )
|                                                                                                                          |  |                                  |         |   |      |   |         |      |  |   |         |  
|Pro forma net income                                                                                                      |  | $                                | 706,190 |   |      | $ | 605,853 |      |  | $ | 522,447 |  
|                                                                                                                          |  |                                  |         |   |      |   |         |      |  |   |         |  
|Basic earnings per share:                                                                                                 |  |                                  |         |   |      |   |         |      |  |   |         |  
|As reported                                                                                                               |  | $                                | 3.15    |   |      | $ | 2.81    |      |  | $ | 2.41    |  
|Pro forma                                                                                                                 |  |                                  | 3.06    |   |      |   | 2.72    |      |  |   | 2.31    |  
|                                                                                                                          |  |                                  |        
|Diluted earnings per share:                                                                                               |  |                                  |         |   |      |   |         |      |  |   |         |  
|As reported                                                                                                               |  | $                                | 3.10    |   |      | $ | 2.77    |      |  | $ | 2.38    |  
|Pro forma                                                                                                                 |  |                                  | 2.99    |   |      |   | 2.66    |      |  |   | 2.28    |  

The fair value of each option grant was estimated as of the date of grant using the Black-Scholes
closed form option-pricing model for options granted prior to September 30, 2004. A form of a lattice option-pricing model was used for options granted after September 30, 2004.

The grant date fair values and assumptions used to determine such value are as follows:



|                                       |  |      |             |   |      |   |             |      |  |   |             |  
|-------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | ---- |  | - | ----------- | -
|                                       |  | 2005 |             |   | 2004 |   |             | 2003 | 
|Weighted-average grant date fair value |  | $    | 8.78        |   |      | $ | 7.48        |      |  | $ | 10.00       |  
|Assumptions:                           |  |      |             |   |      |   |             |      |  |   |             |  
|Risk-free interest rates               |  |      | 3.70-4.64   | % |      |   | 3.17-4.45   | %    |  |   | 2.54-3.83   | %
|Expected volatility                    |  |      | 13.12-18.50 | % |      |   | 18.00-30.33 | %    |  |   | 30.23-31.19 | %
|Expected term (in years)               |  |      | 6.0         |   |      |   | 6.0         |      |  |   | 6.0         |  
|Expected dividend yield                |  |      | 2.11        | % |      |   | 1.93        | %    |  |   | 2.19        | %

The estimated compensation cost per share for the ESPP was $9.96 and $8.04 for 2005 and 2004,
respectively. During 2005 and 2004, common shares purchased by employees under the ESPP amounted to 324,500 and 332,520, respectively.

Activity relating to the Corporations Restricted Stock Purchase Rights was:



|                                                                 |  |             |          |   |      |   |          |      |  |   |          |  
|---------------------------------------------------------------- |  | ----------- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                                                 |  | December 31 |         
|                                                                 |  | 2005        |          |   | 2004 |   |          | 2003 | 
|Restricted stock purchase rights outstanding  Beginning of Year |  |             |         |   |      |   |         |      |  |   |         |  
|Restricted stock purchase rights granted                         |  |             | 183,700  |   |      |   | 172,700  |      |  |   | 163,300  |  
|Restricted stock purchase rights exercised                       |  |             | (183,700 | ) |      |   | (172,700 | )    |  |   | (163,300 | )
|                                                                 |  |             |          |   |      |   |          |      |  |   |          |  
|Restricted stock purchase rights outstanding  End of Year       |  |             |         |   |      |   |         |      |  |   |         |  
|                                                                 |  |             |          |   |      |   |          |      |  |   |          |  
|Weighted-average grant date market value                         |  | $           | 42.88    |   |      | $ | 41.50    |      |  | $ | 34.28    |  
|Aggregate compensation expense                                   |  | $           | 4,529    |   |      | $ | 3,153    |      |  | $ | 1,111    |  
|Unamortized deferred compensation                                |  | $           | 13,794   |   |      | $ | 10,727   |      |  | $ | 6,910    |  

Restrictions on stock issued pursuant to the exercise of stock purchase rights generally lapse
within a three to seven year period. Accordingly, the compensation related to issuance of the rights is deferred and amortized over the vesting period. Unamortized deferred compensation is reflected as a reduction of Shareholders Equity.



88



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



Shares reserved for the granting of options and stock purchase rights at December 31, 2005 were
4,121,081.

The Corporation also has a Long-Term Incentive Plan. Under the plan, performance units may be awarded from time to time. Once
awarded, additional performance units will be credited to each participant based on dividends paid by the Corporation on its common stock. At the end of a designated vesting period, participants will receive an amount equal to some percent
(0%275%) of the initial performance units credited plus those additional units credited as dividends based on the established performance criteria. Units awarded to certain executives of the Corporation were 131,200 in 2005, 121,500 in 2004,
and 133,500 in 2003. The vesting period is three years from the date the performance units were awarded. At December 31, 2005, based on the performance criteria, approximately $11,060 would be due to the participants under the 2003 and 2004
awards. In addition, the amount payable to participants under the 2002 award, which was fully vested, was $9,421 at December 31, 2005.

See Note 1, New accounting pronouncements, for a discussion of SFAS 123(R), Share-Based Payment which the Corporation adopted on January 1, 2006.

17. Employee Retirement and Health Plans

The Corporation has a defined contribution program that
consists of a retirement plan and employee stock ownership plan for substantially all employees. The retirement plan provides for a guaranteed contribution to eligible participants equal to 2% of compensation. At the Corporations option, an
additional profit sharing amount may also be contributed to the retirement plan and may vary from year to year up to a maximum of 6% of eligible compensation. Under the employee stock ownership plan, employee contributions into the retirement plan
of up to 6% of eligible compensation are matched up to 50% by the Corporation based on the Corporations return on equity as defined by the plan. Total expense relating to these plans was $60,390, $52,065, and $52,946 in 2005, 2004, and 2003,
respectively.

The Corporation also has supplemental retirement plans to provide retirement benefits to certain of its key executives.
Total expense relating to these plans amounted to $3,112 in 2005, $3,213 in 2004, and $10,779 in 2003.

The Corporation sponsors a defined
benefit health plan that provides health care benefits to eligible current and retired employees. Eligibility for retiree benefits is dependent upon age, years of service, and participation in the health plan during active service. The plan is
contributory and in 1997 and 2002 the plan was amended. Employees hired after September 1, 1997, including employees retained from mergers, will be granted access to the Corporations plan upon becoming an eligible retiree; however, such
retirees must pay 100% of the cost of health care benefits. The plan continues to contain other cost-sharing features such as deductibles and coinsurance. In addition to the normal monthly funding for claims, the Corporation expects to make an
additional contribution to its plan of approximately $7.0 million per year.

The changes during the year of the accumulated postretirement
benefit obligation (APBO) for retiree health benefits are as follows:



|                                                        |  |      |         |   |      |   |         |  
|------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                        |  | 2005 |         |   | 2004 |  
|Change in Benefit Obligation                            |  |      |         |   |      |   |         |  
|APBO, beginning of year                                 |  | $    | 73,652  |   |      | $ | 83,337  |  
|Service cost                                            |  |      | 2,210   |   |      |   | 2,523   |  
|Interest cost on APBO                                   |  |      | 4,635   |   |      |   | 5,008   |  
|Actuarial (gains) losses                                |  |      | 9,433   |   |      |   | (5,785  | )
|Other Events (Medicare Part D)                          |  |      | (3,507  | ) |      |   | (7,842  | )
|Benefits paid                                           |  |      | (5,035  | ) |      |   | (3,589  | )
|                                                        |  |      |         |   |      |   |         |  
|APBO, end of year                                       |  |      | 81,388  |   |      |   | 73,652  |  
|                                                        |  |      |         |   |      |   |         |  
|Change in Plan Assets                                   |  |      |         |   |      |   |         |  
|Fair value of plan assets, beginning of year            |  |      | 7,826   |   |      |   |        |  
|Actual return on plan assets                            |  |      | 546     |   |      |   | 407     |  
|Employer contribution/payments                          |  |      | 10,980  |   |      |   | 11,008  |  
|Benefits paid                                           |  |      | (5,035  | ) |      |   | (3,589  | )
|                                                        |  |      |         |   |      |   |         |  
|Fair value of plan assets, end of year                  |  |      | 14,317  |   |      |   | 7,826   |  
|                                                        |  |      |         |   |      |   |         |  
|Unfunded status                                         |  |      | 67,071  |   |      |   | 65,826  |  
|Unrecognized actuarial net loss                         |  |      | (24,929 | ) |      |   | (20,008 | )
|Unrecognized prior service cost                         |  |      | 22,841  |   |      |   | 25,563  |  
|                                                        |  |      |         |   |      |   |         |  
|Accrued postretirement benefit cost                     |  | $    | 64,983  |   |      | $ | 71,381  |  
|                                                        |  |      |         |   |      |   |         |  
|Weighted average discount rate used in determining APBO |  |      | 5.00    | % |      |   | 6.25    | %
|                                                        |  |      |         |   |      |   |         |  



89



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



The assumed health care cost trend for 2006 was 9.00% for pre-age 65 and post-age 65 retirees. The
rate was assumed to decrease gradually to 5.00% for pre-age 65 and post-age 65 retirees in 2010 and remain at that level thereafter.

The
weighted average discount rate used in determining the APBO was based on matching the Corporations estimated plan duration to a yield curve derived from a portfolio of high-quality corporate bonds with yields within the 10thto 90thpercentiles. The portfolio consisted of over 500 actual Aa quality bonds at various maturity points across the full maturity spectrum that were all United States issues and non-callable (or callable with make whole features) with a
minimum amount outstanding of $50 million.

Net periodic postretirement benefit cost for the years ended December 31, 2005, 2004 and
2003 includes the following components:



|                                           |  |      |        |   |      |   |        |      |  |   |        |  
|------------------------------------------ |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                           |  | 2005 |        |   | 2004 |   |        | 2003 | 
|Service cost                               |  | $    | 2,210  |   |      | $ | 2,523  |      |  | $ | 2,140  |  
|Interest cost on APBO                      |  |      | 4,635  |   |      |   | 5,008  |      |  |   | 5,340  |  
|Expected return on plan assets             |  |      | (597   | ) |      |   | (300   | )    |  |   |       |  
|Prior service amortization                 |  |      | (2,721 | ) |      |   | (2,721 | )    |  |   | (2,721 | )
|Actuarial loss amortization                |  |      | 1,056  |   |      |   | 1,664  |      |  |   | 2,005  |  
|Other                                      |  |      |       |   |      |   |       |      |  |   | 660    |  
|                                           |  |      |        |   |      |   |        |      |  |   |        |  
|Net periodic postretirement (benefit)/cost |  | $    | 4,583  |   |      | $ | 6,174  |      |  | $ | 7,424  |  
|                                           |  |      |        |   |      |   |        |      |  |   |        |  

The assumed health care cost trend rate has a significant effect on the amounts reported for the
health care plans. A one-percentage point change on assumed health care cost trend rates would have the following effects:



|                                                        |  |                            |       |                            |   |        |  
|------------------------------------------------------- |  | -------------------------- | ----- | -------------------------- | - | ------ | -
|                                                        |  | OnePercentagePointIncrease |       | OnePercentagePointDecrease |  
|Effect on total of service and interest cost components |  | $                          | 827   |                            | $ | (724   | )
|Effect on accumulated postretirement benefit obligation |  |                            | 9,111 |                            |   | (8,005 | )

Postretirement medical plan weightedaverage asset allocations at December 31, by asset
category are as follows:



|                           |  |      |   |  |      |  
|-------------------------- |  | ---- | - |  | ---- | -
|Plan Assets by Category    |  | 2005 |   |  | 2004 |  
|Equity securities          |  | 50   | % |  | 48   | %
|Tax exempt debt securities |  | 45   |   |  | 45   |  
|Cash                       |  | 5    |   |  | 7    |  
|                           |  |      |   |  |      |  
|Total                      |  | 100  | % |  | 100  | %
|                           |  |      |   |  |      |  

The Corporations primary investment objective is to achieve a combination of capital
appreciation and current income. The long-term target asset mix is 50% fixed income and 50% equity securities. Individual fixed income securities may be taxable or tax-exempt and will have maturities of thirty years or less. The average maturity of
the portfolio will not exceed ten years.

The following benefit payments, which reflect expected future service, as appropriate, are
expected to be paid:



|          |  |                               |        |                                 |   |        |  
|--------- |  | ----------------------------- | ------ | ------------------------------- | - | ------ | -
|          |  | Total Without Medicare Part D |        | EstimatedMedicarePart D Subsidy |  
|2006      |  | $                             | 3,805  |                                 | $ | (683   | )
|2007      |  |                               | 4,348  |                                 |   | (763   | )
|2008      |  |                               | 4,886  |                                 |   | (838   | )
|2009      |  |                               | 5,422  |                                 |   | (901   | )
|2010-2015 |  |                               | 39,690 |                                 |   | (6,341 | )



90



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



On December 8, 2003 the Medicare Prescription Drug, Improvement and Modernization Act of 2003
(the Act) was signed into law. The Act introduces a prescription drug benefit program under Medicare (Medicare Part D) as well as a 28% Federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at
least actuarially equivalent to Medicare Part D.

In May 2004, the Financial Accounting Standards Board issued FSP 106-2, Accounting
and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003.FSP 106-2 requires companies to account for the effect of the subsidy on benefits attributable to past service as an
actuarial experience gain and as a reduction of the service cost component of net postretirement health care costs for amounts attributable to current service, if the benefit provided is at least actuarially equivalent to Medicare Part D.

During the third quarter of 2004, the Corporation elected to adopt FSP 106-2 and to retroactively recognize the Act from January 1,
2004. The Corporation and its actuarial advisors determined that benefits provided to certain participants are expected to be at least actuarially equivalent to Medicare Part D, and, accordingly the Corporation will be entitled to some subsidy. The
expected subsidy reduced the accumulated postretirement benefit obligation at January 1, 2004 by approximately $7.8 million and net periodic cost for the year ended December 31, 2004 by approximately $1.3 million as compared with the
amount determined without considering the effects of the subsidy.

Assumptions used to develop this reduction included those used in the
determination of the annual postretirement health care expense and also include expectations of how the Federal program will ultimately operate.

On January 21, 2005 final regulations establishing how Medicare Part D will operate were published. After evaluating the final regulations, the Corporation determined that it was able to expand the retiree group that is eligible for
the subsidy which lowered the APBO by approximately $3.5 million over what had previously been calculated.

18. Financial Instruments with Off-Balance
Sheet Risk

Financial instruments with off-balance sheet risk at December 31 were:



|                                                           |  |      |            |      |   |           
|---------------------------------------------------------- |  | ---- | ---------- | ---- | - | ----------
|                                                           |  | 2005 |            | 2004
|Financial instruments whose amounts represent credit risk: |  |      |            |      |   |           
|Commitments to extend credit:                              |  |      |            |      |   |           
|To commercial customers                                    |  | $    | 13,896,069 |      | $ | 11,407,915
|To individuals                                             |  |      | 2,566,658  |      |   | 2,637,837 
|Commercial letters of credit                               |  |      | 49,698     |      |   | 87,428    
|Mortgage loans sold with recourse                          |  |      | 71,997     |      |   | 152,042   

Commitments to extend credit are agreements to lend to a customer as long as there is no violation
of any condition established in the contract. Commitments generally have fixed expiration dates and may require payment of a fee. The majority of the Corporations commitments to extend credit generally provide for the interest rate to be
determined at the time the commitment is utilized. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

The Corporation evaluates each customers credit worthiness on an individual basis. Collateral obtained, if any, upon extension of credit, is based
upon managements credit evaluation of the customer. Collateral requirements and the ability to access collateral is generally similar to that required on loans outstanding as discussed in Note 6.



91



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



Commercial letters of credit are contingent commitments issued by the Corporation to support the
financial obligations of a customer to a third party. Commercial letters of credit are issued to support payment obligations of a customer as buyer in a commercial contract for the purchase of goods. Letters of credit have maturities which generally
reflect the maturities of the underlying obligations. The credit risk involved in issuing letters of credit is the same as that involved in extending loans to customers. If deemed necessary, the Corporation holds various forms of collateral to
support letters of credit.

Certain mortgage loans sold have limited recourse provisions. The Corporation expects losses arising from the
limited recourse provisions to be insignificant.

19. Foreign Exchange Contracts

Foreign exchange contracts are commitments to purchase or deliver foreign currency at a specified exchange rate. The Corporation enters into foreign
exchange contracts primarily in connection with trading activities to enable customers involved in international trade to hedge their exposure to foreign currency fluctuations and to minimize the Corporations own exposure to foreign currency
fluctuations resulting from the above. Foreign exchange contracts include such commitments as foreign currency spot, forward, future and, to a much lesser extent, option contracts. The risks in these transactions arise from the ability of the
counterparties to perform under the terms of the contracts and the risk of trading in a volatile commodity. The Corporation actively monitors all transactions and positions against predetermined limits established on traders and types of currency to
ensure reasonable risk taking.

Matching commitments to deliver foreign currencies with commitments to purchase foreign currencies
minimizes the Corporations market risk from unfavorable movements in currency exchange rates.

At December 31, 2005 the
Corporations foreign currency position resulting from foreign exchange contracts by major currency was as follows (U.S. dollars):



|                                                                             |  |                                      |         |                                       |   |        
|---------------------------------------------------------------------------- |  | ------------------------------------ | ------- | ------------------------------------- | - | -------
|                                                                             |  | Commitmentsto DeliverForeignExchange |         | Commitmentsto PurchaseForeignExchange
|Currency                                                                     |  |                                      |         |                                       |   |        
|Euros                                                                        |  | $                                    | 214,751 |                                       | $ | 216,421
|Swiss Franc                                                                  |  |                                      | 24,664  |                                       |   | 24,624 
|Canadian Dollars                                                             |  |                                      | 43,841  |                                       |   | 43,629 
|English Pound Sterling                                                       |  |                                      | 35,846  |                                       |   | 35,600 
|Japanese Yen                                                                 |  |                                      | 12,643  |                                       |   | 12,596 
|Australian Dollar                                                            |  |                                      | 2,569   |                                       |   | 2,536  
|Mexican Peso                                                                 |  |                                      | 2,921   |                                       |   | 2,920  
|All Other                                                                    |  |                                      | 379     |                                       |   | 386    
|                                                                             |  |                                      |         |                                       |   |        
|Total                                                                        |  | $                                    | 337,614 |                                       | $ | 338,712
|                                                                             |  |                                      |         |                                       |   |        
|Average amount of contracts during 2005 to deliver/purchase foreign exchange |  | $                                    | 519,954 |                                       | $ | 519,559
|                                                                             |  |                                      |         |                                       |   |        

20. Derivative Financial Instruments and Hedging Activities

Interest rate risk, the exposure of the Corporations net interest income and net fair value of its assets and liabilities to adverse movements in
interest rates, is a significant market risk exposure that can have a material effect on the Corporations financial condition, results of operations and cash flows. The Corporation has established policies that neither earnings nor fair value
at risk should exceed established guidelines and assesses these risks by modeling the impact of changes in interest rates that may adversely impact expected future earnings and fair values.



92



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



The Corporation has strategies designed to confine these risks within the established limits and
identify appropriate risk / reward trade-offs in the financial structure of its balance sheet. These strategies include the use of derivative financial instruments to help achieve the desired balance sheet repricing structure while meeting the
desired objectives of its customers.

Trading Instruments and Other Free Standing Derivatives

The Corporation enters into various derivative contracts primarily to focus on providing derivative products to customers which enables them to manage
their exposures to interest rate risk. The Corporations market risk from unfavorable movements in interest rates is generally economically hedged by concurrently entering into offsetting derivative contracts. The offsetting derivative
contracts generally have nearly identical notional values, terms and indices. The Corporation uses interest rate futures to economically hedge the exposure to interest rate risk arising from the interest rate swap (designated as trading) entered
into in conjunction with its auto securitization activities. Interest rate futures are also used to economically hedge the exposure to interest rate risk arising from auto loans designated as held for sale and other free standing derivatives.

Interest rate lock commitments on residential mortgage loans intended to be held for sale are considered free standing derivative
instruments. The option to sell the mortgage loans at the time the commitments are made are also free standing derivative instruments. The change in fair value of these derivative instruments due to changes in interest rates tend to offset each
other and act as economic hedges. At December 31, 2005 and 2004, the estimated fair values of interest rate lock commitments on residential mortgage loans intended to be held for sale and related option to sell were insignificant.

Trading and free standing derivative contracts are not linked to specific assets and liabilities on the balance sheet or to forecasted transactions in
an accounting hedge relationship and, therefore, do not qualify for hedge accounting under SFAS 133. They are carried at fair value with changes in fair value recorded as a component of other noninterest income.

At December 31, 2005, free standing interest rate swaps consisted of $1.6 billion in notional amount of receive fixed / pay floating with an
aggregate negative fair value of $19.8 million and $1.3 billion in notional amount of pay fixed / receive floating with an aggregate positive fair value of $21.6 million.

At December 31, 2005, interest rate caps purchased amounted to $23.8 million in notional with a positive fair value of $0.2 million and interest rate caps sold amounted to $23.8 million in notional with a
negative fair value of $0.2 million.

At December 31, 2005, the notional value of free standing interest rate futures was $0.9 billion
with an immaterial fair value.

Fair Value Hedges

The Corporation has fixed rate CDs and fixed rate long-term debt which expose the Corporation to variability in fair values due to changes in market interest rates.

To limit the Corporations exposure to changes in fair value due to changes in interest rates, the Corporation has entered into receive-fixed /
pay-floating interest rate swaps with identical call features, thereby creating the effect of floating rate deposits and floating rate long-term debt.

During the first quarter of 2003, the Corporation terminated the fair value hedge on certain long-term borrowings. The adjustment to the fair value of the hedged instrument of $35.2 million is being accreted as income
into earnings over the expected remaining term of the borrowings using the effective interest method.



93



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



The following table presents additional information with respect to selected fair value hedges.

Fair Value Hedges

December 31, 2005



|                      |  |                    |  |                               |         |                           |   |       |                                      |  |    
|--------------------- |  | ------------------ |  | ----------------------------- | ------- | ------------------------- | - | ----- | ------------------------------------ |  | ---
|Hedged Item           |  | Hedging Instrument |  | NotionalAmount($ in millions) |         | Fair Value($ in millions) |   |       | WeightedAverageRemainingTerm (Years)
|Fixed Rate CDs        |  | Receive Fixed Swap |  | $                             | 860.5   |                           | $ | (23.6 | )                                    |  | 8.7
|                      |  |                    |  |                              
|Medium Term Notes     |  | Receive Fixed Swap |  |                               | 359.9   |                           |   | (7.8  | )                                    |  | 7.4
|                      |  |                    |  |                              
|Fixed Rate Bank Notes |  | Receive Fixed Swap |  |                               | 1,070.5 |                           |   | (21.5 | )                                    |  | 6.4
|                      |  |                    |  |                              
|Institutional CDs     |  | Receive Fixed Swap |  |                               | 130.0   |                           |   | (0.7  | )                                    |  | 1.3
|                      |  |                    |  |                              
|Brokered Bullet CDs   |  | Receive Fixed Swap |  |                               | 188.5   |                           |   | (0.9  | )                                    |  | 0.8

The impact from fair value hedges to total net interest income for the year ended
December 31, 2005 was a positive $30.2 million. The impact to net interest income due to ineffectiveness was a positive $0.5 million.

Cash Flow
Hedges

The Corporation has variable rate loans, deposits and borrowings which expose the Corporation to variability in interest
payments due to changes in interest rates. The Corporation believes it is prudent to limit the variability of a portion of its interest receipts and payments. To meet this objective, the Corporation enters into various types of derivative financial
instruments to manage fluctuations in cash flows resulting from interest rate risk. At December 31, 2005, these instruments consisted of interest rate swaps.

The Corporation regularly originates and holds floating rate commercial loans that reprice monthly on the first business day to one-month LIBOR. As a result, the Corporations interest receipts are exposed to
variability in cash flows due to changes in one-month LIBOR.

In order to hedge the interest rate risk associated with the floating rate
commercial loans indexed to one-month LIBOR, the Corporation has entered into receive fixed / pay LIBOR-based floating interest rate swaps designated as cash flow hedges against the first LIBOR-based interest payments received that, in the aggregate
for each period, are interest payments on such principal amount of its then existing LIBOR-indexed floating-rate commercial loans equal to the notional amount of the interest rate swaps outstanding.

Hedge effectiveness is assessed at inception and each quarter on an on-going basis using regression analysis that takes into account reset date
differences for certain designated interest rate swaps that reset quarterly. Each month the Corporation makes a determination that it is probable that the Corporation will continue to receive interest payments on at least that amount of principal of
its existing LIBOR-indexed floating-rate commercial loans that reprice monthly on the first business day to one-month LIBOR equal to the notional amount of the interest rate swaps outstanding. Ineffectiveness is measured using the hypothetical
derivative method and is recorded as a component of interest income on loans.

The interest rate swaps change the variable-rate cash flow
exposure to fixed-rate cash flows.

Changes in the fair value of the interest rate swaps designated as cash flow hedges are reported in
accumulated other comprehensive income. These amounts are subsequently reclassified to interest income or interest expense as a yield adjustment in the same period in which the related interest on the variable rate loans and short-term borrowings
affects earnings. Ineffectiveness arising from differences between the critical terms of the hedging instrument and hedged item is recorded in interest income or expense.



94



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



The following table summarizes the Corporations cash flow hedges.

Cash Flow Hedges

December 31,
2005



|                         |  |                    |  |                               |         |                           |   |       |                                      |  |    
|------------------------ |  | ------------------ |  | ----------------------------- | ------- | ------------------------- | - | ----- | ------------------------------------ |  | ---
|Hedged Item              |  | Hedging Instrument |  | NotionalAmount($ in millions) |         | Fair Value($ in millions) |   |       | WeightedAverageRemainingTerm (Years)
|Variable Rate Loans      |  | Receive Fixed Swap |  | $                             | 1,150.0 |                           | $ | (33.9 | )                                    |  | 3.9
|                         |  |                    |  |                              
|Institutional CDs        |  | Pay Fixed Swap     |  |                               | 1,405.0 |                           |   | 13.8  |                                      |  | 1.4
|                         |  |                    |  |                              
|Federal Funds Purchased  |  | Pay Fixed Swap     |  |                               | 300.0   |                           |   | (1.4  | )                                    |  | 1.3
|                         |  |                    |  |                              
|FHLB Advances            |  | Pay Fixed Swap     |  |                               | 1,220.0 |                           |   | 21.8  |                                      |  | 3.0
|                         |  |                    |  |                              
|Floating Rate Bank Notes |  | Pay Fixed Swap     |  |                               | 125.0   |                           |   | 1.2   |                                      |  | 1.3
|                         |  |                    |  |                              
|Money Market Accounts    |  | Pay Fixed Swap     |  |                               | 250.0   |                           |   | 5.3   |                                      |  | 1.5

During 2004, $300 million of FHLB floating rate advances were retired. In conjunction with the
retirement of debt, $300 million in notional value of receive floating / pay fixed interest rate swaps designated as cash flow hedges against the retired floating rate advances were terminated. The loss in accumulated other comprehensive income
aggregating $2.0 million ($1.3 million after tax) was charged to other expense.

During 2003, $610.0 million of FHLB floating rate advances
were retired. In conjunction with the retirement of debt, $610.0 million in notional value of received floating / pay fixed interest rate swaps designated as cash flow hedges against the retired floating rate advances were terminated. The loss in
accumulated other comprehensive income aggregating $40.5 million ($26.3 million after tax) was charged to other expense.

During 2003, the
Corporation redeemed all of the Floating Rate Debentures held by its subsidiary, MVBI Capital Trust, and MVBI Capital Trust redeemed all of its currently outstanding Floating Rate Trust Preferred Securities at an aggregate liquidation amount of
$14.95 million. In conjunction with the redemption, the Corporation terminated the associated interest rate swap designated as a cash flow hedge. The loss in accumulated other comprehensive income aggregating $1.4 million ($0.9 million after tax)
was charged to other expense.

During 2003, the cash flow hedge on commercial paper was terminated. The $32.6 million in accumulated other
comprehensive income at the time of termination is being amortized as expense into earnings in the remaining periods during which the hedged forecasted transaction affects earnings.

The impact to total net interest income from cash flow hedges, including amortization of terminated cash flow hedges, for the year ended
December 31, 2005 was a positive $5.3 million. The impact due to ineffectiveness was immaterial. The estimated reclassification from accumulated other comprehensive income in the next twelve months is approximately $7.1 million.

Credit risk arises from the potential failure of counterparties to perform in accordance with the terms of the contracts. The Corporation maintains risk
management policies that define parameters of acceptable market risk within the framework of its overall asset/liability management strategies and monitor and limit exposure to credit risk. The Corporation believes its credit and settlement
procedures serve to minimize its exposure to credit risk. Credit exposure resulting from derivative financial instruments is represented by their fair value amounts, increased by an estimate of potential adverse position exposure arising from
changes over time in interest rates, maturities and other relevant factors. At December 31, 2005, the estimated credit exposure arising from derivative financial instruments was approximately $24.7 million.

For the years ended December 31, 2004 and 2003, the total effect on net interest income resulting from derivative financial instruments, was a
positive $8.6 million and a negative $34.6 million including the amortization of terminated derivative financial instruments, respectively.



95



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



21. Fair Value of Financial Instruments

The book values and estimated fair values for on and off-balance sheet financial instruments as of December 31, 2005 and 2004 are presented in the
following table. Derivative financial instruments designated as hedging instruments are included in the book values and fair values presented for the related hedged items. Derivative financial instruments designated as trading and other free
standing derivatives are included in Trading securities.

Balance Sheet Financial Instruments ($ in millions)



|                                         |  |            |          |            |   |            |  |            |          |  |   |         
|---------------------------------------- |  | ---------- | -------- | ---------- | - | ---------- |  | ---------- | -------- |  | - | --------
|                                         |  | 2005       |          | 2004      
|                                         |  | Book Value |          | Fair Value |   | Book Value |  | Fair Value
|Financial Assets:                        |  |            |          |            |   |            |  |            |          |  |   |         
|Cash and short term investments          |  | $          | 1,455.0  |            | $ | 1,455.0    |  | $          | 1,011.2  |  | $ | 1,011.2 
|Trading securities                       |  |            | 29.8     |            |   | 29.8       |  |            | 18.4     |  |   | 18.4    
|Investment securities available for sale |  |            | 5,701.7  |            |   | 5,701.7    |  |            | 5,359.0  |  |   | 5,359.0 
|Investment securities held to maturity   |  |            | 618.6    |            |   | 638.1      |  |            | 726.4    |  |   | 765.1   
|Net loans and leases                     |  |            | 33,803.1 |            |   | 33,878.5   |  |            | 29,178.7 |  |   | 29,309.4
|Interest receivable                      |  |            | 199.0    |            |   | 199.0      |  |            | 144.9    |  |   | 144.9   
|                                         |  |            |          |           
|Financial Liabilities:                   |  |            |          |            |   |            |  |            |          |  |   |         
|Deposits                                 |  |            | 27,674.2 |            |   | 27,642.7   |  |            | 26,455.1 |  |   | 26,453.7
|Short-term borrowings                    |  |            | 3,020.0  |            |   | 3,020.0    |  |            | 1,934.2  |  |   | 1,934.2 
|Long-term borrowings                     |  |            | 9,275.4  |            |   | 9,248.6    |  |            | 6,622.4  |  |   | 6,707.2 
|Standby letters of credit                |  |            | 6.8      |            |   | 6.8        |  |            | 5.1      |  |   | 5.1     
|Interest payable                         |  |            | 168.1    |            |   | 168.1      |  |            | 93.0     |  |   | 93.0    

Where readily available, quoted market prices are utilized by the Corporation. If quoted market
prices are not available, fair values are based on estimates using present value or other valuation techniques. These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The
calculated fair value estimates, therefore, cannot be substantiated by comparison to independent markets and, in many cases, could not be realized upon immediate settlement of the instrument. The current reporting requirements exclude certain
financial instruments and all nonfinancial assets and liabilities from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the entire Corporation.

The following methods and assumptions are used in estimating the fair value for financial instruments.

Cash and short-term investments

The carrying amounts
reported for cash and short-term investments approximate the fair values for those assets.

Trading and investment securities

Fair value is based on quoted market prices or dealer quotes where available. Estimated fair values for residual interests in the form of interest-only
strips from automobile loan securitizations are based on discounted cash flow analysis.

Net loans and leases

Loan and lease balances are assigned fair values based on a discounted cash flow analysis. The discount rate is based on the treasury yield curve, with
rate adjustments for credit quality, cost and profit factors. Net loans and leases include loans held for sale.



96



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



Deposits

The fair value for demand deposits or any interest bearing deposits with no fixed maturity date is considered to be equal to the carrying value. Time deposits with defined maturity dates are considered to have a fair value equal to the book
value if the maturity date was within three months of December 31. The remaining time deposits are assigned fair values based on a discounted cash flow analysis using discount rates that approximate interest rates currently being offered on
time deposits with comparable maturities.

Borrowings

Short-term borrowings are carried at cost that approximates fair value. Long-term debt is generally valued using a discounted cash flow analysis with a discount rate based on current incremental borrowing rates for
similar types of arrangements or, if not readily available, based on a build up approach similar to that used for loans and deposits. Long-term borrowings include their related current maturities.

Standby letters of credit

The book value and fair
value of standby letters of credit is based on the unamortized premium (fees paid by customers).

Off-Balance Sheet Financial Instruments
($ in millions)

Fair values of loan commitments and commercial letters of credit have been estimated based on the equivalent fees, net
of expenses, that would be charged for similar contracts and customers at December 31:



|                             |  |      |     |      |   |     
|---------------------------- |  | ---- | --- | ---- | - | ----
|                             |  | 2005 |     | 2004
|Loan commitments             |  | $    | 9.4 |      | $ | 13.2
|Commercial letters of credit |  |      | 0.4 |      |   | 0.7 

See Note 18 for additional information on off-balance sheet financial instruments.

22. Business Segments

Generally, the Corporation
organizes its segments based on legal entities. Each entity offers a variety of products and services to meet the needs of its customers and the particular market served. Each entity has its own president and is separately managed subject to
adherence to corporate policies. Discrete financial information is reviewed by senior management to assess performance on a monthly basis. Certain segments are combined and consolidated for purposes of assessing financial performance.

The accounting policies of the Corporations segments are the same as those described in Note 1. Intersegment revenues may be based on cost, current
market prices or negotiated prices between the providers and receivers of services.

Based on the way the Corporation organizes its
segments, the Corporation has determined that it has two reportable segments.

Banking

Banking represents the aggregation of two separately chartered banks headquartered in Wisconsin, one federally chartered thrift headquartered in Nevada,
one separately chartered bank headquartered in St. Louis, Missouri, an asset-based lending subsidiary headquartered in Minnesota and an operational support subsidiary. Banking consists of accepting deposits, making loans and providing other services
such as cash management, foreign exchange and correspondent banking to a variety of commercial and retail customers. Products and services are provided through a variety of delivery channels including traditional branches, supermarket branches,
telephone centers, ATMs and the Internet.



97



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



Data Services (or Metavante)

Data Services includes Metavante as well as its related subsidiaries. Metavante provides technology products, software and services, including data processing to M&I affiliates as well as banks, thrifts, credit
unions, trust companies and other financial services providers in the United States and abroad. Metavante provides products and services related to customer relationship management, electronic banking, Internet banking and electronic funds transfer.
Metavante also provides a variety of card solutions, including debit, prepaid debit, and credit card account processing, card personalization, ACH processing, ATM driving and monitoring, gateway transaction processing, merchant processing,
healthcare identification card fulfillment and flexible spending account processing. In addition Metavante provides electronic bill presentment and payment services, as well as payment and settlement of bill payment transactions for businesses and
consumers.

All Others

The
Corporations primary other operating segments include Trust Services, Mortgage Banking (residential and commercial), Capital Markets Group, Brokerage and Insurance Services and Commercial Leasing. Trust Services provides investment management
and advisory services as well as personal, commercial and corporate trust services in Wisconsin, Arizona, Minnesota, Florida, Nevada, Missouri and Indiana. Capital Markets Group provides venture capital and advisory services.

Total Revenues by type in All Others consist of the following ($ in millions):



|                             |  |      |       |      |   |       |  |   |      
|---------------------------- |  | ---- | ----- | ---- | - | ----- |  | - | -----
|                             |  | 2005 |       | 2004 |   | 2003 
|Trust Services               |  | $    | 165.2 |      | $ | 148.3 |  | $ | 126.2
|Residential Mortgage Banking |  |      | 24.2  |      |   | 28.8  |  |   | 49.0 
|Capital Markets              |  |      | 25.1  |      |   | 18.1  |  |   | 20.4 
|Brokerage and Insurance      |  |      | 27.0  |      |   | 25.2  |  |   | 23.4 
|Commercial Leasing           |  |      | 14.9  |      |   | 15.5  |  |   | 15.1 
|Commercial Mortgage Banking  |  |      | 6.2   |      |   | 5.5   |  |   | 6.0  
|Others                       |  |      | 4.0   |      |   | 3.6   |  |   | 3.5  
|                             |  |      |       |      |   |       |  |   |      
|Total                        |  | $    | 266.6 |      | $ | 245.0 |  | $ | 243.6
|                             |  |      |       |      |   |       |  |   |      

The following represents the Corporations operating segments as of and for the years ended
December 31, 2005, 2004 and 2003. Beginning in 2005, total other income for Metavante includes float income which represents interest income on balances invested in an affiliate bank which arise from Electronic Bill Payment activities. This
income was formerly reported as a component of Net Interest Income for Metavante. Segment information for all periods have been restated for this reclassification. Fees  Intercompany represent intercompany revenue charged to other segments for
providing certain services. Expenses  Intercompany represent fees charged by other segments for certain services received. For each segment, Expenses  Intercompany are not the costs of that segments reported intercompany revenues.
Intrasegment revenues, expenses and assets have been eliminated.



98



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|--------------------------------------- |  | -------------------------------------------- | -------- | - | --------- | - | ------- | ------ |  | - | ----------------- | - |  | ---------------------------------------- | ----- | - | ------------ | - | -------- | - |  | - | -------- | -
|                                        |  | Year Ended December 31, 2005 ($ in millions) |         
|                                        |  | Banking                                      |          |   | Metavante |   |         | Others |  |   | CorporateOverhead |   |  | EliminationsReclassificationsAdjustments |       |   | Consolidated |  
|Net interest income                     |  | $                                            | 1,244.5  |   |           | $ | (37.3   | )      |  | $ | 22.9              |   |  | $                                        | (9.7  | ) |              | $ | 12.1     |   |  | $ | 1,232.5  |  
|Other income                            |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Fees  external                         |  |                                              | 368.1    |   |           |   | 1,141.4 |        |  |   | 220.4             |   |  |                                          | 19.1  |   |              |   |         |   |  |   | 1,749.0  |  
|Fees  internal                         |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Fees  intercompany                     |  |                                              | 57.7     |   |           |   | 93.2    |        |  |   | 23.3              |   |  |                                          | 86.4  |   |              |   | (260.6   | ) |  |   |         |  
|Float income  intercompany             |  |                                              |         |   |           |   | 12.1    |        |  |   |                  |   |  |                                          |      |   |              |   | (12.1    | ) |  |   |         |  
|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Total other income                      |  |                                              | 425.8    |   |           |   | 1,246.7 |        |  |   | 243.7             |   |  |                                          | 105.5 |   |              |   | (272.7   | ) |  |   | 1,749.0  |  
|Other expense                           |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Expenses  other                        |  |                                              | 638.2    |   |           |   | 968.5   |        |  |   | 133.3             |   |  |                                          | 106.5 |   |              |   | (0.2     | ) |  |   | 1,846.3  |  
|Expenses  intercompany                 |  |                                              | 170.7    |   |           |   | 40.8    |        |  |   | 47.7              |   |  |                                          | 1.2   |   |              |   | (260.4   | ) |  |   |         |  
|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Total other expense                     |  |                                              | 808.9    |   |           |   | 1,009.3 |        |  |   | 181.0             |   |  |                                          | 107.7 |   |              |   | (260.6   | ) |  |   | 1,846.3  |  
|Provision for loan and lease losses     |  |                                              | 43.5     |   |           |   |        |        |  |   | 1.3               |   |  |                                          |      |   |              |   |         |   |  |   | 44.8     |  
|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Income (loss) before taxes              |  |                                              | 817.9    |   |           |   | 200.1   |        |  |   | 84.3              |   |  |                                          | (11.9 | ) |              |   |         |   |  |   | 1,090.4  |  
|Income tax expense (benefit)            |  |                                              | 261.8    |   |           |   | 75.7    |        |  |   | 32.1              |   |  |                                          | (6.7  | ) |              |   |         |   |  |   | 362.9    |  
|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Segment income                          |  | $                                            | 556.1    |   |           | $ | 124.4   |        |  | $ | 52.2              |   |  | $                                        | (5.2  | ) |              | $ |         |   |  | $ | 727.5    |  
|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Identifiable assets                     |  | $                                            | 43,481.7 |   |           | $ | 2,811.3 |        |  | $ | 760.9             |   |  | $                                        | 615.7 |   |              | $ | (1,456.9 | ) |  | $ | 46,212.7 |  
|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Depreciation and amortization           |  | $                                            | 81.4     |   |           | $ | 137.0   |        |  | $ | (21.3             | ) |  | $                                        | 9.8   |   |              | $ |         |   |  | $ | 206.9    |  
|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Purchase of premises and equipment, net |  | $                                            | 60.2     |   |           | $ | 44.4    |        |  | $ | 10.5              |   |  | $                                        | (21.5 | ) |              | $ |         |   |  | $ | 93.6     |  
|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Return on Average Equity                |  |                                              | 15.89    | % |           |   | 16.59   | %      |  |   | 20.04             | % |  |                                          |       |   |              |   |          |   |  |   | 16.95    | %
|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  



|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|--------------------------------------- |  | -------------------------------------------- | -------- | - | --------- | - | ------- | ------ |  | - | ----------------- | - |  | ---------------------------------------- | ----- | - | ------------ | - | -------- | - |  | - | -------- | -
|                                        |  | Year Ended December 31, 2004 ($ in millions) |         
|                                        |  | Banking                                      |          |   | Metavante |   |         | Others |  |   | CorporateOverhead |   |  | EliminationsReclassificationsAdjustments |       |   | Consolidated |  
|Net interest income                     |  | $                                            | 1,133.9  |   |           | $ | (21.8   | )      |  | $ | 23.8              |   |  | $                                        | (7.9  | ) |              | $ | 4.0      |   |  | $ | 1,132.0  |  
|Other income                            |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Fees  external                         |  |                                              | 334.0    |   |           |   | 892.0   |        |  |   | 198.6             |   |  |                                          | 21.9  |   |              |   |         |   |  |   | 1,446.5  |  
|Fees  internal                         |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Fees  intercompany                     |  |                                              | 61.9     |   |           |   | 80.0    |        |  |   | 22.6              |   |  |                                          | 70.3  |   |              |   | (234.8   | ) |  |   |         |  
|Float income  intercompany             |  |                                              |         |   |           |   | 4.0     |        |  |   |                  |   |  |                                          |      |   |              |   | (4.0     | ) |  |   |         |  
|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Total other income                      |  |                                              | 395.9    |   |           |   | 976.0   |        |  |   | 221.2             |   |  |                                          | 92.2  |   |              |   | (238.8   | ) |  |   | 1,446.5  |  
|Other expense                           |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Expenses  other                        |  |                                              | 603.8    |   |           |   | 779.0   |        |  |   | 121.7             |   |  |                                          | 90.8  |   |              |   | 0.2      |   |  |   | 1,595.5  |  
|Expenses  intercompany                 |  |                                              | 150.5    |   |           |   | 44.1    |        |  |   | 46.5              |   |  |                                          | (6.1  | ) |              |   | (235.0   | ) |  |   |         |  
|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Total other expense                     |  |                                              | 754.3    |   |           |   | 823.1   |        |  |   | 168.2             |   |  |                                          | 84.7  |   |              |   | (234.8   | ) |  |   | 1,595.5  |  
|Provision for loan and lease losses     |  |                                              | 29.9     |   |           |   |        |        |  |   | 8.1               |   |  |                                          |      |   |              |   |         |   |  |   | 38.0     |  
|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Income (loss) before taxes              |  |                                              | 745.6    |   |           |   | 131.1   |        |  |   | 68.7              |   |  |                                          | (0.4  | ) |              |   |         |   |  |   | 945.0    |  
|Income tax expense (benefit)            |  |                                              | 244.1    |   |           |   | 50.7    |        |  |   | 26.9              |   |  |                                          | (3.8  | ) |              |   |         |   |  |   | 317.9    |  
|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Segment income                          |  | $                                            | 501.5    |   |           | $ | 80.4    |        |  | $ | 41.8              |   |  | $                                        | 3.4   |   |              | $ |         |   |  | $ | 627.1    |  
|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Identifiable assets                     |  | $                                            | 38,102.8 |   |           | $ | 2,375.0 |        |  | $ | 632.0             |   |  | $                                        | 936.9 |   |              | $ | (1,609.3 | ) |  | $ | 40,437.4 |  
|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Depreciation and amortization           |  | $                                            | 88.3     |   |           | $ | 116.6   |        |  | $ | (16.3             | ) |  | $                                        | 6.6   |   |              | $ |         |   |  | $ | 195.2    |  
|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Purchase of premises and equipment, net |  | $                                            | 53.2     |   |           | $ | 24.1    |        |  | $ | 1.7               |   |  | $                                        | 1.4   |   |              | $ |         |   |  | $ | 80.4     |  
|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Return on Average Equity                |  |                                              | 16.47    | % |           |   | 18.71   | %      |  |   | 17.16             | % |  |                                          |       |   |              |   |          |   |  |   | 17.89    | %
|                                        |  |                                              |          |   |           |   |         |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  



99



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



|                                        |  |                                              |          |   |           |   |       |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|--------------------------------------- |  | -------------------------------------------- | -------- | - | --------- | - | ----- | ------ |  | - | ----------------- | - |  | ---------------------------------------- | ----- | - | ------------ | - | -------- | - |  | - | -------- | -
|                                        |  | Year Ended December 31, 2003 ($ in millions) |         
|                                        |  | Banking                                      |          |   | Metavante |   |       | Others |  |   | CorporateOverhead |   |  | EliminationsReclassificationsAdjustments |       |   | Consolidated |  
|Net interest income                     |  | $                                            | 1,046.5  |   |           | $ | (4.6  | )      |  | $ | 29.8              |   |  | $                                        | (16.7 | ) |              | $ | 2.3      |   |  | $ | 1,057.3  |  
|Other income                            |  |                                              |          |   |           |   |       |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Fees  external                         |  |                                              | 371.1    |   |           |   | 657.9 |        |  |   | 182.1             |   |  |                                          | 4.4   |   |              |   | 0.3      |   |  |   | 1,215.8  |  
|Fees  internal                         |  |                                              |          |   |           |   |       |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Fees  intercompany                     |  |                                              | 60.9     |   |           |   | 71.1  |        |  |   | 31.7              |   |  |                                          | 62.1  |   |              |   | (225.8   | ) |  |   |         |  
|Float income  intercompany             |  |                                              |         |   |           |   | 2.3   |        |  |   |                  |   |  |                                          |      |   |              |   | (2.3     | ) |  |   |         |  
|                                        |  |                                              |          |   |           |   |       |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Total other income                      |  |                                              | 432.0    |   |           |   | 731.3 |        |  |   | 213.8             |   |  |                                          | 66.5  |   |              |   | (227.8   | ) |  |   | 1,215.8  |  
|Other expense                           |  |                                              |          |   |           |   |       |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Expenses  other                        |  |                                              | 634.4    |   |           |   | 611.6 |        |  |   | 117.9             |   |  |                                          | 88.0  |   |              |   | (0.2     | ) |  |   | 1,451.7  |  
|Expenses  intercompany                 |  |                                              | 147.2    |   |           |   | 41.0  |        |  |   | 42.9              |   |  |                                          | (5.8  | ) |              |   | (225.3   | ) |  |   |         |  
|                                        |  |                                              |          |   |           |   |       |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Total other expense                     |  |                                              | 781.6    |   |           |   | 652.6 |        |  |   | 160.8             |   |  |                                          | 82.2  |   |              |   | (225.5   | ) |  |   | 1,451.7  |  
|Provision for loan and lease losses     |  |                                              | 51.9     |   |           |   |      |        |  |   | 11.1              |   |  |                                          |      |   |              |   |         |   |  |   | 63.0     |  
|                                        |  |                                              |          |   |           |   |       |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Income (loss) before taxes              |  |                                              | 645.0    |   |           |   | 74.1  |        |  |   | 71.7              |   |  |                                          | (32.4 | ) |              |   |         |   |  |   | 758.4    |  
|Income tax expense (benefit)            |  |                                              | 179.5    |   |           |   | 20.0  |        |  |   | 28.1              |   |  |                                          | (13.3 | ) |              |   |         |   |  |   | 214.3    |  
|                                        |  |                                              |          |   |           |   |       |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Segment income                          |  | $                                            | 465.5    |   |           | $ | 54.1  |        |  | $ | 43.6              |   |  | $                                        | (19.1 | ) |              | $ |         |   |  | $ | 544.1    |  
|                                        |  |                                              |          |   |           |   |       |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Identifiable assets                     |  | $                                            | 33,221.9 |   |           | $ | 990.2 |        |  | $ | 609.6             |   |  | $                                        | 571.4 |   |              | $ | (1,020.5 | ) |  | $ | 34,372.6 |  
|                                        |  |                                              |          |   |           |   |       |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Depreciation and amortization           |  | $                                            | 100.8    |   |           | $ | 113.9 |        |  | $ | (18.4             | ) |  | $                                        | 3.8   |   |              | $ |         |   |  | $ | 200.1    |  
|                                        |  |                                              |          |   |           |   |       |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Purchase of premises and equipment, net |  | $                                            | 35.9     |   |           | $ | 24.2  |        |  | $ | 2.6               |   |  | $                                        | (0.6  | ) |              | $ |         |   |  | $ | 62.1     |  
|                                        |  |                                              |          |   |           |   |       |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  
|Return on Average Equity                |  |                                              | 15.92    | % |           |   | 15.44 | %      |  |   | 18.21             | % |  |                                          |       |   |              |   |          |   |  |   | 16.79    | %
|                                        |  |                                              |          |   |           |   |       |        |  |   |                   |   |  |                                          |       |   |              |   |          |   |  |   |          |  

23. Guarantees

Standby letters of credit are contingent commitments issued by the Corporation to support the obligations of a customer to a third party and to support public and private financing, and other financial or performance
obligations of customers. Standby letters of credit have maturities that generally reflect the maturities of the underlying obligations. The credit risk involved in issuing standby letters of credit is the same as that involved in extending loans to
customers. If deemed necessary, the Corporation holds various forms of collateral to support the standby letters of credit. The gross amount of standby letters of credit issued at December 31, 2005 was $1.8 billion. Of the amount outstanding at
December 31, 2005, standby letters of credit conveyed to others in the form of participations amounted to $72.3 million. Since many of the standby letters of credit are expected to expire without being drawn upon, the amounts outstanding do not
necessarily represent future cash requirements. At December 31, 2005, the estimated fair value associated with letters of credit amounted to $6.8 million.

Metavante offers credit card processing to its customers. Under the rules of the credit card associations, Metavante has certain contingent liabilities for card transactions acquired from merchants. This contingent
liability arises in the event of a billing dispute between the merchant and a cardholder that is ultimately resolved in the cardholders favor. In such case, Metavante charges the transaction back (chargeback) to the merchant and
the disputed amount is credited or otherwise refunded to the cardholder. If Metavante is unable to collect this amount from the merchant, due to the merchants insolvency or other reasons, Metavante will bear the loss for the amount of the
refund paid to the cardholder. In most cases this contingent liability situation is unlikely to arise because most products or services are delivered when purchased, and credits are issued by the merchant on returned items. However, where the
product or service is not provided until some time following the purchase, the contingent liability may be more likely. This credit loss exposure is within the scope of the recognition and measurement provisions of FIN 45. The Corporation has
concluded that the fair value of the contingent liability was immaterial due to the following factors: (1) merchants are evaluated for credit risk in a manner similar to that employed in making lending decisions; (2) if deemed appropriate,
the Corporation obtains collateral which includes holding funds until the product or service is delivered or severs its relationship with a merchant; and (3) compensation, if any, received for providing the guarantee is minimal.



100



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



Metavante assesses the contingent liability and records credit losses for known losses and a
provision for losses incurred but not reported which are based on historical chargeback loss experience. For the year ended December 31, 2005, recoveries of such losses totaled $56, compared to $300 of such losses for the year ended
December 31, 2004.

Metavantes master license agreement includes an indemnification clause that indemnifies the licensee against
claims, suits or other proceedings (including reasonable attorneys fees and payment of any final settlement or judgment) brought by third parties against the licensee alleging that a software product, by itself and not in combination with any
other hardware, software or services, when used by licensee as authorized under the master license agreement, infringes a U.S. patent or U.S. copyright issued or registered as of the date the master license agreement is executed. Metavantes
obligation to indemnify a licensee is contingent on the licensee providing prompt written notice of the claim, full authority and control of the defense and settlement of the claim and reasonable assistance at Metavantes request and expense,
to defend or settle such claim.

In the event a software product becomes, or in Metavantes opinion is likely to become, the subject
of an infringement claim, Metavante may, at its option and expense, either procure for the licensee the right to continue using the software product, modify the software product so that it becomes non-infringing, substitute the software product with
other software of the same material capability and functionality or where none of these options are reasonably available, terminate the license granted and refund the unearned portion of the initial license fee.

Metavantes obligation is subject to certain exceptions and Metavante will have no obligation to any infringement claim based upon any failure to
use the software product in accordance with the license agreement or for purposes not intended by Metavante, Metavantes modification of the software product in compliance with specifications or requirements provided by the licensee, use of any
part of the software product in conjunction with third party software, hardware or data not authorized in the license agreement, modification, addition or change to any part of the software product by the licensee or its agents or any registered
user, use of any release of the software product other than the most current release made available to the licensee and any claim of infringement arising more than five years after the delivery date of the applicable software product.

At December 31, 2005 and 2004 there were no liabilities reflected on the Consolidated Balance Sheets related to these indemnifications.

As of December 31, 2005, the Corporation has fully and unconditionally guaranteed $200 million of certain long-term borrowing obligations issued
by M&I Capital Trust A that was deconsolidated upon the adoption of the provisions of FIN 46R. In addition, at December 31, 2005 the Corporation has fully and unconditionally guaranteed $400 million of certain long-term borrowing
obligations issued by M&I Capital Trust B. See Note 13 for further discussion regarding M&I Capital Trust A and B.

As part of
securities custody activities and at the direction of trust clients, the Corporations trust subsidiary, Marshall & Ilsley Trust Company N.A. (M&I Trust) lends securities owned by trust clients to borrowers who have
been evaluated for credit risk in a manner similar to that employed in making lending decisions. In connection with these activities, M&I Trust has issued certain indemnifications against loss resulting from the default by a borrower under the
master securities loan agreement, such as the failure of the borrower to return loaned securities when due or the borrowers bankruptcy or receivership. The borrowing party is required to fully collateralize securities received with cash or
marketable securities. As securities are loaned, collateral is maintained at a minimum of 100 percent of the fair value of the securities plus accrued interest and the collateral is revalued on a daily basis. The amount of securities loaned subject
to indemnification was $8.0 billion at December 31, 2005 and $5.0 billion at December 31, 2004. Because of the requirement to fully collateralize securities borrowed, management believes that the exposure to credit loss from this activity
is remote and there are no liabilities reflected on the Consolidated Balance Sheets at December 31, 2005 and December 31, 2004, related to these indemnifications.



101



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



24. Condensed Financial InformationParent Corporation Only

Condensed Balance Sheets

December 31



|                                                                                    |  |      |           |      |   |          
|----------------------------------------------------------------------------------- |  | ---- | --------- | ---- | - | ---------
|                                                                                    |  | 2005 |           | 2004
|Assets                                                                              |  |      |           |      |   |          
|Cash and cash equivalents                                                           |  | $    | 288,579   |      | $ | 582,127  
|Indebtedness of nonbank affiliates                                                  |  |      | 1,287,910 |      |   | 1,288,790
|Investments in affiliates:                                                          |  |      |           |      |   |          
|Banks                                                                               |  |      | 3,558,373 |      |   | 3,078,330
|Nonbanks                                                                            |  |      | 1,450,097 |      |   | 951,864  
|Premises and equipment, net                                                         |  |      | 8,786     |      |   | 31,189   
|Other assets                                                                        |  |      | 317,280   |      |   | 326,588  
|                                                                                    |  |      |           |      |   |          
|Total assets                                                                        |  | $    | 6,911,025 |      | $ | 6,258,888
|                                                                                    |  |      |           |      |   |          
|Liabilities and Shareholders Equity                                                |  |      |           |      |   |          
|Commercial paper issued                                                             |  | $    | 301,963   |      | $ | 312,098  
|Other liabilities                                                                   |  |      | 318,452   |      |   | 324,029  
|Long-term borrowings:                                                               |  |      |           |      |   |          
|Medium-term notes Series E and MiNotes                                              |  |      | 423,796   |      |   | 526,850  
|4.375% senior notes                                                                 |  |      | 598,007   |      |   | 597,505  
|3.90% junior subordinated debt securities                                           |  |      | 396,014   |      |   | 395,018  
|7.65% junior subordinated deferrable interest debentures due to M&I Capital Trust A |  |      | 204,983   |      |   | 213,574  
|                                                                                    |  |      |           |      |   |          
|Total long-term borrowings                                                          |  |      | 1,622,800 |      |   | 1,732,947
|                                                                                    |  |      |           |      |   |          
|Total liabilities                                                                   |  |      | 2,243,215 |      |   | 2,369,074
|Shareholders equity                                                                |  |      | 4,667,810 |      |   | 3,889,814
|                                                                                    |  |      |           |      |   |          
|Total liabilities and shareholders equity                                          |  | $    | 6,911,025 |      | $ | 6,258,888
|                                                                                    |  |      |           |      |   |          

Scheduled maturities of long-term borrowings are $198,425 in 2006, $9,299 in 2007, $3,529 in 2008,
$605,387 in 2009 and $18,988 in 2010. See Note 13 for a description of the long-term borrowings.



102



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



Condensed Statements of Income

Years Ended December 31



|                                                                                |  |      |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                |  | 2005 |         |   | 2004 |   |         | 2003 | 
|Income                                                                          |  |      |         |   |      |   |         |      |  |   |         |  
|Cash dividends:                                                                 |  |      |         |   |      |   |         |      |  |   |         |  
|Bank affiliates                                                                 |  | $    | 445     |   |      | $ | 284,347 |      |  | $ | 390,129 |  
|Nonbank affiliates                                                              |  |      | 59,473  |   |      |   | 68,473  |      |  |   | 28,682  |  
|Interest from affiliates                                                        |  |      | 68,955  |   |      |   | 34,825  |      |  |   | 13,406  |  
|Service fees and other                                                          |  |      | 112,504 |   |      |   | 100,986 |      |  |   | 71,658  |  
|                                                                                |  |      |         |   |      |   |         |      |  |   |         |  
|Total income                                                                    |  |      | 241,377 |   |      |   | 488,631 |      |  |   | 503,875 |  
|Expense                                                                         |  |      |         |   |      |   |         |      |  |   |         |  
|Interest                                                                        |  |      | 85,567  |   |      |   | 48,246  |      |  |   | 32,056  |  
|Salaries and employee benefits                                                  |  |      | 64,899  |   |      |   | 57,044  |      |  |   | 50,684  |  
|Administrative and general                                                      |  |      | 43,857  |   |      |   | 31,687  |      |  |   | 35,478  |  
|                                                                                |  |      |         |   |      |   |         |      |  |   |         |  
|Total expense                                                                   |  |      | 194,323 |   |      |   | 136,977 |      |  |   | 118,218 |  
|                                                                                |  |      |         |   |      |   |         |      |  |   |         |  
|Income before income taxes and equity in undistributed net income of affiliates |  |      | 47,054  |   |      |   | 351,654 |      |  |   | 385,657 |  
|Provision for income taxes                                                      |  |      | (6,667  | ) |      |   | (3,900  | )    |  |   | (13,314 | )
|                                                                                |  |      |         |   |      |   |         |      |  |   |         |  
|Income before equity in undistributed net income of affiliates                  |  |      | 53,721  |   |      |   | 355,554 |      |  |   | 398,971 |  
|Equity in undistributed net income of affiliates, net of dividends paid:        |  |      |         |   |      |   |         |      |  |   |         |  
|Banks                                                                           |  |      | 524,903 |   |      |   | 191,083 |      |  |   | 51,927  |  
|Nonbanks                                                                        |  |      | 148,845 |   |      |   | 80,449  |      |  |   | 93,207  |  
|                                                                                |  |      |         |   |      |   |         |      |  |   |         |  
|Net income                                                                      |  | $    | 727,469 |   |      | $ | 627,086 |      |  | $ | 544,105 |  
|                                                                                |  |      |         |   |      |   |         |      |  |   |         |  



103



---

##### Table of Contents

Notes to Consolidated Financial Statements

December 31, 2005, 2004, and 2003 ($000s except share data)



Condensed Statements of Cash Flows

Years Ended December 31



|                                                          |  |      |            |   |      |   |            |      |  |   |            |  
|--------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                          |  | 2005 |            |   | 2004 |   |            | 2003 | 
|Cash Flows From Operating Activities:                     |  |      |            |   |      |   |            |      |  |   |            |  
|Net income                                                |  | $    | 727,469    |   |      | $ | 627,086    |      |  | $ | 544,105    |  
|Noncash items included in income:                         |  |      |            |   |      |   |            |      |  |   |            |  
|Equity in undistributed net income of affiliates          |  |      | (673,748   | ) |      |   | (271,532   | )    |  |   | (145,134   | )
|Depreciation and amortization                             |  |      | 9,786      |   |      |   | 6,670      |      |  |   | 3,831      |  
|Other                                                     |  |      | (16,275    | ) |      |   | (6,593     | )    |  |   | 21,244     |  
|                                                          |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash provided by operating activities                 |  |      | 47,232     |   |      |   | 355,631    |      |  |   | 424,046    |  
|                                                          |  |      |           
|Cash Flows From Investing Activities:                     |  |      |            |   |      |   |            |      |  |   |            |  
|Increases in indebtedness of affiliates                   |  |      | (548,005   | ) |      |   | (1,522,750 | )    |  |   | (1,104,749 | )
|Decreases in indebtedness of affiliates                   |  |      | 548,885    |   |      |   | 599,830    |      |  |   | 1,125,657  |  
|Decreases (increases) in investments in affiliates        |  |      | (110,013   | ) |      |   | (147,329   | )    |  |   | 2,829      |  
|Proceeds from (purchases of ) premises and equipment, net |  |      | 21,456     |   |      |   | (1,456     | )    |  |   | 622        |  
|Other                                                     |  |      | 24,340     |   |      |   | (59,570    | )    |  |   | (21,374    | )
|                                                          |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash (used in) provided by investing activities       |  |      | (63,337    | ) |      |   | (1,131,275 | )    |  |   | 2,985      |  
|                                                          |  |      |           
|Cash Flows From Financing Activities:                     |  |      |            |   |      |   |            |      |  |   |            |  
|Dividends paid                                            |  |      | (214,788   | ) |      |   | (179,855   | )    |  |   | (158,007   | )
|Proceeds from issuance of commercial paper                |  |      | 4,676,424  |   |      |   | 4,280,021  |      |  |   | 4,638,514  |  
|Principal payments on commercial paper                    |  |      | (4,686,559 | ) |      |   | (4,273,666 | )    |  |   | (4,652,968 | )
|Proceeds from issuance of long-term borrowings            |  |      | 8,005      |   |      |   | 1,108,956  |      |  |   | 179,166    |  
|Payments on long-term borrowings                          |  |      | (111,036   | ) |      |   | (8,241     | )    |  |   | (186,460   | )
|Purchases of common stock                                 |  |      |           |   |      |   | (98,385    | )    |  |   | (201,044   | )
|Proceeds from issuance of common stock                    |  |      | 60,911     |   |      |   | 206,666    |      |  |   | 49,063     |  
|Other                                                     |  |      | (10,400    | ) |      |   | (3,062     | )    |  |   |           |  
|                                                          |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash (used in) provided by financing activities       |  |      | (277,443   | ) |      |   | 1,032,434  |      |  |   | (331,736   | )
|                                                          |  |      |            |   |      |   |            |      |  |   |            |  
|Net (decrease) increase in cash and cash equivalents      |  |      | (293,548   | ) |      |   | 256,790    |      |  |   | 95,295     |  
|Cash and cash equivalents, beginning of year              |  |      | 582,127    |   |      |   | 325,337    |      |  |   | 230,042    |  
|                                                          |  |      |            |   |      |   |            |      |  |   |            |  
|Cash and cash equivalents, end of year                    |  | $    | 288,579    |   |      | $ | 582,127    |      |  | $ | 325,337    |  
|                                                          |  |      |            |   |      |   |            |      |  |   |            |  



104



---

##### Table of Contents

Quarterly Financial Information (Unaudited)

Following is unaudited financial information for each of the calendar quarters during the years ended December 31, 2005 and 2004. Common dividend
data for prior periods has been restated for the 2002 two-for-one stock split. ($000s except share data)



|                                    |  |               |         |          |   |         |  |          |         |  |   |        
|----------------------------------- |  | ------------- | ------- | -------- | - | ------- |  | -------- | ------- |  | - | -------
|                                    |  | Quarter Ended
|                                    |  | Dec. 31       |         | Sept. 30 |   | June 30 |  | March 31
|2005                                |  |               |         |          |   |         |  |          |         |  |   |        
|Total Interest Income               |  | $             | 619,922 |          | $ | 575,175 |  | $        | 533,241 |  | $ | 485,607
|Net Interest Income                 |  |               | 322,758 |          |   | 313,246 |  |          | 304,763 |  |   | 291,781
|Provision for Loan and Lease Losses |  |               | 12,995  |          |   | 9,949   |  |          | 13,725  |  |   | 8,126  
|Income before Income Taxes          |  |               | 274,386 |          |   | 278,202 |  |          | 281,036 |  |   | 256,743
|Net Income                          |  |               | 185,255 |          |   | 184,147 |  |          | 188,487 |  |   | 169,580
|Net Income Per Share:               |  |               |         |          |   |         |  |          |         |  |   |        
|Basic                               |  | $             | 0.79    |          | $ | 0.79    |  | $        | 0.82    |  | $ | 0.75   
|Diluted                             |  |               | 0.78    |          |   | 0.78    |  |          | 0.81    |  |   | 0.73   
|2004                                |  |               |         |          |   |         |  |          |         |  |   |        
|Total Interest Income               |  | $             | 454,468 |          | $ | 424,220 |  | $        | 398,029 |  | $ | 389,073
|Net Interest Income                 |  |               | 288,210 |          |   | 281,138 |  |          | 284,008 |  |   | 278,636
|Provision for Loan and Lease Losses |  |               | 12,837  |          |   | 6,872   |  |          | 9,227   |  |   | 9,027  
|Income before Income Taxes          |  |               | 260,070 |          |   | 234,098 |  |          | 230,088 |  |   | 220,710
|Net Income                          |  |               | 173,819 |          |   | 155,449 |  |          | 151,709 |  |   | 146,109
|Net Income Per Share:               |  |               |         |          |   |         |  |          |         |  |   |        
|Basic                               |  | $             | 0.77    |          | $ | 0.70    |  | $        | 0.68    |  | $ | 0.66   
|Diluted                             |  |               | 0.76    |          |   | 0.69    |  |          | 0.67    |  |   | 0.65   



|                          |  |      |       |      |   |       |  |      |       |      |   |       |  |   |      
|------------------------- |  | ---- | ----- | ---- | - | ----- |  | ---- | ----- | ---- | - | ----- |  | - | -----
|                          |  | 2005 |       | 2004 |   | 2003  |  | 2002 |       | 2001
|Common Dividends Declared |  |      |       |      |   |       |  |      |       |      |   |       |  |   |      
|First Quarter             |  | $    | 0.210 |      | $ | 0.180 |  | $    | 0.160 |      | $ | 0.145 |  | $ | 0.133
|Second Quarter            |  |      | 0.240 |      |   | 0.210 |  |      | 0.180 |      |   | 0.160 |  |   | 0.145
|Third Quarter             |  |      | 0.240 |      |   | 0.210 |  |      | 0.180 |      |   | 0.160 |  |   | 0.145
|Fourth Quarter            |  |      | 0.240 |      |   | 0.210 |  |      | 0.180 |      |   | 0.160 |  |   | 0.145
|                          |  |      |       |      |   |       |  |      |       |      |   |       |  |   |      
|                          |  | $    | 0.930 |      | $ | 0.810 |  | $    | 0.700 |      | $ | 0.625 |  | $ | 0.568
|                          |  |      |       |      |   |       |  |      |       |      |   |       |  |   |      

Price Range of Stock

(Low and High Close-Restated for 2002 Two-for-One Stock Split)



|               |  |      |       |      |   |       |  |      |       |      |   |       |  |   |      
|-------------- |  | ---- | ----- | ---- | - | ----- |  | ---- | ----- | ---- | - | ----- |  | - | -----
|               |  | 2005 |       | 2004 |   | 2003  |  | 2002 |       | 2001
|First Quarter  |  |      |       |      |   |       |  |      |       |      |   |       |  |   |      
|Low            |  | $    | 40.21 |      | $ | 36.18 |  | $    | 25.07 |      | $ | 28.90 |  | $ | 24.02
|High           |  |      | 43.65 |      |   | 40.39 |  |      | 29.15 |      |   | 31.68 |  |   | 27.60
|Second Quarter |  |      |       |      |   |       |  |      |       |      |   |       |  |   |      
|Low            |  |      | 41.23 |      |   | 36.60 |  |      | 25.79 |      |   | 29.52 |  |   | 24.46
|High           |  |      | 45.06 |      |   | 41.15 |  |      | 31.75 |      |   | 31.96 |  |   | 27.18
|Third Quarter  |  |      |       |      |   |       |  |      |       |      |   |       |  |   |      
|Low            |  |      | 42.83 |      |   | 37.32 |  |      | 30.13 |      |   | 25.69 |  |   | 25.50
|High           |  |      | 47.28 |      |   | 41.21 |  |      | 32.74 |      |   | 30.97 |  |   | 29.78
|Fourth Quarter |  |      |       |      |   |       |  |      |       |      |   |       |  |   |      
|Low            |  |      | 40.18 |      |   | 40.28 |  |      | 32.53 |      |   | 23.25 |  |   | 26.33
|High           |  |      | 44.40 |      |   | 44.43 |  |      | 38.40 |      |   | 29.20 |  |   | 32.06



105



---

##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Marshall & Ilsley Corporation:

We have audited the accompanying consolidated balance sheets of Marshall & Ilsley Corporation and subsidiaries (the Corporation) as of December 31, 2005 and 2004, and the related consolidated
statements of income, shareholders equity and cash flows for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Corporations management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of Marshall & Ilsley Corporation and subsidiaries as of December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the
period ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in
accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Corporations internal control over financial reporting as of December 31, 2005, based on the criteria established in
Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2006 expressed an unqualified opinion on managements assessment of the
effectiveness of the Corporations internal control over financial reporting and an unqualified opinion on the effectiveness of the Corporations internal control over financial reporting.

/s/ Deloitte & Touche LLP

Deloitte & Touche LLP

Milwaukee, Wisconsin

February 24, 2006



106



---

##### Table of Contents

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not
applicable.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Marshall & Ilsley Corporation (the Corporation) maintains a set of disclosure controls and procedures that are designed to ensure
that information required to be disclosed by the Corporation in the reports filed by it under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SECs rules
and forms. The Corporation carried out an evaluation, under the supervision and with the participation of its management, including the Chief Executive Officer and President and the Senior Vice President and Chief Financial Officer, of the
effectiveness of the design and operation of its disclosure controls and procedures pursuant to Rule 13a-15(e) of the Exchange Act. Based on that evaluation, the Chief Executive Officer and President and the Senior Vice President and Chief Financial
Officer concluded that the Corporations disclosure controls and procedures are effective as of the end of the period covered by this report.

Managements Report on Internal Control Over Financial Reporting

Management is responsible for establishing and
maintaining adequate internal control over financial reporting. As such term is defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and
principal financial officers, or persons performing similar functions, and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Internal control over financial reporting includes those policies and procedures that:



| | (1) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the Corporation;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with accounting principles generally
accepted in the United States, and that receipts and expenditures of the Corporation are being made only in accordance with authorizations of management and the directors of the Corporation; and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | provide reasonable assurance regarding prevention of unauthorized acquisition, use, or disposition of the Corporations assets that could have a material effect on the
financial statements.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Management conducted an evaluation of the effectiveness of the Corporations internal control
over financial reporting based on the criteria in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation under the criteria in Internal Control -
Integrated Framework, management concluded that internal control over financial reporting was effective as of December 31, 2005.

Managements assessment of the effectiveness of internal control over financial reporting as of December 31, 2005 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in
their report dated February 24, 2006, which is included herein.

Changes in Internal Controls

There have been no changes in the Corporations internal control over financial reporting identified in connection with the evaluation discussed
above that occurred during the Corporations fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporations internal control over financial reporting.



107



---

##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Marshall & Ilsley Corporation:

We have audited managements assessment, included in the accompanying Managements Report on Internal Control Over Financial Reporting, that Marshall &
Ilsley Corporation and subsidiaries (the Corporation) maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal ControlIntegrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission. Because managements assessment and our audit were conducted to meet the reporting requirements of Section 112 of the Federal Deposit Insurance Corporation
Improvement Act (FDICIA), managements assessment and our audit of the Corporations internal control over financial reporting included controls over the preparation of the schedules equivalent to the basic financial statements in
accordance with the instructions for the Consolidated Financial Statements for Bank Holding Companies (Form FR Y-9C). The Corporations management is responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on managements assessment and an opinion on the effectiveness of the Corporations internal control over
financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, evaluating managements assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary
in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A companys internal control over financial reporting
is a process designed by, or under the supervision of, the companys principal executive and principal financial officers, or persons performing similar functions, and effected by the companys board of directors, management, and other
personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets
that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including
the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal
control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, managements assessment that the Corporation maintained effective internal control over financial reporting as of December 31, 2005, is fairly
stated, in all material respects, based on the criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Corporation maintained,
in all material respects, effective internal control over financial reporting as of December 31, 2005, based on the criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
consolidated financial statements as of and for the year ended December 31, 2005 of the Corporation and our report dated February 24, 2006 expressed an unqualified opinion on those financial statements.

/s/ Deloitte & Touche LLP

Deloitte & Touche LLP

Milwaukee, Wisconsin

February 24, 2006

ITEM 9B. OTHER INFORMATION

Not applicable.



108



---

##### Table of Contents

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Incorporated herein by reference to
M&Is definitive proxy statement for the Annual Meeting of Shareholders to be held on April 25, 2006, except for information as to executive officers and M&Is Code of Business Conduct and Ethics which is set forth in
Part I of this report.

ITEM 11. EXECUTIVE COMPENSATION

Incorporated herein by reference to M&Is definitive proxy
statement for the Annual Meeting of Shareholders to be held on April 25, 2006.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Incorporated herein by reference to M&Is definitive proxy statement for the Annual Meeting of Shareholders to be held on April 25, 2006.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Incorporated herein by reference to
M&Is definitive proxy statement for the Annual Meeting of Shareholders to be held on April 25, 2006, except for information as to executive officers which is set forth in Part I of this report.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Incorporated herein by reference to M&Is
definitive proxy statement for the Annual Meeting of Shareholders to be held on April 25, 2006.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES



|    |  |    |  |                                                                                                                                                                                                                  
|--- |  | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | 1. |  | Financial Statements                                                                                                                                                                                             
|    |  |   
|    |  |    |  | Consolidated Financial Statements:                                                                                                                                                                               
|    |  |    |  | Balance Sheets  December 31, 2005 and 2004                                                                                                                                                                      
|    |  |    |  | Statements of Income  years ended December 31, 2005, 2004 and 2003                                                                                                                                              
|    |  |    |  | Statements of Cash Flows  years ended December 31, 2005, 2004 and 2003                                                                                                                                          
|    |  |    |  | Statements of Shareholders Equity  years ended December 31, 2005, 2004 and 2003                                                                                                                                
|    |  |    |  | Notes to Consolidated Financial Statements                                                                                                                                                                       
|    |  |    |  | Quarterly Financial Information (Unaudited)                                                                                                                                                                      
|    |  |    |  | Report of Independent Registered Public Accounting Firm                                                                                                                                                          
|    |  |   
|    |  | 2. |  | Financial Statement Schedules                                                                                                                                                                                    
|    |  |   
|    |  |    |  | All schedules are omitted because they are not required, not applicable or the required information is contained elsewhere.                                                                                      
|    |  |   
|    |  | 3. |  | Exhibits                                                                                                                                                                                                         
|    |  |   
|    |  |    |  | See Index to Exhibits of this Form 10-K, which is incorporated herein by reference. Shareholders may obtain a copy of any Exhibit free of charge by calling M&Is Shareholder
Information Line at 1-800-318-0208.



109



---

##### Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



MARSHALL & ILSLEY CORPORATIONBy:

/s/ Dennis J. KuesterDennis J. KuesterChairman and Chief Executive OfficerDate: March 1, 2006


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:



|                                                  |  |  |  |                    
|------------------------------------------------- |  |  |  | -------------------
|/s/ John M. Presley                               |  |  |  |                    
|John M. Presley                                   |  |  |  |                    
|Senior Vice President and Chief Financial Officer |  |  |  |                    
|(Principal Financial Officer)                     |  |  |  | Date: March 1, 2006
|                                                  |  | 
|/s/ Patricia R. Justiliano                        |  |  |  |                    
|Patricia R. Justiliano                            |  |  |  |                    
|Senior Vice President and Corporate Controller    |  |  |  |                    
|(Principal Accounting Officer)                    |  |  |  | Date: March 1, 2006



|Directors: | Richard A. Abdoo, Andrew N. Baur, John W. Daniels, Jr., Bruce E. Jacobs, Ted D. Kellner, Dennis J. Kuester, John A. Mellowes, Edward L. Meyer, Jr., Robert J. OToole, San
W. Orr, Jr., Peter M. Platten, III, James A. Urdan, Debra S. Waller, George E. Wardeberg and James B. Wigdale.
|---------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|    |  |                         |  |  |  |                    
|--- |  | ----------------------- |  |  |  | -------------------
|By: |  | /s/ Randall J. Erickson |  |  |  | Date: March 1, 2006
|    |  | Randall J. Erickson     |  |  |  |                    
|    |  | As Attorney-In-Fact*    |  |  |  |                    

---

|* | Pursuant to authority granted by powers of attorney, copies of which are filed herewith.
|- | ----------------------------------------------------------------------------------------



110



---

##### Table of Contents

MARSHALL & ILSLEY CORPORATION

INDEX TO EXHIBITS

(Item 15(a)3)

ITEM



|     |  |     |  |                                                                                                                                                                                                                                                                                    
|---- |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3)  |  | (a) |  | Restated Articles of Incorporation, as amended, incorporated by reference to M&Is Quarterly Report on Form 10-Q for the quarter ended March 31, 2003, SEC File No.
1-15403                                                                                                        
|     |  |    
|     |  | (b) |  | By-laws, as amended, incorporated by reference to M&Is Current Report on Form 8-K dated August 30, 2002, SEC File No. 1-15403                                                                                                                                                     
|     |  |    
|(4)  |  |     |  | Instruments defining the rights of security holders, including indentures                                                                                                                                                                                                         
|     |  |    
|(10) |  | (a) |  | Deferred Compensation Trust between Marshall & Ilsley Corporation and Bessemer Trust Company dated April 28, 1987, as amended, incorporated by reference to M&Is Annual Report on
Form 10-K for the fiscal year ended December 31, 1988, SEC File No. 1-15403*                    
|     |  |    
|     |  | (b) |  | 1989 Executive Stock Option and Restricted Stock Plan, incorporated by reference to M&Is Annual Report on Form 10-K for the fiscal year ended December 31, 1988, as amended by
M&Is Annual Report on Form 10-K for the fiscal year ended December 31, 1990, SEC File No. 1-15403*
|     |  |    
|     |  | (c) |  | Marshall & Ilsley Corporation 1993 Executive Stock Option Plan, as amended, incorporated by reference to M&Is Annual Report on Form 10-K for the fiscal year ended December 31,
1995, SEC File No. 1-15403*                                                                       
|     |  |    
|     |  | (d) |  | Marshall & Ilsley Corporation 1995 Directors Stock Option Plan, incorporated by reference to M&Is Proxy Statement for the 1995 Annual Meeting of Shareholders, SEC File No.
1-15403*                                                                                              
|     |  |    
|     |  | (e) |  | Marshall & Ilsley Corporation 1997 Executive Stock Option and Restricted Stock Plan, incorporated by reference to M&Is Proxy Statement for the 1997 Annual Meeting of
Shareholders*                                                                                               
|     |  |    
|     |  | (f) |  | Marshall & Ilsley Corporation Amended and Restated Supplementary Retirement Benefits Plan, incorporated by reference to M&Is Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, SEC File No. 1-15403*                                                        
|     |  |    
|     |  | (g) |  | Security Bank S.S.B. Deferred Compensation Plans for Key Executive Officers and Directors, incorporated by reference to Security Capital Corporations Registration Statement on Form S-1
(Reg. No. 33-68982)*                                                                     
|     |  |    
|     |  | (h) |  | Security Bank S.S.B. Supplemental Pension Plan, incorporated by reference to Security Capital Corporations Registration Statement on Form S-1 (Reg. No. 33-68982)*                                                                                                                
|     |  |    
|     |  | (i) |  | Form of Change of Control Agreement between M&I and Mr. Kuester, incorporated by reference to M&Is Annual Report on Form 10-K for the fiscal year ended December 31, 2000, SEC File
No. 1-15403*                                                                                  
|     |  |    
|     |  | (j) |  | Form of Change of Control Agreements between M&I and Ms. Justiliano and Messrs. ONeill, Renard, Roberts and Root, incorporated by reference to M&Is Annual Report on Form 10-K
for the fiscal year ended December 31, 2000, SEC File No. 1-15403*                                
|     |  |    
|     |  | (k) |  | Change of Control Agreement, dated April 16, 2001, between M&I and Mr. Furlong, incorporated by reference to M&Is Quarterly Report on Form 10-Q for the quarter ended March 31,
2001, SEC File No. 1-15403*                                                                       



111



---

##### Table of Contents

| |  |     |  |                                                                                                                                                                                                                                                                          
| |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | (l) |  | Change of Control Agreement, dated January 10, 2001, between M&I and Mr. Hogan, incorporated by reference to M&Is Annual Report on Form 10-K for the fiscal year ended
December 31, 2001, SEC File No. 1-15403*                                                         
| |  |    
| |  | (m) |  | Change of Control Agreement, dated May 31, 2002, between M&I and Mr. Erickson, incorporated by reference to M&Is Quarterly Report on Form 10-Q for the quarter ended
June 30, 2002, SEC File No. 1-15403*                                                               
| |  |    
| |  | (n) |  | Mississippi Valley Bancshares, Inc. 1991 Stock Option Plan (Five-Year Options), incorporated by reference to the Registration Statement on Form S-8 of Mississippi Valley Bancshares, Inc.
(Reg. No. 333-47124)*                                                         
| |  |    
| |  | (o) |  | Letter Agreement, dated June 17, 2002, between M&I Marshall & Ilsley Bank and Andrew N. Baur and Noncompete Agreement, dated June 17, 2002, between M&I and Andrew N. Baur,
incorporated by reference to M&Is Registration Statement on Form S-4 (Reg. No. 333-92472)*  
| |  |    
| |  | (p) |  | Change of Control Agreement, dated June 30, 2003, between M&I and Mr. Krei, incorporated by reference to M&Is Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, SEC
File No. 1-15403*                                                                  
| |  |    
| |  | (q) |  | Amended and Restated Directors Deferred Compensation Plan of Marshall & Ilsley Corporation, incorporated by reference to M&Is Quarterly Report on Form 10-Q for the quarter ended
September 30, 2003, SEC File No. 1-15403*                                             
| |  |    
| |  | (r) |  | Marshall & Ilsley Corporation Amended and Restated Deferred Compensation Trust II between M&I and Marshall & Ilsley Trust Company N.A., incorporated by reference to M&Is
Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, SEC File No. 1-15403* 
| |  |    
| |  | (s) |  | Marshall & Ilsley Corporation Amended and Restated Deferred Compensation Trust III between M&I and Marshall & Ilsley Trust Company N.A., incorporated by reference to M&Is
Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, SEC File No. 1-15403*
| |  |    
| |  | (t) |  | Change of Control Agreement, dated November 30, 2003, between M&I and Mr. Deneen, incorporated by reference to M&Is Annual Report on Form 10-K for the fiscal year ended
December 31, 2003*                                                                             
| |  |    
| |  | (u) |  | Marshall & Ilsley Corporation 2003 Death Benefit Plan, incorporated by reference to M&Is Annual Report on Form 10-K for the fiscal year ended December 31, 2003*                                                                                                        
| |  |    
| |  | (v) |  | Death Benefit Award Agreement, dated December 30, 2003, between M&I and Mr. Kuester, incorporated by reference to M&Is Annual Report on Form 10-K for the fiscal year ended December
31, 2003*                                                                          
| |  |    
| |  | (w) |  | Death Benefit Award Agreement, dated December 30, 2003, between M&I and Mr. Wigdale, incorporated by reference to M&Is Annual Report on Form 10-K for the fiscal year ended December
31, 2003*                                                                          
| |  |    
| |  | (x) |  | Marshall & Ilsley Corporation Amended and Restated Annual Executive Incentive Compensation Plan, incorporated by reference to M&Is Annual Report on Form 10-K for the fiscal year
ended December 31, 2003*                                                              
| |  |    
| |  | (y) |  | Marshall & Ilsley Corporation Amended and Restated Executive Deferred Compensation Plan, incorporated by reference to M&Is Annual Report on Form 10-K for the fiscal year ended
December 31, 2003*                                                                      
| |  |    
| |  | (z) |  | Change of Control Agreement dated February 19, 2004, between M&I and Mr. Martire, incorporated by reference to M&Is Quarterly Report on Form 10-Q for the quarter ended
March 31, 2004, SEC File No. 1-15403*                                                           



112



---

##### Table of Contents

| |  |      |  |                                                                                                                                                                                                                                                                                                       
| |  | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | (aa) |  | Metavante Change of Control Agreement dated May 12, 2004, between M&I and Mr. Martire, incorporated by reference to M&Is Quarterly Report on Form 10-Q for the quarter ended
June 30, 2004, SEC File No. 1-15403*                                                                                    
| |  |     
| |  | (bb) |  | Change of Control Agreement dated January 10, 2001, between M&I and Mr. Ellis, incorporated by reference to M&Is Quarterly Report on Form 10-Q for the quarter ended September 30,
2004, SEC File No. 1-15403*                                                                                       
| |  |     
| |  | (cc) |  | Form of Amendment to Change of Control Agreements dated October 18, 2001, between M&I and Ms. Justiliano and Messrs. Ellis, Hogan, ONeill, Renard, Roberts and Root, incorporated by
reference to M&Is Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, SEC File No. 1-15403*
| |  |     
| |  | (dd) |  | Change of Control Agreement dated October 18, 2004, between M&I and Mr. Presley, incorporated by reference to M&Is Current Report on Form 8-K/A filed October 22, 2004, SEC File No.
1-15403*                                                                                                        
| |  |     
| |  | (ee) |  | Consulting Agreement dated December 15, 2004, between M&I and Mr. Wigdale, incorporated by reference to M&Is Current Report on Form 8-K filed December 17, 2004, SEC File No.
1-15403*                                                                                                               
| |  |     
| |  | (ff) |  | Consulting Agreement dated December 15, 2004 between Southwest Bank of St. Louis and Mr. Baur, incorporated by reference to M&Is Current Report on Form 8-K filed December 17, 2004, SEC
File No. 1-15403*                                                                                           
| |  |     
| |  | (gg) |  | 2005 Directors Deferred Compensation Plan of Marshall & Ilsley Corporation, incorporated by reference to M&Is Current Report on Form 8-K filed December 17, 2004, SEC File No.
1-15403*                                                                                                              
| |  |     
| |  | (hh) |  | Marshall & Ilsley Corporation 2005 Executive Deferred Compensation Plan, incorporated by reference to M&Is Current Report on Form 8-K filed December 17, 2004, SEC File No.
1-15403*                                                                                                                 
| |  |     
| |  | (ii) |  | Form of Certificate of Nonstatutory Stock Option Award Agreement and Terms of the Award Agreement, incorporated by reference to M&Is Annual Report on Form 10-K for the fiscal year
ended December 31, 2004, SEC File No. 1-15403*                                                                   
| |  |     
| |  | (jj) |  | Summary of Non-Employee Director Compensation, incorporated by reference to Item 1.01 of M&Is Current Report on Form 8-K filed August 19, 2005, SEC File No. 1-15403*                                                                                                                                
| |  |     
| |  | (kk) |  | Summary of Named Executive Officer Base Salaries Effective January 1, 2005, incorporated by reference to Item 1.01 of M&Is Current Report on Form 8-K filed December 21, 2005, SEC File
No. 1-15403*                                                                                                 
| |  |     
| |  | (ll) |  | Summary of Terms of Nonqualified Supplemental Retirement Plan for Mark F. Furlong, incorporated by reference to M&Is Annual Report on Form 10-K for the fiscal year ended December 31,
2004, SEC File No. 1-15403*                                                                                   
| |  |     
| |  | (mm) |  | Change of Control Agreement dated March 10, 2005, between M&I and Ms. Knickerbocker, incorporated by reference to M&Is Annual Report on Form 10-K for the fiscal year ended December
31, 2004, SEC File No. 1-15403*                                                                                 
| |  |     
| |  | (nn) |  | Metavante Corporation Acquisition Performance Incentive Plan, incorporated by reference to M&Is Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, SEC File No.
1-15403*                                                                                                            
| |  |     
| |  | (oo) |  | Form of Restricted Stock Agreement, incorporated by reference to M&Is Quarterly Report on Form 10-Q for the quarter ended June 30, 2005, SEC File No. 1-15403*                                                                                                                                       



113



---

##### Table of Contents

|     |  |                                                                                                                                                                                                            |  |                                                                                                                                                                                                                            
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |  | (pp)                                                                                                                                                                                                       |  | Change of Control Agreement dated as of January 12, 2005 between the Corporation and Mr. Smith, incorporated by reference to M&Is Quarterly Report on Form 10-Q for the quarter
ended June 30, 2005, SEC File No. 1-15403*
|     |  |                                                                                                                                                                                                           
|     |  | (qq)                                                                                                                                                                                                       |  | Marshall & Ilsley Corporation Amended and Restated 1997 Executive Stock Option and Restricted Stock Plan*                                                                                                                  
|     |  |                                                                                                                                                                                                           
|     |  | (rr)                                                                                                                                                                                                       |  | Marshall & Ilsley Corporation 2000 Executive Stock Option and Restricted Stock Plan*                                                                                                                                       
|     |  |                                                                                                                                                                                                           
|     |  | (ss)                                                                                                                                                                                                       |  | Amended and Restated Marshall & Ilsley Corporation Nonqualified Retirement Benefit Plan*                                                                                                                                   
|     |  |                                                                                                                                                                                                           
|     |  | (tt)                                                                                                                                                                                                       |  | Marshall & Ilsley Corporation 2003 Executive Stock Option and Restricted Stock Plan*                                                                                                                                       
|     |  |                                                                                                                                                                                                           
|     |  | (uu)                                                                                                                                                                                                       |  | Marshall & Ilsley Corporation Amended and Restated 1994 Long-Term Incentive Plan for Executives*                                                                                                                           
|     | 
|(11) |  | Computation of Net Income Per Common Share, incorporated by reference to Note 2 of Notes to Consolidated Financial Statements included in Item 8, Consolidated Financial Statements
and Supplementary Data
|     | 
|(12) |  | Computation of Ratio of Earnings to Fixed Charges                                                                                                                                                         
|     | 
|(14) |  | Code of Business Conduct and Ethics, incorporated by reference to M&Is Annual Report on Form 10-K for the fiscal year ended December 31, 2004, SEC File No.
1-15403                                      
|     | 
|(21) |  | Subsidiaries                                                                                                                                                                                              
|     | 
|(23) |  | Consent of Deloitte & Touche LLP                                                                                                                                                                          
|     | 
|(24) |  | Powers of Attorney                                                                                                                                                                                        
|     |  |                                                                                                                                                                                                           
|(31) |  | (a)                                                                                                                                                                                                        |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended                                                                                                  
|     |  |                                                                                                                                                                                                           
|     |  | (b)                                                                                                                                                                                                        |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended                                                                                                  
|     |  |                                                                                                                                                                                                           
|(32) |  | (a)                                                                                                                                                                                                        |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350                                                                                                                                                
|     |  |                                                                                                                                                                                                           
|     |  | (b)                                                                                                                                                                                                        |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350                                                                                                                                                

---

| | The total amount of securities authorized pursuant to any instrument defining the rights of holders of long-term debt of M&I does not exceed 10% of the total assets of M&I
and its subsidiaries on a consolidated basis. M&I agrees to furnish to the Commission upon request a copy of any such instrument.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|* | Management contract or compensatory plan or arrangement.
|- | --------------------------------------------------------



114