<PAGE>  1
==========================================================================

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549

                                  Form 10-Q

 (Mark One)

  [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934

               For the quarterly period ended June 30, 2007

                                      OR

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

           For the transition period from __________ to __________

                       Commission file number  1-15403

                        MARSHALL & ILSLEY CORPORATION
           (Exact name of registrant as specified in its charter)

               Wisconsin                              39-0968604
    (State or other jurisdiction of                (I.R.S. Employer
     Incorporation or organization)               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

                                     None
             (Former name, former address and former fiscal year,
                        if changed since last report)

       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 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 by Rule 12b-2 of the Exchange Act).
                                             Yes   [ ]       No   [X]

       Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

                                                   Outstanding at
                  Class                             July 31, 2007
                  -----                           ----------------
     Common Stock, $1.00 Par Value                   257,315,755

==========================================================================

<PAGE>
<PAGE> 2
                        PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                           MARSHALL & ILSLEY CORPORATION
                     CONSOLIDATED BALANCE SHEETS (Unaudited)
                           ($000's except share data)
                                                              June 30,     December 31,     June 30,
                                                                2007           2006           2006
                                                           -------------- -------------- -------------
<S>                                                       <C>            <C>            <C>
Assets
------
Cash and cash equivalents:
--------------------------
  Cash and due from banks                                  $   1,246,265  $   1,248,007  $   1,280,941
  Federal funds sold and security resale agreements              488,847        192,061        221,497
  Money market funds                                              34,305         45,190         40,831
                                                            -------------  -------------  -------------
Total cash and cash equivalents                                1,769,417      1,485,258      1,543,269

Interest bearing deposits at other banks                          17,597         19,042         18,252

Investment securities:
----------------------
  Trading securities, at market value                             51,186         36,249         54,928
  Available for sale, at market value                          7,165,422      6,977,853      6,627,287
  Held to maturity, market value $417,395
   ($507,909 December 31, 2006 and $559,869 June 30, 2006)       409,897        495,520        547,686
                                                            -------------  -------------  -------------
Total investment securities                                    7,626,505      7,509,622      7,229,901

Loans held for sale                                               94,766        300,677        157,041

Loans and leases:
-----------------
  Loans and leases, net of unearned income                    43,190,838     41,634,340     40,281,478
    Allowance for loan and lease losses                         (431,012)      (420,610)      (415,201)
                                                            -------------  -------------  -------------
  Net loans and leases                                        42,759,826     41,213,730     39,866,277

Premises and equipment, net                                      586,466        571,637        569,240
Goodwill and other intangibles                                 3,418,568      3,212,102      3,154,828
Accrued interest and other assets                              2,024,584      1,918,189      1,915,296
                                                            -------------  -------------  -------------
Total Assets                                               $  58,297,729  $  56,230,257  $  54,454,104
                                                            =============  =============  =============

Liabilities and Shareholders' Equity
------------------------------------
Deposits:
  Noninterest bearing                                      $   5,717,972  $   6,112,362  $   5,773,090
  Interest bearing                                            29,270,312     27,972,020     27,190,336
                                                            -------------  -------------  -------------
Total deposits                                                34,988,284     34,084,382     32,963,426

Federal funds purchased and security repurchase agreements     1,568,202      2,838,756      2,378,380
Other short-term borrowings                                    6,603,785      3,586,374      4,399,478
Accrued expenses and other liabilities                         1,494,779      1,543,219      1,510,781
Long-term borrowings                                           7,204,415      8,026,155      7,476,087
                                                            -------------  -------------  -------------
Total liabilities                                             51,859,465     50,078,886     48,728,152

Shareholders' equity:
---------------------
  Series A convertible preferred stock, $1.00 par value;
    2,000,000 shares authorized                                      --             --             --
  Common stock, $1.00 par value; 266,824,323 shares issued
    (261,972,424 shares at December 31, 2006 and 261,972,933
    shares at June 30, 2006)                                     266,824        261,972        261,973
  Additional paid-in capital                                   2,006,226      1,770,540      1,747,576
  Retained earnings                                            4,671,559      4,383,642      4,076,429
  Accumulated other comprehensive income,
    net of related taxes                                         (63,787)       (17,546)       (71,647)
  Treasury stock, at cost: 9,711,618 shares
       (6,502,732 December 31, 2006 and
        8,000,318 June 30, 2006)                                (401,672)      (205,938)      (253,201)

  Deferred compensation                                          (40,886)       (41,299)       (35,178)
                                                            -------------  -------------  -------------
Total shareholders' equity                                     6,438,264      6,151,371      5,725,952
                                                            -------------  -------------  -------------
Total Liabilities and Shareholders' Equity                 $  58,297,729  $  56,230,257  $  54,454,104
                                                            =============  =============  =============
See notes to financial statements.
</TABLE>
                                                              08/07/2007

<PAGE> 3
<TABLE>
<CAPTION>
                           MARSHALL & ILSLEY CORPORATION
                  CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                          ($000's except per share data)

                                                              Three Months Ended June 30,
                                                           -------------------------------
                                                                 2007            2006
                                                           ---------------  --------------
<S>                                                       <C>              <C>
Interest and fee income
-----------------------
  Loans and leases                                         $      803,757   $     716,983
  Investment securities:
    Taxable                                                        78,680          70,908
    Exempt from federal income taxes                               14,959          15,749
  Trading securities                                                  336             198
  Short-term investments                                            3,681           5,011
                                                            --------------   -------------
Total interest and fee income                                     901,413         808,849

Interest expense
----------------
  Deposits                                                        299,186         271,513
  Short-term borrowings                                            56,047          43,124
  Long-term borrowings                                            150,283         117,427
                                                            --------------   -------------
Total interest expense                                            505,516         432,064
                                                            --------------   -------------
Net interest income                                               395,897         376,785
Provision for loan and lease losses                                26,026          11,053
                                                            --------------   -------------
Net interest income after provision for loan and lease losses     369,871         365,732

Other income
------------
  Data processing services                                        363,817         344,976
  Wealth management                                                65,580          56,309
  Service charges on deposits                                      28,054          25,005
  Gains on sale of mortgage loans                                  10,367          11,750
  Other mortgage banking revenue                                    1,610           1,197
  Net investment securities gains                                  19,455             960
  Losses related to Firstsource                                      (982)             --
  Life insurance revenue                                            7,997           7,408
  Net derivative losses - discontinued hedges                          --         (20,672)
  Other                                                            41,094          34,041
                                                            --------------   -------------
Total other income                                                536,992         460,974

Other expense
-------------
  Salaries and employee benefits                                  317,787         307,060
  Net occupancy                                                    27,969          25,698
  Equipment                                                        34,320          38,113
  Software expenses                                                18,826          17,348
  Processing charges                                               37,511          29,586
  Supplies and printing                                             8,028           6,473
  Professional services                                            17,589          14,036
  Shipping and handling                                            23,873          21,669
  Amortization of intangibles                                      12,279          12,004
  Metavante transaction costs                                       2,560              --
  Other                                                            75,794          72,269
                                                            --------------   -------------
Total other expense                                               576,536         544,256
                                                            --------------   -------------
Income before income taxes                                        330,327         282,450
Provision for income taxes                                        110,038          91,908
                                                            --------------   -------------
Net income                                                 $      220,289   $     190,542
                                                            ==============   =============

Net income per common share
---------------------------
  Basic                                                    $         0.85   $        0.75
  Diluted                                                            0.83            0.74

Dividends paid per common share                            $        0.310   $       0.270

Weighted average common shares outstanding (000's):
---------------------------------------------------
  Basic                                                           258,772         252,764
  Diluted                                                         264,840         258,298

See notes to financial statements.
</TABLE>
                                                              08/07/2007


<PAGE>
<PAGE> 4
<TABLE>
<CAPTION>
                           MARSHALL & ILSLEY CORPORATION
                  CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                          ($000's except per share data)

                                                               Six Months Ended June 30,
                                                           -------------------------------
                                                                 2007            2006
                                                           ---------------  --------------
<S>                                                       <C>              <C>
Interest and fee income
-----------------------
  Loans and leases                                         $    1,586,910   $   1,307,383
  Investment securities:
    Taxable                                                       155,734         128,776
    Exempt from federal income taxes                               29,820          31,748
  Trading securities                                                  469             268
  Short-term investments                                            7,489           8,576
                                                            --------------   -------------
Total interest and fee income                                   1,780,422       1,476,751

Interest expense
----------------
  Deposits                                                        589,211         470,292
  Short-term borrowings                                           110,963          82,459
  Long-term borrowings                                            294,041         222,082
                                                            --------------   -------------
Total interest expense                                            994,215         774,833
                                                            --------------   -------------
Net interest income                                               786,207         701,918
Provision for loan and lease losses                                43,174          22,048
                                                            --------------   -------------
Net interest income after provision for loan and lease losses     743,033         679,870

Other income
------------
  Data processing services                                        720,190         687,956
  Wealth management                                               126,286         109,108
  Service charges on deposits                                      53,931          47,555
  Gains on sale of mortgage loans                                  19,160          23,736
  Other mortgage banking revenue                                    2,957           2,146
  Net investment securities gains                                  21,039           2,090
  Net gains related to Firstsource                                  7,046              --
  Life insurance revenue                                           15,517          14,374
  Net derivative losses - discontinued hedges                          --         (42,017)
  Other                                                            78,012          66,898
                                                            --------------   -------------
Total other income                                              1,044,138         911,846

Other expense
-------------
  Salaries and employee benefits                                  614,910         584,463
  Net occupancy                                                    54,950          50,579
  Equipment                                                        66,664          71,052
  Software expenses                                                37,607          34,786
  Processing charges                                               68,348          56,599
  Supplies and printing                                            15,885          12,595
  Professional services                                            32,588          25,485
  Shipping and handling                                            49,298          45,571
  Amortization of intangibles                                      23,560          20,879
  Metavante transaction costs                                       4,025              --
  Other                                                           161,668         147,380
                                                            --------------   -------------
Total other expense                                             1,129,503       1,049,389
                                                            --------------   -------------
Income before income taxes                                        657,668         542,327
Provision for income taxes                                        220,617         178,713
                                                            --------------   -------------
Net income                                                 $      437,051   $     363,614
                                                            ==============   =============

Net income per common share
---------------------------
  Basic                                                    $         1.70   $        1.49
  Diluted                                                            1.66            1.46

Dividends paid per common share                            $        0.580   $       0.510

Weighted average common shares outstanding (000's):
---------------------------------------------------
  Basic                                                           257,142         244,088
  Diluted                                                         263,066         249,379

See notes to financial statements.
</TABLE>


<PAGE>
<PAGE> 4
<TABLE>
<CAPTION>
                           MARSHALL & ILSLEY CORPORATION
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                                     ($000's)

                                                               Six Months Ended June 30,
                                                           -------------------------------
                                                                 2007            2006
                                                           ---------------  --------------
<S>                                                       <C>              <C>
Net Cash Provided by Operating Activities                  $      513,335   $     436,972

Cash Flows From Investing Activities:
-------------------------------------
  Proceeds from sales of securities available for sale            134,789         558,720
  Proceeds from maturities of securities available for sale       623,171         587,188
  Proceeds from maturities of securities held to maturity          86,207          71,539
  Purchases of securities available for sale                     (780,104)     (1,366,562)
  Net increase in loans                                         1,084,816)     (2,609,407)
  Purchases of assets to be leased                               (152,370)       (101,711)
  Principal payments on lease receivables                         184,692         105,735
  Purchases of premises and equipment, net                        (45,015)        (56,977)
  Acquisitions, net of cash and cash equivalents acquired (paid)   61,355         (66,911)
  Other                                                            12,582          (1,684)
                                                            --------------   -------------
Net cash used in investing activities                            (959,509)     (2,880,070)

Cash Flows From Financing Activities:
-------------------------------------
  Net increase in deposits                                        202,603       1,596,693
  Proceeds from issuance of commercial paper                    3,893,282       2,019,445
  Principal payments on commercial paper                       (3,669,916)     (1,972,059)
  Net (decrease) increase in other short-term borrowings         (595,969)        521,658
  Proceeds from issuance of long-term borrowings                2,197,615       1,199,051
  Payments of long-term borrowings                               (915,469)       (670,666)
  Dividends paid                                                 (149,133)       (124,524)
  Purchases of common stock                                      (294,758)        (41,790)
  Proceeds from exercise of stock options                          67,278          49,408
  Other                                                            (5,200)         (5,200)
                                                            --------------   -------------
Net cash provided by financing activities                         730,333       2,572,016
                                                            --------------   -------------
Net increase in cash and cash equivalents                         284,159         128,918
Cash and cash equivalents, beginning of year                    1,485,258       1,414,351
                                                            --------------   -------------
Cash and cash equivalents, end of period                   $    1,769,417   $   1,543,269
                                                             =============   =============

Supplemental cash flow information:
-----------------------------------
  Cash paid during the period for:
    Interest                                               $      966,281   $     688,262
    Income taxes                                                  156,337         174,028

See notes to financial statements.
</TABLE>
                                                              08/07/2007

<PAGE> 6
                          MARSHALL & ILSLEY CORPORATION
                          Notes to Financial Statements
                         June 30, 2007 & 2006 (Unaudited)

  1.  Basis of Presentation

      The accompanying unaudited consolidated financial statements should
      be read in conjunction with Marshall & Ilsley Corporation's ("M&I"
      or "Corporation") Annual Report on Form 10-K for the year ended
      December 31, 2006.  The unaudited financial information included in
      this report reflects all adjustments consisting of normal recurring
      accruals which are necessary for a fair statement of the financial
      position and results of operations as of and for the three and six
      months ended June 30, 2007 and 2006. The results of operations for
      the three and six months ended June 30, 2007 and 2006 are not
      necessarily indicative of results to be expected for the entire
      year.

  2.  New Accounting Pronouncements

      In June 2007, the Financial Accounting Standards Board ("FASB")
      ratified Emerging Issues Task Force Issue No. 06-11, Accounting for
      Income Tax Benefits of Dividends on Share-Based Payment Awards
      ("EITF 06-11"). EITF 06-11 specifies how entities should recognize
      the income tax benefit received on dividends that are (a) paid to
      employees holding equity-classified nonvested shares,
      equity-classified nonvested share units, or equity-classified
      outstanding stock options and (b) charged to retained earnings under
      Statement of Financial Accounting Standards 123(R), Share-Based
      Payment.  EITF 06-11 is effective for the Corporation on January 1,
      2008.  The Corporation does not believe EITF 06-11 will have a
      material effect on its financial statements and related disclosures.

      In May 2007, FASB issued FASB Staff Position No. FIN 48-1,
      Definition of Settlement in FASB Interpretation No. 48 ("FSP FIN
      48-1"). FSP FIN 48-1 amends FASB Interpretation No. 48, Accounting
      for Uncertainty in Income Taxes ("FIN 48"). FIN 48, which was
      adopted by the Corporation on January 1, 2007, clarifies the
      accounting for uncertainty in income taxes recognized in financial
      statements in accordance with FASB Statement 109, Accounting for
      Income Taxes.  FSP FIN 48-1 provides guidance on how an entity
      should determine whether a tax position is effectively settled for
      the purpose of recognizing previously unrecognized tax benefits. FSP
      FIN 48-1 clarifies that a tax position can be effectively settled
      upon the completion of an examination by a taxing authority without
      being legally extinguished. FSP FIN 48-1 is effective upon the
      initial adoption of FIN 48 and therefore was adopted by the
      Corporation in the beginning of fiscal 2007. The adoption of FSP FIN
      48-1 did not have an impact on the accompanying financial
      statements.

      In February 2007, the FASB issued Statement of Financial Accounting
      Standard No. 159, The Fair Value Option for Financial Assets and
      Financial Liabilities, Including an Amendment of FASB Statement No.
      115 ("SFAS 159"). SFAS 159 permits entities to choose to measure
      many financial instruments and certain other items generally on an
      instrument-by-instrument basis at fair value that are not currently
      required to be measured at fair value. SFAS 159 is intended to
      provide entities with the opportunity to mitigate volatility in
      reported earnings caused by measuring related assets and liabilities
      differently without having to apply complex hedge accounting
      provisions. SFAS 159 does not change requirements for recognizing
      and measuring dividend income, interest income, or interest expense.
      SFAS 159 is effective for the Corporation on January 1, 2008.  The
      Corporation continues to assess the impact, if any, SFAS 159 will
      have on the Corporation.

  3.  Equity Investment in Firstsource Solutions Limited ("Firstsource")

      As of December 31, 2006, the Corporation's wholly-owned subsidiary,
      Metavante, owned a 24% interest in Firstsource. Firstsource is an
      India-based provider of business process outsourcing solutions. This
      investment is accounted for using the equity method of accounting.
      During February 2007, Firstsource offered 60,000,000 new shares of
      common stock at $1.45 per share in a public offering that yielded
      $86.9 million of cash proceeds to Firstsource.  This issuance of new
      shares of common stock diluted Metavante's ownership percentage to
      approximately 21%. Under the provisions of Staff Accounting Bulletin
      No. 51, Accounting for Sales of Stock by a Subsidiary ("SAB 51"),
      when an investee issues shares of its common stock, the investor
      should recognize a gain or loss in the same manner as if the
      investor had sold a portion of its investment.  Subject to certain
      criteria of SAB 51, the resulting gain or loss can be recognized in
      the consolidated financial statements or reflected as a capital
      transaction, at the option of the Corporation, and the accounting
      treatment selected is to be followed consistently for all future
      gains or losses.  The Corporation elected to recognize the initial
      gain of $8.0 million in the consolidated statement of income in the
      first quarter of 2007. All future SAB 51 gains or losses will be
      recognized in the consolidated statement of income.  As a result of
      Firstsource's equity transactions in the second quarter of 2007, the
      Corporation recognized a loss of $1.0 million for the three months
      ended June 30, 2007.  For the six months ended June 30, 2007, the
      net gain related to Firstsource amounted to $7.0 million. Deferred
      income taxes have been provided on the net gain.

<PAGE> 7
                    MARSHALL & ILSLEY CORPORATION
              Notes to Financial Statements - Continued
                   June 30, 2007 & 2006 (Unaudited)

  4.  Adoption of SAB 108

      The Corporation elected early application of Staff Accounting
      Bulletin No. 108 ("SAB 108") during the third quarter of 2006. In
      accordance with SAB 108, the Corporation adjusted its opening
      financial position for 2006 and the results of operations for the
      first and second quarter of 2006 to reflect a change in its hedge
      accounting under Statement of Financial Accounting Standards No.
      133, Accounting for Derivative Instruments and Hedging Activities
      ("SFAS 133").

      The Corporation utilized interest rate swaps to hedge its risk in
      connection with certain financial instruments.  The Corporation had
      applied hedge accounting under SFAS 133 to these transactions from
      inception.  Due to the recent expansion of certain highly technical
      interpretations of SFAS 133, specifically hedge designation under
      the "matched-term" method, interest rate swaps designated as fair
      value hedges with an aggregate notional amount of $1,762.3 million
      and negative fair value of $50.0 million and interest rate swaps
      designated as cash flow hedges with an aggregate notional amount of
      $1,300.0 million and negative fair value of $45.5 million at June
      30, 2006 did not qualify for hedge accounting. As a result, any
      fluctuation in the fair value of the derivatives should have been
      recorded through the income statement with no corresponding offset
      to the hedged items, or accumulated other comprehensive income.

      The cumulative effect of adjusting the reported carrying amount of
      the assets, liabilities and accumulated other comprehensive income
      at January 1, 2006 resulted in a decrease to retained earnings of
      $34.2 million and reduced the net loss in accumulated other
      comprehensive income by $16.2 million.  In aggregate total
      Shareholders' Equity was reduced by $18.0 million.  For the three
      and six months ended June 30, 2006 net derivative losses -
      discontinued hedges amounted to $20.7 million and $42.0 million,
      respectively.

      The aggregate impact of the adjustments is summarized below ($000's
      except per share data):

<TABLE>
<CAPTION>
                                                        Previously                        As
As of and for the Three Months ended June 30, 2006       Reported      Adjustment      Adjusted
--------------------------------------------------    --------------  ------------  --------------
<S>                                                  <C>              <C>          <C>
Loans and leases, net of unearned income              $  40,230,299    $   51,179   $  40,281,478
Accrued interest and other assets                         1,931,237       (15,941)      1,915,296
Total deposits                                           32,957,792         5,634      32,963,426
Accrued expenses and other liabilities                    1,449,603        61,178       1,510,781
Retained earnings                                         4,137,607       (61,178)      4,076,429
Accumulated other comprehensive (loss)
   income, net of related taxes                            (101,251)       29,604         (71,647)

Net interest income                                   $     374,057    $    2,728   $     376,785
Net derivative losses - discontinued hedges                     --        (20,672)        (20,672)
Other income                                                 36,768        (2,727)         34,041
Income before income taxes                                  303,121       (20,671)        282,450
Provision for income taxes                                   99,372        (7,464)         91,908
Net income                                                  203,749       (13,207)        190,542

Net income per common share:
   Basic                                              $        0.81    $    (0.06)  $        0.75
   Diluted                                                     0.79         (0.05)           0.74
</TABLE>

<PAGE> 8
                    MARSHALL & ILSLEY CORPORATION
              Notes to Financial Statements - Continued
                   June 30, 2007 & 2006 (Unaudited)
<TABLE>
<CAPTION>
                                                        Previously                        As
As of and for the Six Months ended June 30, 2006         Reported      Adjustment      Adjusted
------------------------------------------------      --------------  ------------  --------------
<S>                                                  <C>              <C>          <C>
Net interest income                                   $     698,637    $    3,281   $     701,918
Net derivative losses - discontinued hedges                     --        (42,017)        (42,017)
Other income                                                 70,178        (3,280)         66,898
Income before income taxes                                  584,343       (42,016)        542,327
Provision for income taxes                                  193,826       (15,113)        178,713
Net income                                                  390,517       (26,903)        363,614

Net income per common share:
   Basic                                              $        1.60    $    (0.11)  $        1.49
   Diluted                                                     1.57         (0.11)           1.46
</TABLE>

 5.   Comprehensive Income

      The following tables present the Corporation's comprehensive income
      ($000's):
<TABLE>
<CAPTION>
                                                           Three Months Ended June 30, 2007
                                                     ------------------------------------------
                                                       Before-Tax   Tax (Expense)   Net-of-Tax
                                                         Amount        Benefit        Amount
                                                     -------------- ------------- -------------
    <S>                                             <C>            <C>           <C>
     Net income                                                                   $    220,289
     Other comprehensive income:
       Unrealized gains (losses) on available
         for sale investment securities:
         Arising during the period                   $    (105,746) $     37,055       (68,691)
         Reclassification for securities
           transactions included in net income                (390)          137          (253)
                                                      -------------  ------------  ------------
       Total unrealized gains (losses) on
         available for sale investment securities    $    (106,136) $     37,192  $    (68,944)
                                                      -------------  ------------  ------------

       Net gains (losses) on derivatives hedging
         variability of cash flows:
         Arising during the period                          36,498       (12,774)       23,724
         Reclassification adjustments for
           hedging activities included in net income        (5,288)        1,851        (3,437)
                                                      -------------  ------------  ------------
       Total net gains (losses) on derivatives
         hedging variability of cash flows           $      31,210  $    (10,923) $     20,287
                                                      -------------  ------------  ------------

       Unrealized gains (losses) on funded status
         of defined benefit postretirement plan:
         Arising during the period                              --            --            --
         Reclassification for amortization of
           actuarial loss and prior service
           credit amortization included in net income        (559)           207          (352)
                                                      -------------  ------------  ------------
       Total unrealized gains (losses) on funded status
         of defined benefit postretirement plan      $       (559)  $        207  $       (352)
                                                      -------------  ------------  ------------
       Other comprehensive income (loss)                                               (49,009)
                                                                                   ------------
       Total comprehensive income                                                 $    171,280
                                                                                   ============
</TABLE>
<TABLE>
<CAPTION>
                                                           Three Months Ended June 30, 2006
                                                     ------------------------------------------
                                                       Before-Tax   Tax (Expense)   Net-of-Tax
                                                         Amount        Benefit        Amount
                                                     -------------- ------------- -------------
    <S>                                             <C>            <C>           <C>
     Net income                                                                   $    190,542
     Other comprehensive income:
       Unrealized gains (losses) on available
         for sale investment securities:
         Arising during the period                   $     (86,639) $     30,269       (56,370)
         Reclassification for securities
           transactions included in net income              (1,493)          522          (971)
                                                      -------------  ------------  ------------
     Total unrealized gains (losses) on available
       for sale investment securities                $     (88,132) $     30,791  $    (57,341)
                                                      -------------  ------------  ------------

     Net gains (losses) on derivatives hedging
       variability of cash flows:
       Arising during the period                            13,508        (4,728)        8,780
       Reclassification adjustments for
         hedging activities included in net income          (5,479)        1,918        (3,561)
                                                      -------------  ------------  ------------
     Total net gains (losses) on derivatives hedging
       variability of cash flows                     $       8,029  $     (2,810) $      5,219
                                                      -------------  ------------  ------------
     Other comprehensive income (loss)                                                 (52,122)
                                                                                   ------------
     Total comprehensive income                                                   $    138,420
                                                                                   ============
</TABLE>

<PAGE> 9
                    MARSHALL & ILSLEY CORPORATION
              Notes to Financial Statements - Continued
                   June 30, 2007 & 2006 (Unaudited)
<TABLE>
<CAPTION>
                                                            Six Months Ended June 30, 2007
                                                     ------------------------------------------
                                                       Before-Tax   Tax (Expense)   Net-of-Tax
                                                         Amount        Benefit        Amount
                                                     -------------- ------------- -------------
    <S>                                             <C>            <C>           <C>
     Net income                                                                   $    437,051
     Other comprehensive income:
       Unrealized gains (losses) on available
         for sale investment securities:
       Arising during the period                     $     (88,094) $     30,808       (57,286)
       Reclassification for securities
         transactions included in net income                (1,005)          352          (653)
                                                      -------------  ------------  ------------
       Total unrealized gains (losses) on
         available for sale investment securities    $     (89,099) $     31,160  $    (57,939)
                                                      -------------  ------------  ------------

     Net gains (losses) on derivatives hedging
       variability of cash flows:
       Arising during the period                            30,316       (10,611)       19,705
       Reclassification adjustments for
         hedging activities included in net income         (11,236)        3,933        (7,303)
                                                      -------------  ------------  ------------
       Total net gains (losses) on derivatives
         hedging variability of cash flows           $      19,080  $     (6,678) $     12,402
                                                      -------------  ------------  ------------

     Unrealized gains (losses) on funded status of
       defined benefit postretirement plan:
       Arising during the period                                --            --            --
      Reclassification for amortization of
        actuarial loss and prior service
        credit amortization included in net income          (1,118)          414          (704)
                                                      -------------  ------------  ------------
     Total unrealized gains (losses) on funded status
       of defined benefit postretirement plan        $      (1,118) $        414  $       (704)
                                                      -------------  ------------  ------------
     Other comprehensive income (loss)                                                 (46,241)
                                                                                   ------------
     Total comprehensive income                                                   $    390,810
                                                                                   ============
</TABLE>
<TABLE>
<CAPTION>
                                                            Six Months Ended June 30, 2006
                                                     ------------------------------------------
                                                       Before-Tax   Tax (Expense)   Net-of-Tax
                                                         Amount        Benefit        Amount
                                                     -------------- ------------- -------------
    <S>                                             <C>            <C>           <C>
     Net income                                                                   $    363,614
     Other comprehensive income:
       Unrealized gains (losses) on available
         for sale investment securities:
         Arising during the period                   $    (102,563) $     35,865       (66,698)
       Reclassification for securities
         transactions included in net income                (1,941)          679        (1,262)
                                                      -------------  ------------  ------------
       Total unrealized gains (losses) on
         available for sale investment securities    $    (104,504) $     36,544  $    (67,960)
                                                      -------------  ------------  ------------

     Net gains (losses) on derivatives hedging
       variability of cash flows:
       Arising during the period                            59,880       (20,958)       38,922
       Reclassification adjustments for
         hedging activities included in net income          (8,181)        2,863        (5,318)
                                                      -------------  ------------  ------------
       Total net gains (losses) on derivatives
         hedging variability of cash flows           $      51,699  $    (18,095) $     33,604
                                                      -------------  ------------  ------------
     Other comprehensive income (loss)                                                 (34,356)
                                                                                   ------------
     Total comprehensive income                                                   $    329,258
                                                                                   ============
</TABLE>

  6.  Earnings Per Share

      A reconciliation of the numerators and denominators of the basic and
      diluted per share computations are as follows (dollars and shares in
      thousands, except per share data):
<TABLE>
<CAPTION>
                                                        Three Months Ended June 30, 2007
                                                     ---------------------------------------
                                                        Income     Average Shares  Per Share
                                                      (Numerator)   (Denominator)   Amount
                                                     ------------ --------------- ----------
    <S>                                             <C>          <C>             <C>
     Basic Earnings Per Share:
       Income Available to Common Shareholders       $   220,289         258,772  $    0.85
                                                                                   =========
     Effect of Dilutive Securities:
       Stock Options, Restricted Stock
         and Other Plans                                     --            6,068
                                                      -----------   -------------
     Diluted Earnings Per Share:
       Income Available to Common Shareholders       $   220,289         264,840  $    0.83
                                                                                   =========
</TABLE>
<PAGE> 10
                    MARSHALL & ILSLEY CORPORATION
              Notes to Financial Statements - Continued
                   June 30, 2007 & 2006 (Unaudited)
<TABLE>
<CAPTION>
                                                        Three Months Ended June 30, 2006
                                                     ---------------------------------------
                                                        Income     Average Shares  Per Share
                                                      (Numerator)   (Denominator)   Amount
                                                     ------------ --------------- ----------
    <S>                                             <C>          <C>             <C>
     Basic Earnings Per Share:
       Income Available to Common Shareholders       $   190,542         252,764  $    0.75
                                                                                   =========
     Effect of Dilutive Securities:
       Stock Options, Restricted Stock
         and Other Plans                                     --            5,534
                                                      -----------   -------------
     Diluted Earnings Per Share:
       Income Available to Common Shareholders       $   190,542         258,298  $    0.74
                                                                                   =========
</TABLE>
<TABLE>
<CAPTION>
                                                         Six Months Ended June 30, 2007
                                                     ---------------------------------------
                                                        Income     Average Shares  Per Share
                                                      (Numerator)   (Denominator)   Amount
                                                     ------------ --------------- ----------
    <S>                                             <C>          <C>             <C>
     Basic Earnings Per Share:
       Income Available to Common Shareholders       $    437,051        257,142  $    1.70
                                                                                   =========
     Effect of Dilutive Securities:
       Stock Options, Restricted Stock
         and Other Plans                                      --           5,924
                                                      -----------   -------------
     Diluted Earnings Per Share:
       Income Available to Common Shareholders       $    437,051        263,066  $    1.66
                                                                                   =========
</TABLE>
<TABLE>
<CAPTION>
                                                         Six Months Ended June 30, 2006
                                                     ---------------------------------------
                                                        Income     Average Shares  Per Share
                                                      (Numerator)   (Denominator)   Amount
                                                     ------------ --------------- ----------
    <S>                                             <C>          <C>             <C>
     Basic Earnings Per Share:
       Income Available to Common Shareholders       $   363,614         244,088  $    1.49
                                                                                   =========
     Effect of Dilutive Securities:
       Stock Options, Restricted Stock
         and Other Plans                                     --            5,291
                                                      -----------   -------------
     Diluted Earnings Per Share:
       Income Available to Common Shareholders       $   363,614         249,379  $     1.46
                                                                                   =========
</TABLE>

      Options to purchase shares of common stock not included in the
      computation of diluted net income per share because the stock
      options were antidilutive are as follows (shares in thousands):
<TABLE>
<CAPTION>
                        Three Months Ended June 30,        Six Months Ended June 30,
                  ---------------------------------  ----------------------------------
                       2007             2006              2007             2006
                  ---------------- ----------------  ---------------- -----------------
    <S>          <C>              <C>               <C>              <C>
     Shares             18               47              3,610              131

     Price Range  $48.41 - $49.20  $45.11 - $47.02   $47.99 - $49.20  $44.20 - $47.02
</TABLE>

<PAGE> 11
                    MARSHALL & ILSLEY CORPORATION
              Notes to Financial Statements - Continued
                   June 30, 2007 & 2006 (Unaudited)

  7.  Business Combinations

      The following acquisitions, which are not considered to be material
      business combinations, individually or in the aggregate, were
      completed during 2007:

      Second Quarter
      --------------
      On April 20, 2007, the Corporation completed its acquisition of
      North Star Financial Corporation ("North Star") of Chicago,
      Illinois.  Total consideration in this transaction amounted to $21.0
      million, consisting of 441,252 shares of the Corporation's common
      stock valued at $47.55 per common share.  North Star and its
      subsidiaries provide a variety of wealth management services through
      personal and other trusts. In addition, North Star offers a variety
      of other products and services including land trusts, 1031 exchanges
      for both real and personal property, and ESOP services, including
      consultative services relating to the transfer of small-business
      stock ownership.  North Star's businesses were integrated with the
      Corporation's Wealth Management unit. Initial goodwill, subject to
      the completion of appraisals and valuation of the assets acquired
      and liabilities assumed, amounted to $18.0 million. The preliminary
      estimated identifiable intangible assets to be amortized (customer
      relationships, tradename and non-compete agreements) amounted to
      $6.6 million.  This is considered a non-cash transaction for the
      purposes of the Consolidated Statement of Cash Flows.  The goodwill
      and intangibles resulting from this acquisition are not deductible
      for tax purposes.

      On April 1, 2007, the Corporation completed its acquisition of
      United Heritage Bankshares of Florida, Inc. ("United Heritage").
      United Heritage Bank, a wholly-owned subsidiary of United Heritage,
      with $791.3 million in assets as of March 31, 2007, has 13 branches
      in the metropolitan Orlando area.  Total consideration in this
      transaction amounted to approximately $219.6 million, consisting of
      4,410,647 shares of the Corporation's common stock valued at $204.3
      million and the exchange of vested stock options valued at
      approximately $15.3 million.  The current United Heritage Bank
      branches became M&I Bank branches in the second quarter of 2007.
      Initial goodwill, subject to the completion of appraisals and
      valuation of the assets acquired and liabilities assumed, amounted
      to $147.8 million.  The estimated identifiable intangible asset to
      be amortized (core deposits) with a weighted average life of 7.7
      years amounted to $11.6 million. This is considered a non-cash
      transaction for the purposes of the Consolidated Statement of Cash
      Flows. The goodwill and intangibles resulting from this acquisition
      are not deductible for tax purposes.

      First Quarter
      -------------
      On January 17, 2007, Metavante acquired all of the outstanding stock
      of Valutec Card Solutions, Inc. ("Valutec") for $41.0 million in
      cash. Valutec provides closed-loop, in-store gift and loyalty card
      solutions for small and medium-sized businesses, including hosted
      account management, reporting capabilities, plastic card design and
      production and card program merchandising products.  Initial
      goodwill, subject to the completion of appraisals and valuation of
      the assets acquired and liabilities assumed, amounted to $34.1
      million.  The estimated identifiable intangible asset to be
      amortized (customer relationships) with an estimated useful life of
      7.0 years amounted to $8.2 million.  The goodwill and intangibles
      resulting from this acquisition are not deductible for tax purposes.

      Recent acquisition activity
      ---------------------------
      On July 9, 2007, the Corporation announced the signing of a
      definitive agreement to acquire First Indiana Corp. ("First
      Indiana").  First Indiana, based in Indianapolis, Indiana had $2.2
      billion in consolidated assets as of June 30, 2007, and has 32
      offices in central Indiana.  Under the terms of the definitive
      agreement, stockholders of First Indiana will receive $32.00 in cash
      for each share of First Indiana common stock outstanding, or
      approximately $529.0 million in the aggregate. The transaction is
      expected to close in the fourth quarter of 2007 or in the first
      quarter of 2008, subject to the affirmative vote of First Indiana's
      stockholders, regulatory approvals and other customary closing
      conditions.

      On July 1, 2007, the Corporation completed its acquisition of Excel
      Bank Corporation ("Excel"). Pursuant to an Amended and Restated
      Merger Agreement, shareholders of Excel received $13.97 per share in
      cash for each issued and outstanding share of Excel common stock, or
      approximately $105.0 million in the aggregate. Outstanding options
      to acquire Excel common stock were converted into options to acquire
      the Corporation's common stock. Excel, with $616.0 million in
      consolidated assets as of June 30, 2007, has four branches in the
      greater Minneapolis/St. Paul, Minnesota metropolitan area.  The
      current Excel branches became branches of M&I Bank on August 1,
      2007.

<PAGE> 12
                    MARSHALL & ILSLEY CORPORATION
              Notes to Financial Statements - Continued
                   June 30, 2007 & 2006 (Unaudited)

  8.  Investment Securities

      Selected investment securities, by type, held by the Corporation
      were as follows ($000's):
<TABLE>
<CAPTION>
                                                    June 30,     December 31,      June 30,
                                                      2007           2006            2006
                                                --------------- --------------- ---------------
    <S>                                        <C>             <C>             <C>
     Investment securities available for sale:
       U.S. treasury and government agencies    $    5,597,523  $    5,466,369  $    5,219,287
       States and political subdivisions               888,816         824,015         748,967
       Mortgage backed securities                      100,471         114,467         101,945
       Other                                           578,612         573,002         557,088
                                                 --------------  --------------  --------------
     Total                                      $    7,165,422  $    6,977,853  $    6,627,287
                                                 ==============  ==============  ==============
     Investment securities held to maturity:
       States and political subdivisions        $      408,897  $     494,020  $       546,186
       Other                                             1,000          1,500            1,500
                                                 --------------  --------------  --------------
     Total                                      $      409,897  $     495,520  $       547,686
                                                 ==============  ==============  ==============
</TABLE>

      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 June 30, 2007 ($000's):
<TABLE>
<CAPTION>
                          Less than 12 Months         12 Months or More                Total
                       -------------------------  -------------------------  --------------------------
                            Fair      Unrealized       Fair      Unrealized       Fair      Unrealized
                           Value        Losses        Value        Losses        Value        Losses
                       ------------  -----------  ------------  -----------  ------------  ------------
<S>                   <C>           <C>          <C>           <C>          <C>           <C>
U.S. treasury and
 government agencies   $  2,325,825  $   28,439   $ 2,985,134   $   95,804   $ 5,310,959  $    124,243
States and political
  subdivisions              473,991       9,825        74,640        3,080       548,631        12,905
Mortgage backed securities   28,908         142        71,561        2,026       100,469         2,168
Other                         1,821           4           400           64         2,221            68
                        -----------   ----------   -----------   ----------   -----------   -----------
Total                  $  2,830,545  $   38,410   $ 3,131,735   $  100,974   $ 5,962,280   $   139,384
                        ============  ==========   ===========   ==========   ===========  ============
</TABLE>

      The investment securities in the above table were temporarily
      impaired at June 30, 2007.  This temporary impairment represents the
      amount of loss that would have been realized if the investment
      securities had been sold on June 30, 2007.  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.  At June 30, 2007, the Corporation
      had the ability and intent to hold these temporarily impaired
      investment securities until a recovery of fair value, which may be
      maturity.

<PAGE> 13
                    MARSHALL & ILSLEY CORPORATION
              Notes to Financial Statements - Continued
                   June 30, 2007 & 2006 (Unaudited)
  9.  Loans and Leases

      The Corporation's loan and lease portfolio, including loans held for
      sale, consisted of the following ($000's):
<TABLE>
<CAPTION>
                                                    June 30,     December 31,      June 30,
                                                      2007           2006            2006
                                                --------------- --------------- ---------------
    <S>                                        <C>             <C>             <C>
     Commercial, financial and agricultural     $   12,520,763  $   12,050,963  $   11,763,501
     Cash flow hedging instruments at fair value        (2,073)         (2,773)         (4,362)
                                                 --------------  --------------  --------------
       Commercial, financial and agricultural       12,518,690      12,048,190      11,759,139

     Real estate:
       Construction                                  6,502,403       6,088,206       5,401,568
       Residential mortgage                          6,685,530       6,328,478       5,816,886
       Home equity loans and lines of credit         4,205,734       4,342,362       4,537,014
       Commercial mortgage                          11,282,679      10,965,607      10,861,445
                                                 --------------  --------------  --------------
     Total real estate                              28,676,346      27,724,653      26,616,913

     Personal                                        1,397,219       1,458,594       1,408,973
       Lease financing                                 693,349         703,580         653,494
                                                 --------------  --------------  --------------
         Total loans and leases                  $  43,285,604  $   41,935,017  $   40,438,519
                                                 ==============  ==============  ==============
</TABLE>

  10. Financial Asset Sales

      During the second quarter of 2007, the Corporation sold automobile
      loans with principal balances of $52.2 million in securitization
      transactions. For the three and six months ended June 30, 2007, the
      Corporation recognized net gains of $1.3 million and $1.1 million,
      respectively, from the sale and securitization of auto loans. Other
      income associated with auto securitizations, primarily servicing
      income, amounted to $1.2 million in the current quarter.

      Key economic assumptions used in measuring the retained interests at
      the date of securitization resulting from securitizations completed
      during the quarter were as follows (rate per annum):
<TABLE>
    <S>                                        <C>
     Prepayment speed (CPR)                     15-41 %
     Weighted average life (in months)           22.9
     Expected credit losses
       (based on original balance)          0.50-1.53 %
     Residual cash flow discount rate            12.0 %
     Variable returns to transferees     Forward one-month
                                           LIBOR yield curve
</TABLE>

      At June 30, 2007, securitized automobile loans and other automobile
      loans managed together with them, along with delinquency and credit
      loss information consisted of the following ($000's):
<TABLE>
<CAPTION>
<S>                                                 <C> <C>      <C> <C>         <C> <C>
                                                                   Total
                                    Securitized   Portfolio       Managed
    <S>                          <C>            <C>          <C>
     Loan balances                $   787,445    $  207,043   $  994,488
     Principal amounts of loans
       60 days or more past due         2,539           445        2,984
     Net credit losses (recoveries)
       year to date                     3,664           210        3,874
</TABLE>

      At the end of the second quarter of 2007, the Corporation elected to
      discontinue the sale and securitization of automobile loans into the
      secondary market. Loans previously classified as held for sale were
      reclassified as portfolio loans at the lower of cost or market. The
      difference between cost and market was insignificant.

<PAGE> 14
                    MARSHALL & ILSLEY CORPORATION
              Notes to Financial Statements - Continued
                   June 30, 2007 & 2006 (Unaudited)
 11.  Goodwill and Other Intangibles

      The changes in the carrying amount of goodwill for the six months
      ended June 30, 2007 were as follows ($000's):

<TABLE>
<CAPTION>
                                                   Banking      Metavante       Others        Total
                                                ------------- ------------- ------------- -------------
    <S>                                        <C>           <C>           <C>           <C>
     Goodwill balance as of January 1, 2007     $  1,425,197  $  1,330,276  $     29,056  $  2,784,529
     Goodwill acquired during the period             147,796        34,125        17,964       199,885
     Purchase accounting adjustments                  (2,971)       10,462           231         7,722
                                                 ------------  ------------  ------------  ------------
     Goodwill balance as of June 30, 2007       $  1,570,022  $  1,374,863  $     47,251  $  2,992,136
                                                 ============  ============  ============  ============
</TABLE>

      Goodwill acquired during the second quarter of 2007 for the Banking
      segment included initial goodwill of $147.8 million for the
      acquisition of United Heritage. Goodwill acquired during the second
      quarter of 2007 for the Others segment included initial goodwill of
      $18.0 million related to the North Star acquisition. Goodwill
      acquired during the first quarter of 2007 for the Metavante segment
      included initial goodwill of $34.1 million for the acquisition of
      Valutec.

      Purchase accounting adjustments for the Metavante segment represent
      adjustments made to the initial estimates of fair value associated
      with the acquisition of VICOR, Inc. and Link2Gov Corp.  In addition,
      purchase accounting adjustments for the Metavante segment included
      total earnout payments of $8.0 million related to the acquisitions
      of Advanced Financial Solutions, Inc., Printing for Systems, Inc.
      and AdminiSource Corporation.  Purchase accounting adjustments for
      the Banking segment and Others segment included adjustments
      primarily related to the April 2006 acquisition of Gold Banc
      Corporation, Inc.

      At June 30, 2007, the Corporation's other intangible assets
      consisted of the following ($000's):
<TABLE>
<CAPTION>
                                                               June 30, 2007
                                                -----------------------------------------------
                                                                     Accum-
                                                     Gross           ulated             Net
                                                    Carrying         Amort-          Carrying
                                                     Amount         ization            Value
                                                --------------- --------------- ---------------
    <S>                                        <C>             <C>             <C>
     Other intangible assets
       Core deposit intangible                  $      219,387  $      104,476  $      114,911
       Data processing contract
         rights/customer lists                         363,151          72,015         291,136
       Trust customers                                   9,580           2,419           7,161
       Tradename                                         9,850           1,167           8,683
       Other Intangibles                                 3,188             952           2,236
                                                 --------------  --------------  --------------
                                                $      605,156  $      181,029  $      424,127
                                                 ==============  ==============  ==============

     Mortgage loan servicing rights                                             $        2,305
                                                                                 ==============
</TABLE>

      Amortization expense of other acquired intangible assets for the
      three and six months ended June 30, 2007 amounted to $12.0 million
      and $23.0 million, respectively. For the three and six months ended
      June 30, 2006, amortization expense of other acquired intangible
      assets amounted to $11.7 million and $20.2 million, respectively.
      Amortization of mortgage servicing rights amounted to $0.3 million
      and $0.6 million for the three and six months ended June 30, 2007,
      respectively.  For the three and six months ended June 30, 2006,
      amortization of mortgage servicing rights amounted to $0.3 million
      and $0.7 million, respectively.

<PAGE> 15
                    MARSHALL & ILSLEY CORPORATION
              Notes to Financial Statements - Continued
                   June 30, 2007 & 2006 (Unaudited)

      The estimated amortization expense of other intangible assets and
      mortgage loan servicing rights for the next five annual fiscal years
      are ($000's):
<TABLE>
<CAPTION>
                 <S>                        <C>
                   2008                $    46,620
                   2009                     43,496
                   2010                     40,728
                   2011                     38,306
                   2012                     36,479
</TABLE>

  12. Deposits
      The Corporation's deposit liabilities consisted of the following
      ($000's):
<TABLE>
<CAPTION>
                                                    June 30,     December 31,      June 30,
                                                      2007           2006            2006
                                                --------------- --------------- ---------------
    <S>                                        <C>             <C>             <C>
     Noninterest bearing demand                 $    5,717,972  $    6,112,362  $    5,773,090
     Savings and NOW                                13,717,333      12,081,260      11,549,046

     CD's $100,000 and over                          7,707,849       7,841,499       8,107,033
     Cash flow hedge-Institutional CDs                  (2,293)           (970)        (17,419)
                                                 --------------  --------------  --------------
        Total CD's $100,000 and over                 7,705,556       7,840,529       8,089,614
     Other time deposits                             4,899,680       4,821,233       4,801,124
     Foreign deposits                                2,947,743       3,228,998       2,750,552
                                                 --------------  --------------  --------------
        Total deposits                          $   34,988,284  $   34,084,382  $   32,963,426
                                                 ==============  ==============  ==============
</TABLE>

 13.  Income Taxes

      Effective January 1, 2007, the Corporation adopted the provisions of
      FASB Interpretation No. 48 ("FIN 48"), Accounting for Uncertainty in
      Income Taxes - an interpretation of FASB Statement No. 109, and
      there was no effect on the consolidated financial statements. FIN 48
      clarifies the accounting for uncertainty in income taxes recognized
      in financial statements in accordance with FASB Statement No. 109,
      Accounting for Income Taxes. FIN 48 prescribes a recognition
      threshold and measurement attribute for the financial statement
      recognition and measurement of a tax position taken or expected to
      be taken in a tax return. FIN 48 also provides guidance on
      derecognition, classification, interest and penalties, accounting in
      interim periods, disclosure and transition.

      As of the date of adoption the total amount of unrecognized tax
      benefits was $92.1 million, of which $71.8 million related to
      benefits that, if recognized, would impact the annual effective tax
      rate. Upon adoption of FIN 48, the Corporation changed its policy to
      include interest and penalties related to income tax liabilities in
      income tax expense. Prior to adoption of FIN 48, the Corporation
      recorded interest and penalties related to income tax liabilities to
      other expense, a component of Income Before Income Taxes.  Included
      in the total liability for unrecognized tax benefits as of the date
      of adoption is $6.8 million of interest and no penalties.

      The Corporation, along with its subsidiaries, files income tax
      returns in the U.S. and various state jurisdictions. With limited
      exceptions, the Corporation is no longer subject to examinations by
      federal and state taxing authorities for taxable years before 2003.

      The Corporation anticipates it is reasonably possible within 12
      months of the adoption date that unrecognized tax benefits could be
      reduced up to approximately $22 million. The reduction would
      principally result from settlements with taxing authorities as it
      relates to the tax benefits associated with a 2002 stock issuance.

<PAGE> 16
                    MARSHALL & ILSLEY CORPORATION
              Notes to Financial Statements - Continued
                   June 30, 2007 & 2006 (Unaudited)

 14.  Derivative Financial Instruments and Hedging Activities

      The following is an update of the Corporation's use of derivative
      financial instruments and its hedging activities as described in its
      Annual Report on Form 10-K for the year ended December 31, 2006.
      There were no significant new hedging strategies employed during the
      six months ended June 30, 2007.

      Trading Instruments and Other Free Standing Derivatives
      -------------------------------------------------------
      Loan commitments accounted for as derivatives are not material to
      the Corporation and the Corporation does not employ any formal
      hedging strategies for these commitments.

      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 June 30, 2007, free standing interest rate swaps consisted of
      $2.7 billion in notional amount of receive fixed / pay floating with
      an aggregate negative fair value of $25.8 million and $1.8 billion
      in notional amount of pay fixed / receive floating with an aggregate
      positive fair value of $25.0 million.

      At June 30, 2007, interest rate caps purchased amounted to $17.5
million in notional amount with an immaterial fair value and
interest rate caps sold amounted to $17.5 million in notional amount
with an immaterial fair value.

      At June 30, 2007, the notional value of interest rate futures
      designated as trading was $2.5 billion with a negative fair value of
      $0.4 million.

      The following table presents additional information with respect to
      fair value hedges.
<TABLE>
<CAPTION>
      Fair Value Hedges
      June 30, 2007                                                   Weighted
                                                 Notional     Fair     Average
             Hedged                 Hedging       Amount     Value    Remaining
              Item                Instrument    ($ in mil)($ in mil) Term (Yrs)
      ---------------------- ------------------- --------- --------- ----------
     <S>                    <C>                 <C>       <C>       <C>
      Fair Value Hedges that Qualify for Shortcut Accounting
      ------------------------------------------------------
        Fixed Rate
          Bank Notes         Receive Fixed Swap  $  390.9  $  (21.8)      7.8

      Other Fair Value Hedges
      -----------------------
        Fixed Rate
          Bank Notes         Receive Fixed Swap  $  125.0  $   (6.3)      9.0
        Institutional CDs    Receive Fixed Swap      50.0      (1.0)     29.0
        Callable CDs         Receive Fixed Swap     242.7      (3.6)      8.8
</TABLE>

      The impact from fair value hedges to total net interest income for
      the three and six months ended June 30, 2007 was a negative $0.7
      million and a negative $1.6 million, respectively. The impact to net
      interest income due to ineffectiveness was not material.

<PAGE> 17
                    MARSHALL & ILSLEY CORPORATION
              Notes to Financial Statements - Continued
                   June 30, 2007 & 2006 (Unaudited)

      The following table summarizes the Corporation's cash flow hedges.
<TABLE>
<CAPTION>
      Cash Flow Hedges
      June 30, 2007                                                  Weighted
                                                 Notional     Fair     Average
             Hedged                 Hedging       Amount     Value    Remaining
              Item                Instrument    ($ in mil)($ in mil) Term (Yrs)
      ---------------------- ------------------- --------- --------- ----------
     <S>                    <C>                 <C>       <C>       <C>
        Variable Rate Loans   Receive Fixed Swap $  100.0  $   (2.1)       1.0
        Institutional CDs     Pay Fixed Swap      1,425.0       2.3        1.5
        Federal Funds
          Purchased           Pay Fixed Swap        150.0       0.1        0.5
        FHLB Advances         Pay Fixed Swap      1,410.0      19.6        3.7
        Floating Rate
          Bank Notes          Pay Fixed Swap        550.0       1.0        2.4
</TABLE>

      The impact to total net interest income from cash flow hedges,
      including amortization of terminated cash flow hedges for the three
      and six months ended June 30, 2007 was a positive $5.3 million and a
      positive $11.2 million, respectively. For the three and six months
      ended June 30, 2007, respectively, the impact due to ineffectiveness
      was not material.

      For the three and six months ended June 30, 2006, the total effect
      on net interest income resulting from derivative financial
      instruments was a positive $5.5 million and a positive $9.6 million,
      respectively, including the amortization of terminated derivative
      financial instruments.

 15.  Postretirement Health Plan

      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 or retained from mergers after September 1, 1997
      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.

      Net periodic postretirement benefit cost for the three and six
      months ended June 30, 2007 and 2006 included the following
      components ($000's):
<TABLE>
<CAPTION>
                       Three Months Ended June 30,       Six Months Ended June 30,
                       ------------------------------  ----------------------------
                            2007            2006             2007           2006
                       --------------- --------------  -------------- -------------
    <S>              <C>             <C>             <C>            <C>
      Service cost    $          434  $          570  $         868  $       1,140
      Interest cost
        on APBO                1,062           1,022          2,123          2,044
      Expected return on
        plan assets             (355)           (232)          (710)          (464)
      Prior service
        amortization            (680)           (680)        (1,360)        (1,360)
      Actuarial loss
        amortization             121             378            242            757
                        -------------  --------------  -------------  -------------
      Net periodic postretirement
        benefit cost   $         582  $        1,058  $       1,163  $       2,117
                        =============  ==============  =============  =============
</TABLE>

      Benefit payments and expenses, net of participant contributions, for
      the three and six months ended June 30, 2007 amounted to $1.2
      million and $2.3 million, respectively.

<PAGE> 18
                    MARSHALL & ILSLEY CORPORATION
              Notes to Financial Statements - Continued
                   June 30, 2007 & 2006 (Unaudited)

      The funded status, which is the accumulated postretirement benefit
      obligation net of fair value of plan assets, as of June 30, 2007 is
      as follows ($000's):
<TABLE>
<CAPTION>
     <S>                                       <C>
      Total funded status, December 31, 2006    $   (50,309)
      Service cost                                     (868)
      Interest cost on APBO                          (2,123)
      Expected return on plan assets                    710
      Employer contributions/payments                 9,282
      Expected subsidy (Medicare Part D)               (384)
                                                 -----------
      Total funded status, June 30, 2007        $   (43,692)
                                                 ===========
</TABLE>

 16.  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 following represents the Corporation's operating segments as of
      and for the three and six months ended June 30, 2007 and 2006.
      During 2006, the Corporation transferred the residential and
      commercial mortgage banking reporting units, which were previously
      included in other business operations, to the Banking segment.
      Segment information for all periods presented has been adjusted for
      these transfers.  There have not been any other changes to the way
      the Corporation organizes its segments.

      Metavante transaction costs of $2.6 million and $4.0 million for the
      three and six months ended June 30, 2007, respectively and Net
      derivative losses of $20.7 million and $42.0 million for the three
      and six months ended June 30, 2006, respectively are not included in
      segment income, but are reported in Reclassifications, Eliminations
      and Adjustments in the following tables.  Management does not
      include these items when assessing the financial results of the
      segment operations.

<PAGE> 19
                    MARSHALL & ILSLEY CORPORATION
              Notes to Financial Statements - Continued
                   June 30, 2007 & 2006 (Unaudited)

      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 ($ in millions):
<TABLE>
<CAPTION>
                                                   Three Months Ended June 30, 2007
                          ---------------------------------------------------------------------------------
                                                                                    Reclass-
                                                                                   ifications,
                                                                      Corporate   Eliminations     Consol-
                             Banking      Metavante       Others       Overhead  & Adjustments     idated
                          ------------  ------------  ------------  ------------  -----------  ------------
<S>                      <C>           <C>           <C>           <C>           <C>          <C>
Net interest income       $     406.1   $      (6.7)  $       4.3   $     (10.7)  $      2.9   $     395.9
Other income
  Fees - external               103.5         364.8          65.0           4.7           --         538.0
  Fees - internal
    Fees - intercompany          18.6          28.0           1.9          28.3        (76.8)           --
    Float income -
      intercompany                 --           2.9            --            --         (2.9)           --
                           -----------   -----------   -----------   -----------   ----------   -----------
      Total other income        122.1         395.7          66.9          33.0        (79.7)        538.0

Losses related to Firstsource      --          (1.0)           --            --           --          (1.0)

Other expense
  Expenses - other              194.0         307.5          41.6          31.4          2.1         576.6
  Expenses - intercompany        47.0          13.5          13.7           2.1        (76.3)           --
                           -----------   -----------   -----------   -----------   ----------   -----------
Total other expense             241.0         321.0          55.3          33.5        (74.2)        576.6

Provision for loan
  and lease losses               25.7            --           0.3            --           --          26.0
                           -----------   -----------   -----------   -----------   ----------   -----------
Income (loss) before taxes      261.5          67.0          15.6         (11.2)        (2.6)        330.3
Income tax expense (benefit)     86.1          23.2           5.3          (4.3)        (0.3)        110.0
                           -----------   -----------   -----------   -----------   ----------   -----------
Segment income (loss)     $     175.4   $      43.8   $      10.3   $      (6.9)  $     (2.3)  $     220.3
                           ===========   ===========   ===========   ===========   ==========   ===========
Identifiable assets       $  55,304.8   $   3,117.4   $     873.2   $     708.2   $ (1,705.9)  $  58,297.7
                           ===========   ===========   ===========   ===========   ==========   ===========
Return on average equity         12.4%         13.2%         14.5%                                    13.5%
                           ===========   ===========   ===========                              ===========
</TABLE>
<TABLE>
<CAPTION>
                                                   Three Months Ended June 30, 2006
                          ---------------------------------------------------------------------------------
                                                                                    Reclass-
                                                                                   ifications,
                                                                      Corporate   Eliminations     Consol-
                             Banking      Metavante       Others       Overhead  & Adjustments     idated
                          ------------  ------------  ------------  ------------  -----------  ------------
<S>                      <C>           <C>           <C>           <C>           <C>          <C>
Net interest income       $     386.5   $      (7.5)  $       3.5   $      (8.4)  $      2.7   $     376.8
Other income
  Fees - external                79.9         345.0          55.3           1.5        (20.7)        461.0
  Fees - internal
    Fees - intercompany          16.0          25.8           1.5          25.0        (68.3)           --
    Float income - intercompany    --           2.7            --            --         (2.7)           --
                           -----------   -----------   -----------   -----------   ----------   -----------
      Total other income         95.9         373.5          56.8          26.5        (91.7)        461.0

Other expense
  Expenses - other              184.8         294.6          36.0          28.4          0.5         544.3
  Expenses - intercompany        43.2          13.0          11.4           1.2        (68.8)           --
                           -----------   -----------   -----------   -----------   ----------   -----------
Total other expense             228.0         307.6          47.4          29.6        (68.3)        544.3
Provision for loan
  and lease losses               10.6            --           0.5            --           --          11.1
                           -----------   -----------   -----------   -----------   ----------   -----------
Income (loss) before taxes      243.8          58.4          12.4         (11.5)       (20.7)        282.4
Income tax expense (benefit)     81.0          18.0           4.5          (4.1)        (7.5)         91.9
                           -----------   -----------   -----------   -----------   ----------   -----------
Segment income (loss)     $     162.8   $      40.4   $       7.9   $      (7.4)  $    (13.2)  $     190.5
                           ===========   ===========   ===========   ===========   ==========   ===========
Identifiable assets       $  51,661.9   $   2,790.5   $     745.8   $     684.9   $ (1,429.0)  $  54,454.1
                           ===========   ===========   ===========   ===========   ==========   ===========
Return on average equity         13.2%         14.5%         14.1%                                    13.5%
                           ===========   ===========   ===========                              ===========
</TABLE>

<PAGE> 20
                    MARSHALL & ILSLEY CORPORATION
              Notes to Financial Statements - Continued
                   June 30, 2007 & 2006 (Unaudited)
<TABLE>
<CAPTION>
                                                    Six Months Ended June 30, 2007
                          ---------------------------------------------------------------------------------
                                                                                    Reclass-
                                                                                   ifications,
                                                                      Corporate   Eliminations     Consol-
                             Banking      Metavante       Others       Overhead  & Adjustments     idated
                          ------------  ------------  ------------  ------------  -----------  ------------
<S>                      <C>           <C>           <C>           <C>           <C>          <C>
Net interest income       $     803.5   $     (14.0)  $       9.7   $     (19.0)  $      6.0   $     786.2

Other income
  Fees - external               184.1         721.8         126.7           4.5           --       1,037.1
  Fees - internal
    Fees - intercompany          36.7          55.2           3.6          56.9       (152.4)           --
    Float income - intercompany    --           6.0            --            --         (6.0)           --
                           -----------   -----------   -----------   -----------   ----------   -----------
      Total other income        220.8         783.0         130.3          61.4       (158.4)      1,037.1

Gains related to Firstsource       --           7.0            --            --           --           7.0

Other expense
  Expenses - other              385.0         605.1          78.7          57.4          3.2       1,129.4
  Expenses - intercompany        93.3          27.0          27.6           3.7       (151.6)           --
                           -----------   -----------   -----------   -----------   ----------   -----------
Total other expense             478.3         632.1         106.3          61.1       (148.4)      1,129.4
Provision for loan
  and lease losses               42.6            --           0.6            --           --          43.2
                           -----------   -----------   -----------   -----------   ----------   -----------
Income (loss) before taxes      503.4         143.9          33.1         (18.7)        (4.0)        657.7
Income tax expense (benefit)    165.5          50.9          11.8          (7.2)        (0.4)        220.6
                           -----------   -----------   -----------   -----------   ----------   -----------
Segment income (loss)     $     337.9   $      93.0   $      21.3   $     (11.5)  $     (3.6)  $     437.1
                           ===========   ===========   ===========   ===========   ==========   ===========
Identifiable assets       $  55,304.8   $   3,117.4   $     873.2   $     708.2   $ (1,705.9)  $  58,297.7
                           ===========   ===========   ===========   ===========   ==========   ===========
Return on average equity         12.5%         14.3%         16.1%                                    13.8%
                           ===========   ===========   ===========                              ===========
</TABLE>
<TABLE>
<CAPTION>
                                                    Six Months Ended June 30, 2006
                          ---------------------------------------------------------------------------------
                                                                                    Reclass-
                                                                                   ifications,
                                                                      Corporate   Eliminations     Consol-
                             Banking      Metavante       Others       Overhead  & Adjustments     idated
                          ------------  ------------  ------------  ------------  -----------  ------------
<S>                      <C>           <C>           <C>           <C>           <C>          <C>
Net interest income       $     717.2   $     (15.8)  $       7.1   $     (12.5)  $      5.9   $     701.9
Other income
 Fees - external                153.5         688.0         108.7           3.6        (42.0)        911.8
 Fees - internal
   Fees - intercompany           32.0          50.6           3.0          50.0       (135.6)           --
   Float income - intercompany     --           5.9            --            --         (5.9)           --
                           -----------   -----------   -----------   -----------   ----------   -----------
     Total other income         185.5         744.5         111.7          53.6       (183.5)        911.8

Other expense
 Expenses - other               348.6         590.7          70.3          40.5         (0.7)      1,049.4
 Expenses - intercompany         83.5          25.6          22.5           3.3       (134.9)           --
                           -----------   -----------   -----------   -----------   ----------   -----------
Total other expense             432.1         616.3          92.8          43.8       (135.6)      1,049.4
Provision for loan
  and lease losses               21.0            --           1.0            ---          --          22.0
                           -----------   -----------   -----------   -----------   ----------   -----------
Income (loss) before taxes      449.6         112.4          25.0          (2.7)       (42.0)        542.3
Income tax expense (benefit)    148.8          37.5           9.1          (1.6)       (15.1)        178.7
                           -----------   -----------   -----------   -----------   ----------   -----------
Segment income (loss)     $     300.8   $      74.9   $      15.9   $      (1.1)  $    (26.9)  $     363.6
                           ===========   ===========   ===========   ===========   ==========   ===========
Identifiable assets       $  51,661.9   $   2,790.5   $     745.8   $     684.9   $ (1,429.0)  $  54,454.1
                           ===========   ===========   ===========   ===========   ==========   ===========
Return on average equity         13.8%         13.8%         15.0%                                    14.0%
                           ===========   ===========   ===========                              ===========
</TABLE>

<PAGE> 21
      Total revenue, which consists of net interest income plus total
      other income, by type in Others consisted of the following ($ in
      millions):
<TABLE>
<CAPTION>
                         Three Months Ended June 30,     Six Months Ended June 30,
                       ------------------------------  ----------------------------
                            2007            2006             2007           2006
                       --------------- --------------  -------------- -------------
    <S>               <C>             <C>             <C>            <C>
     Trust Services    $         56.7  $        49.2   $       108.9  $       95.2
     Capital Markets              0.5           (0.3)            2.3           0.3
     Brokerage and Insurance      9.4            7.5            18.6          14.8
     Commercial Leasing           3.3            2.8             7.9           5.8
     Others                       1.3            1.1             2.3           2.7
                        --------------  -------------   -------------  ------------
       Total           $         71.2  $        60.3   $       140.0  $      118.8
                        ==============  =============   =============  ============
</TABLE>

 17.  Marshall & Ilsley Corporation and Metavante Corporation Separation

      On April 3, 2007, the Corporation announced its plan to separate
      Marshall & Ilsley Corporation and Metavante Corporation into two
      separate publicly traded companies.

      Under an investment agreement with WPM, L.P., a limited partnership
      affiliated with Warburg Pincus Private Equity IX, L.P., a global
      private equity investor ("Warburg Pincus"), Warburg Pincus has
      agreed to invest $625 million to acquire an equity interest
      representing 25 percent of the common stock of Metavante Holding
      Company, a corporation formed for the purpose of completing this
      separation that will, after the completion of the separation, own
      all of the issued and outstanding common stock of Metavante
      Corporation ("New Metavante").  Marshall & Ilsley Corporation
      shareholders will own 75 percent of the shares of New Metavante
      following completion of the transaction.  This plan will be
      implemented through the spin-off of Marshall & Ilsley Corporation
      and is intended to be tax-free to Marshall & Ilsley Corporation and
      its shareholders.  In connection with the plan, approximately $1.75
      billion of New Metavante debt will be arranged, which will be used
      to repay certain intercompany indebtedness plus accrued and unpaid
      interest owed to the Corporation by Metavante (the amount currently
      owed is approximately $982 million).  In addition, pursuant to the
      investment agreement, New Metavante will contribute $1.665 billion
      in cash to New M&I Corporation, a corporation formed for the purpose
      of completing this separation that will, after the completion of the
      separation, own directly and through its subsidiaries the
      Corporation's banking business ("New Marshall & Ilsley").

      Upon completion of the transaction, shareholders will receive three
      shares of New Marshall & Ilsley common stock and one share of New
      Metavante common stock for every three shares of Marshall & Ilsley
      Corporation common stock held.

      Marshall & Ilsley Corporation's board of directors has unanimously
      adopted and approved the investment agreement and the transactions
      contemplated by this investment agreement and has recommended that
      Marshall & Ilsley Corporation's shareholders approve and adopt this
      investment agreement and the transactions contemplated by this
      investment agreement.  Under the investment agreement with Warburg
      Pincus, the closing of the transaction, which is currently expected
      to occur in the fourth quarter of 2007, is contingent upon
      satisfaction of various closing conditions.  The conditions include
      approval and adoption of Marshall & Ilsley Corporation's
      shareholders, who will be asked to vote on the proposed transactions
      at a special meeting that will be held on a date to be announced,
      receipt of a favorable ruling from the Internal Revenue Service,
      sufficiency of New Metavante's funds, other regulatory approvals and
      other specified closing conditions.

<PAGE> 17
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
                           MARSHALL & ILSLEY CORPORATION
                  CONSOLIDATED AVERAGE BALANCE SHEETS (Unaudited)
                                    ($000's)

                                                             Three Months Ended June 30,
                                                           --------------------------------
                                                                 2007            2006
                                                           ---------------  ---------------
<S>                                                       <C>              <C>
Assets
------
Cash and due from banks                                    $    1,052,715   $    1,030,657

Investment securities:
  Trading securities                                               58,346           50,268
  Short-term investments                                          273,317          374,212
  Other investment securities:
    Taxable                                                     6,325,650        5,818,278
    Tax-exempt                                                  1,300,156        1,316,122
                                                            --------------   --------------
Total investment securities                                     7,957,469        7,558,880

Loans and leases:
  Loans and leases, net of unearned income                     42,908,722       39,697,996
    Allowance for loan and lease losses                          (432,424)        (416,328)
                                                            --------------   --------------
  Net loans and leases                                         42,476,298       39,281,668

Premises and equipment, net                                       588,712          565,369
Accrued interest and other assets                               5,628,302        5,184,462
                                                            --------------   --------------
Total Assets                                               $   57,703,496   $   53,621,036
                                                            ==============   ==============

Liabilities and Shareholders' Equity
------------------------------------
Deposits:
  Noninterest bearing                                      $    5,431,158   $    5,404,147
  Interest bearing                                             27,686,843       27,337,123
                                                            --------------   --------------
Total deposits                                                 33,118,001       32,741,270

Federal funds purchased and security repurchase agreements      3,125,694        2,332,734
Other short-term borrowings                                     1,171,983        1,085,859
Long-term borrowings                                           11,941,934       10,050,166
Accrued expenses and other liabilities                          1,822,376        1,747,329
                                                            --------------   --------------
Total liabilities                                              51,179,988       47,957,358

Shareholders' equity                                            6,523,508        5,663,678
                                                            --------------   --------------
Total Liabilities and Shareholders' Equity                 $   57,703,496   $   53,621,036
                                                            ==============   ==============
</TABLE>


<PAGE>
<PAGE> 23
<TABLE>
<CAPTION>
                           MARSHALL & ILSLEY CORPORATION
                  CONSOLIDATED AVERAGE BALANCE SHEETS (Unaudited)
                                    ($000's)

                                                              Six Months Ended June 30,
                                                           --------------------------------
                                                                 2007            2006
                                                           ---------------  ---------------
<S>                                                       <C>              <C>
Assets
------
Cash and due from banks                                    $    1,047,286   $    1,005,507

Investment securities:
  Trading securities                                               49,871           42,267
  Short-term investments                                          275,257          345,127
  Other investment securities:
    Taxable                                                     6,240,037        5,401,133
    Tax-exempt                                                  1,294,042        1,328,293
                                                            --------------   --------------
Total investment securities                                     7,859,207        7,116,820

Loans and leases:
  Loans and leases, net of unearned income                     42,510,023       37,202,153
    Allowance for loan and lease losses                          (428,087)        (392,442)
                                                            --------------   --------------
  Net loans and leases                                         42,081,936       36,809,711

Premises and equipment, net                                       581,600          530,820
Accrued interest and other assets                               5,540,780        4,756,597
                                                            --------------   --------------
Total Assets                                               $   57,110,809   $   50,219,455
                                                            ==============   ==============

Liabilities and Shareholders' Equity
------------------------------------
Deposits:
  Noninterest bearing                                      $    5,375,550   $    5,174,349
  Interest bearing                                             27,463,804       24,950,246
                                                            --------------   --------------
Total deposits                                                 32,839,354       30,124,595

Federal funds purchased and security repurchase agreements      3,260,183        2,386,379
Other short-term borrowings                                     1,013,133        1,008,475
Long-term borrowings                                           11,783,701        9,728,869
Accrued expenses and other liabilities                          1,822,715        1,729,861
                                                            --------------   --------------
Total liabilities                                              50,719,086       44,978,179

Shareholders' equity                                            6,391,723        5,241,276
                                                            --------------   --------------
Total Liabilities and Shareholders' Equity                 $   57,110,809   $   50,219,455
                                                            ==============   ==============
</TABLE>


<PAGE>
<PAGE> 24
                                 OVERVIEW
                                 --------

  The Corporation's overall strategy is to drive earnings per share growth
  by: (1) expanding banking operations not only in Wisconsin but also 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) separating
  Marshall & Ilsley Corporation and Metavante into two separate publicly
  traded companies, as discussed below.

  In early April 2007, the Corporation announced its plan to separate
  Marshall & Ilsley Corporation and Metavante into two separate publicly
  traded companies.  The Corporation believes this transaction will create
  two well-positioned companies and will provide substantial benefits to
  the shareholders of both companies by creating additional opportunities
  to focus on core businesses.  Metavante expects to be able to drive
  earnings per share growth by having access to financial resources to
  continue to build new products, invest in new technologies, attract and
  retain employees and acquire additional companies. Marshall & Ilsley
  Corporation's enhanced capital position is expected to drive earnings
  per share growth by enabling it to provide resources for continued
  organic growth, fund strategic initiatives within wealth management and
  its other business lines and pursue opportunities in new geographic
  markets. This transaction, which is contingent upon satisfaction of
  various closing conditions, is expected to close in the fourth quarter
  of 2007. The closing conditions include approval and adoption of
  Marshall & Ilsley Corporation shareholders, who will be asked to vote on
  the proposed transactions at a special meeting that will be held on a
  date to be announced, receipt of a favorable ruling from the Internal
  Revenue Service, sufficiency of New Metavante's funds, other regulatory
  approvals and other specified closing conditions.

  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's
  fundamental performance in each of these key areas of its core
  businesses will result in a strong growth profile over time.

  Net income for the second quarter of 2007 amounted to $220.3 million
  compared to $190.5 million for the same period in the prior year, an
  increase of $29.8 million, or 15.6% . Diluted earnings per share were
  $0.83 for the three months ended June 30, 2007 compared to $0.74 for the
  three months ended June 30, 2006. The return on average assets and
  average equity was 1.53% and 13.54%, respectively, for the quarter ended
  June 30, 2007, and 1.43% and 13.49%, respectively, for the quarter ended
  June 30, 2006.

  Net income for the first half of 2007 amounted to $437.1 million
  compared to $363.6 million for the same period in the prior year, an
  increase of $73.5 million, or 20.2% . Diluted earnings per share were
  $1.66 for the six months ended June 30, 2007 compared to $1.46 for the
  six months ended June 30, 2006.  The return on average assets and
  average equity was 1.54% and 13.79%, respectively, for the six months
  ended June 30, 2007, and 1.46% and 13.99%, respectively, for the six
  months ended June 30, 2006.

  For the three and six months ended June 30, 2007, costs associated with
  the previously discussed Metavante transaction amounted to $2.6 million
  and $4.0 million, respectively, and are included in a separate line
  within Other expense in the Consolidated Statements of Income.  Net
  income and diluted earnings per share excluding the transaction costs
  would have been $222.6 million and $0.84 per share for the three months
  ended June 30, 2007, respectively and $440.7 million and $1.68 per share
  for the six months ended June 30, 2007, respectively and the return on
  average assets and return on average equity would have been 1.55% and
  13.69% for the three months ended June 30, 2007, respectively and 1.56%
  and 13.90% for the six months ended June 30, 2007, respectively.  The
  Corporation expects that transaction related costs will significantly
  increase in future quarters until the transaction is completed.

  For the three months ended June 30, 2006, the impact of the
  mark-to-market adjustments associated with certain interest rate swaps
  and reported as Net derivative losses-discontinued hedges within Other
  income in the Consolidated Statements of Income, resulted in a decrease
  to net income of $13.2 million and a decrease to diluted earnings per
  share of $0.05 per share. Management believes the non-cash changes in
  earnings based on market volatility are not reflective of the core
  performance trends of the Corporation. Excluding the non-cash changes in
  earnings based on market volatility, for the three months ended June 30,
  2006, net income and diluted earnings per share would have been $203.7
  million and $0.79 per share respectively, and the return on average
  assets and return on average equity would have been 1.52% and 14.36%,
  respectively.

  For the six months ended June 30, 2006, the impact of the mark-to-market
  adjustments reported as Net derivative losses-discontinued hedges within
  Other income in the Consolidated Statements of Income, resulted in a
  decrease to net income of $26.9 million and a decrease to diluted
  earnings per share of $0.11 per share. Management believes the non-cash
  changes in earnings based on market volatility are not reflective of the
  core performance trends of the Corporation. Excluding the non-cash
  changes in earnings based on market volatility, for the six months ended
  June 30, 2006, net income and diluted earnings per share would have been
  $390.5  million and $1.57 per share respectively, and the return on
  average assets and  return on average equity would have been 1.57% and
  14.96%, respectively.

<PAGE> 25
  A reconciliation of these non-GAAP (Generally Accepted Accounting
  Principles) operating results to GAAP results is provided later in this
  section.

  Earnings growth for the three and six months ended June 30, 2007
  compared to the three and six months ended June 30, 2006 was
  attributable to a number of factors.  For the three months ended June
  30, 2007, the increase in net interest income was due to the
  contribution from the banking acquisition that was completed on April 1,
  2007 and the two banking acquisitions completed in April 2006 as well as
  continued organic loan and bank issued deposit growth.  Net interest
  income was negatively affected by the repurchase of 6.1 million shares
  of the Corporation's common stock during the second quarter of 2007. The
  increase in net charge-offs contributed to an increase in the provision
  for loan and lease losses in the second quarter of 2007. Metavante
  continued to exhibit growth in both revenue and earnings which was
  attributable, in part, to the impact of its acquisition activities as
  well as success in retaining and cross-selling products and services to
  its core customer base.  Metavante's acquisition activities included one
  acquisition completed in the first quarter of 2007 and one acquisition
  completed in the third quarter of 2006. Continued organic growth in
  assets under management and assets under administration, an acquisition
  completed in April 2007, and improved investment performance resulted in
  solid growth in fee income for Wealth Management. Since its initial
  public offering, the common stock of MasterCard has experienced
  significant share-price appreciation. During the second quarter of 2007,
  the Corporation sold its investment in MasterCard Class B common stock
  and realized a pre-tax gain of $19.0 million. These factors along with
  continued organic expense management resulted in the reported earnings
  growth in the three and six months ended June 30, 2007 compared to the
  three and six months ended June 30, 2006.

  The transaction to separate Marshall & Ilsley Corporation and Metavante
  into two separate publicly traded companies will significantly affect
  the financial condition, results of operations and cash flows for both
  the Corporation and Metavante. In connection with the proposed
  transactions, a Registration Statement on Form S-4 was filed with the
  Securities and Exchange Commission that provides, among other things,
  financial information and pro forma financial information for both
  Metavante and the Corporation.

                          ACQUISITION ACTIVITIES
                          ----------------------
  On July 9, 2007, the Corporation announced the signing of a definitive
  agreement to acquire First Indiana Corp. ("First Indiana"). First
  Indiana, based in Indianapolis, Indiana had $2.2 billion in consolidated
  assets as of June 30, 2007, and has 32 offices in central Indiana. Under
  the terms of the definitive agreement, stockholders of First Indiana
  will receive $32.00 in cash for each share of First Indiana common stock
  outstanding, or approximately $529.0 million in the aggregate. The
  transaction is expected to close in the fourth quarter of 2007 or in the
  first quarter of 2008, subject to the affirmative vote of First
  Indiana's stockholders, regulatory approvals and other customary closing
  conditions.

  On July 1, 2007, the Corporation completed its acquisition of Excel Bank
  Corporation ("Excel").  Pursuant to an Amended and Restated Merger
  Agreement, shareholders of Excel received $13.97 per share in cash for
  each issued and outstanding share of Excel common stock, or
  approximately $105.0 million in the aggregate.  Outstanding options to
  acquire Excel common stock were converted into options to acquire the
  Corporation's common stock. Excel, with $616.0 million in consolidated
  assets as of June 30, 2007, has four branches in the greater
  Minneapolis/St. Paul, Minnesota metropolitan area. The current Excel
  branches became branches of M&I Bank on August 1, 2007.

  On April 20, 2007, the Corporation completed its acquisition of North
  Star Financial Corporation ("North Star") of Chicago, Illinois. Total
  consideration in this transaction amounted to $21.0 million, consisting
  of 441,252 shares of the Corporation's common stock valued at $47.55 per
  common share. North Star and its subsidiaries provide a variety of
  wealth management services through personal and other trusts. In
  addition, North Star offers a variety of other products and services
  including land trusts, 1031 exchanges for both real and personal
  property, and ESOP services, including consultative services relating to
  the transfer of small-business stock ownership.  North Star's businesses
  were integrated with the Corporation's Wealth Management unit.

  On April 1, 2007, the Corporation completed its acquisition of United
  Heritage Bankshares of Florida, Inc. ("United Heritage"). United
  Heritage Bank, a wholly-owned subsidiary of United Heritage, with $791.3
  million in assets as of March 31, 2007, has 13 branches in the
  metropolitan Orlando area.  Total consideration in this transaction
  amounted to approximately $219.6 million, consisting of 4,410,647 shares
  of the Corporation's common stock valued at $204.3 million and the
  exchange of vested stock options valued at approximately $15.3 million.
  The current United Heritage Bank branches became M&I Bank branches in
  the second quarter of 2007.

<PAGE> 26
  On January 17, 2007, Metavante acquired all of the outstanding stock of
  Valutec Card Solutions, Inc. ("Valutec") for $41.0 million in cash.
  Valutec provides closed-loop, in-store gift and loyalty card solutions
  for small and medium-sized businesses, including hosted account
  management, reporting capabilities, plastic card design and production
  and card program merchandising products.

  See Note 7 -- Business Combinations in Notes to Financial Statements for
  further discussion of the Corporation's acquisition activities.

                 NOTEWORTHY TRANSACTIONS AND EVENTS
                 ----------------------------------
  Some of the more noteworthy transactions and events that occurred in the
  three and six months ended June 30, 2007 and 2006 consisted of the
  following:

  Second quarter 2007
  -------------------
  As previously discussed, on April 1, 2007, the Corporation completed its
  acquisition of United Heritage and on April 20, 2007, the Corporation
  completed its acquisition of North Star.

  During the second quarter of 2007, the Corporation completed two
  accelerated share repurchase transactions under its authorized Stock
  Repurchase Program. In the aggregate, the Corporation acquired 6.1
  million shares of its common stock in these transactions. Total
  consideration in these transactions amounted to $297.3 million and
  consisted of cash of $294.7 million and common treasury stock valued at
  $2.6 million. In conjunction with the first accelerated share repurchase
  transaction executed during the second quarter of 2007, the Corporation
  used 54,035 shares of its treasury common stock to share-settle the
  final settlement obligation.

  During the second quarter of 2007, the Corporation sold its investment
  in MasterCard Class B common shares and realized a pre-tax gain of $19.0
  million.  That gain is reported in Net investment securities gains in
  the Consolidated Statements of Income. The Corporation sold its
  investment in order to monetize the significant appreciation in the
  market price of the common stock of MasterCard since its initial public
  offering.

  During the second quarter and first half of 2007, the Corporation
  realized a pre-tax loss of $1.0 million and a pre-tax gain of $7.0
  million, respectively, related to Metavante's investment in Firstsource.
  See Note 3 - Equity Investment in Firstsource Solutions Limited in Notes
  to Financial Statements for further information. The Corporation expects
  that additional gains and/or losses from Firstsource equity activities
  could be recognized in future periods.

  As previously discussed, costs associated with the transaction to
  separate Marshall & Ilsley Corporation and Metavante Corporation into
  two separate publicly traded companies amounted to a pre-tax expense of
  $2.6 million ($2.3 million after-tax) for the three months ended June
  30, 2007 and $4.0 million ($3.6 million after-tax) for the six months
  ended June 30, 2007.

  First quarter 2007
  ------------------
  Costs associated with the transaction to separate Marshall & Ilsley
  Corporation and Metavante Corporation into two separate publicly traded
  companies amounted to a pre-tax expense of $1.5 million ($1.3 million
  after-tax) for the three months ended March 31, 2007.

  During the first quarter of 2007, the Corporation realized $8.0 million
  in pre-tax gains related to Metavante's investment in Firstsource.

  The impact of the previously discussed gains were in part offset by the
  loss associated with the call of the Corporation's 7.65% junior
  subordinated deferrable interest debentures and the related M&I Capital
  Trust A 7.65% trust preferred securities. The loss amounted to $9.5
  million and is included in Other expense in the Consolidated Statements
  of Income.

  Second quarter 2006
  -------------------
  The results of operations and financial position as of and for the three
  months ended June 30, 2006 included the effect of the previously
  announced acquisitions of Gold Banc Corporation, Inc. and Trustcorp
  Financial, Inc. which were both completed on April 1, 2006.  As of April
  1, 2006, the combined assets of Gold Banc Corporation, Inc. and
  Trustcorp Financial, Inc. amounted to approximately $4.9 billion. The
  combined purchase price for these companies, which included
  approximately $146.0 million of cash, amounted to $898.2 million. In the
  aggregate, 16.74 million shares of the Corporation's common stock were
  issued and fully vested stock options to purchase 0.5 million of the
  Corporation's common stock were exchanged in these transactions.

<PAGE> 27
  As previously discussed, the Corporation determined during 2006 that
  certain transactions did not qualify for hedge accounting. The impact of
  the mark-to-market adjustments associated with certain interest rate
  swaps and reported as Net derivative losses-discontinued hedges in the
  Consolidated Statements of Income, resulted in a decrease to net income
  of $13.2 million and a decrease to diluted earnings per share of $0.05
  for the three months ended June 30, 2006. For the six months ended June
  30, 2006, net derivative losses-discontinued hedges resulted in a
  decrease to net income of $26.9 million and a decrease of $0.11 to
  diluted earnings per share.

  First quarter 2006
  ------------------
  The impact of the mark-to-market adjustments associated with certain
  interest rate swaps and reported as Net derivative losses-discontinued
  hedges in the Consolidated Statements of Income, resulted in a decrease
  to net income of $13.7 million and a decrease to diluted earnings per
  share of $0.06 per share for the three months ended March 31, 2006.

                         NET INTEREST INCOME
                         -------------------
  Net interest income is the difference between interest earned on earning
  assets and interest owed on interest bearing liabilities. Net interest
  income represented 42.4% of the Corporation's source of revenues for the
  three months ended June 30, 2007 compared to 45.0% for the three months
  ended June 30, 2006.  For the six months ended June 30, 2007 net
  interest income represented 43.0% of the Corporation's source of
  revenues compared to 43.5% for the six months ended June 30, 2006.

  Net interest income for the second quarter of 2007 amounted to $395.9
  million compared to $376.8 million reported for the second quarter of
  2006, an increase of $19.1 million or 5.1% . For the six months ended
  June 30, 2007, net interest income amounted to $786.2 million compared
  to $701.9 million reported for the six months ended June 30, 2006, an
  increase of $84.3 million or 12.0%.  Acquisition-related and organic
  loan growth and the growth in bank issued deposits were the primary
  contributors to the increase in net interest income.  Factors negatively
  affecting net interest income compared to the prior year included the
  impact of the financing costs associated with the 2006 banking
  acquisitions and Metavante's acquisitions, the cost of common stock
  repurchases, tightening loan spreads and a general shift in the bank
  issued deposit mix from lower cost to higher cost deposit products.

  Average earning assets increased $3.6 billion or 7.6% in the second
  quarter of 2007 compared to the second quarter of 2006. Average loans
  and leases accounted for $3.2 billion of the growth in average earning
  assets in the second quarter of 2007 compared to the second quarter of
  2006. Average investment securities increased $0.4 billion in the second
  quarter of 2007 over the prior year second quarter.

  Average interest bearing liabilities amounted to $43.9 billion in the
  second quarter of 2007 compared to $40.8 billion in the second quarter
  of 2006, an increase of $3.1 billion or 7.6% . Average interest bearing
  deposits increased $0.3 billion or 1.3% in the second quarter of 2007
  compared to the second quarter of 2006. Average total borrowings
  increased $2.8 billion or 20.6% in the second quarter of 2007 compared
  to the same period in 2006.

  Average noninterest bearing deposits were relatively unchanged in the
  three months ended June 30, 2007 compared to the three months ended June
  30, 2006.

  For the six months ended June 30, 2007, average earning assets amounted
  to $50.4 billion compared to $44.3 billion in the six months ended June
  30, 2006, an increase of $6.1 billion or 13.7% . Average loans and
  leases accounted for $5.3 billion of the growth in average earning
  assets in the six months ended June 30, 2007 compared to the six months
  ended June 30, 2006. Average investment securities increased
  approximately $0.8 billion over the comparative six month periods.

  Average interest bearing liabilities increased $5.4 billion or 14.3% in
  the six months ended June 30, 2007 compared to the six months ended June
  30, 2006.  Average interest bearing deposits increased $2.5 billion or
  10.1% in the six months ended June 30, 2007 compared to the six months
  ended June 30, 2006.  Average total borrowings increased $2.9 billion or
  22.4% over the comparative six month periods.

  For the six months ended June 30, 2007 compared to the six months ended
  June 30, 2006, average noninterest bearing deposits increased $0.2
  billion or 3.9%.


<PAGE>
<PAGE> 28
  The growth and composition of the Corporation's quarterly average loan
  and lease portfolio for the current quarter and previous four quarters
  are reflected in the following table ($ in millions):

                Consolidated Average Loans and Leases
                 -------------------------------------
<TABLE>
<CAPTION>
                                       2007                     2006                  Growth Pct.
                              -------------------- ----------------------------- ------------------
                                 Second    First     Fourth    Third     Second             Prior
                                Quarter   Quarter   Quarter   Quarter   Quarter   Annual   Quarter
                              ---------- --------- --------- --------- --------- -------- ---------
<S>                          <C>        <C>       <C>       <C>       <C>       <C>       <C>
Commercial Loans and Leases
  Commercial                  $ 12,494   $ 12,164  $ 11,800  $ 11,559  $ 11,441     9.2%     2.7%
  Commercial real estate
    Commercial mortgages        11,175     10,936    10,932    10,838    10,746     4.0      2.2
    Construction                 3,607      3,480     3,346     3,227     2,834    27.3      3.6
                               --------   --------  --------  --------  -------- -------  -------
  Total commercial real estate  14,782     14,416    14,278    14,065    13,580     8.8      2.5
  Commercial lease financing       507        513       538       529       504     0.7     (1.1)
                               --------   --------  --------  --------  -------- -------  -------
Total commercial loans
  and leases                    27,783     27,093    26,616    26,153    25,525     8.8      2.5

Personal loans and leases
  Residential real estate
    Residential mortgages        6,562      6,382     6,195     5,924     5,621    16.7      2.8
    Construction                 2,827      2,780     2,649     2,471     2,365    19.6      1.7
                               --------   --------  --------  --------  -------- -------  -------
  Total residential real estate  9,389      9,162     8,844     8,395     7,986    17.6      2.5

Personal loans
  Student                           70        113        78        47        51    36.9    (37.7)
  Credit card                      249        245       250       246       237     4.8      1.4
  Home equity loans and lines    4,223      4,295     4,387     4,474     4,596    (8.1)    (1.7)
  Other                          1,019      1,031     1,101     1,143     1,167   (12.6)    (1.1)
                               --------   --------  --------  --------  -------- -------  -------
Total personal loans             5,561      5,684     5,816     5,910     6,051    (8.1)    (2.2)

Personal lease financing           176        168       162       150       136    29.3      4.9
                               --------   --------  --------  --------  -------- -------  -------
Total personal loans and leases 15,126     15,014    14,822    14,455    14,173     6.7      0.8
                               --------   --------  --------  --------  -------- -------  -------
Total consolidated average
  loans and leases            $ 42,909   $ 42,107  $ 41,438  $ 40,608  $ 39,698     8.1%     1.9%
                               ========   ========  ========  ========  ======== =======  =======
</TABLE>

  Total consolidated average loans and leases increased $3.2 billion or
  8.1% in the second quarter of 2007 compared to the second quarter of
  2006. Excluding the effect of the banking acquisitions, total
  consolidated average loan and lease organic growth was 6.9% in the
  second quarter of 2007 compared to the second quarter of 2006.
  Approximately $0.4 billion of the growth in total consolidated average
  loans and leases was attributable to the banking acquisitions and $2.8
  billion of the growth was organic.  Of the average growth attributable
  to the banking acquisitions, $0.4 billion was attributable to average
  commercial real estate loans. Of the $2.8 billion of average loan and
  lease organic growth, $1.0 billion was attributable to average
  commercial loans and leases, $0.8 billion was attributable to average
  commercial real estate loans, and $1.4 billion was attributable to
  residential real estate loans.  From a production standpoint,
  residential real estate loan closings in the second quarter of 2007 were
  $1.3 billion compared to $1.4 billion in the second quarter of 2006.
  Average home equity loans and lines declined $0.4 billion in the second
  quarter of 2007 compared to the second quarter of 2006.

  For the six months ended June 30, 2007, total consolidated average loans
  and leases increased $5.3 billion or 14.3% compared to the six months
  ended June 30, 2006. Excluding the effect of the 2007 and 2006 banking
  acquisitions, total consolidated average loan and lease organic growth
  was 8.0% for the six months ended June 30, 2007 compared to the six
  months ended June 30, 2006.  Approximately $2.2 billion of the growth in
  total consolidated average loans and leases was attributable to the
  banking acquisitions and $3.1 billion of the growth was organic. Of the
  $2.2 billion of average growth attributable to the banking acquisitions,
  $1.6 billion was attributable to average commercial real estate loans,
  approximately $0.5 billion was attributable to average commercial loans
  and leases and $0.1 billion was attributable to average residential real
  estate loans. Of the $3.1 billion of average loan and lease organic
  growth, $1.2 billion was attributable to average commercial loans and
  leases, $0.9 billion was attributable to average commercial real estate
  loans, and $1.5 billion was attributable to residential real estate
  loans.  From a production standpoint, residential real estate loan
  closings in the first half of 2007 and the first half of 2006 were $2.3
  billion and $2.6 billion, respectively.  Average home equity loans and
  lines declined $0.4 billion in the six months ended June 30, 2007
  compared to the six months ended June 30, 2006. Average personal loans
  and leases decreased $0.1 billion in the first half of 2007 compared to
  the same period in 2006.

<PAGE> 29
  Total average commercial loan and lease organic growth was 8.2% in the
  second quarter of 2007 compared to the second quarter of 2006. For the
  six months ended June 30, 2007 compared to the six months ended June 30,
  2006 total average commercial loan and lease organic growth was 10.7% .
  Commercial loan and lease organic growth continued to be positive in the
  first half of 2007 although the Corporation has seen some slowing in
  certain businesses. Management believes that year over year organic
  commercial loan growth (as a percentage) will continue its slight
  moderation and expects organic commercial loan growth will be in the
  mid-to-high single digit percentage range in 2007. Total average
  commercial real estate loan organic growth was 6.0% in the second
  quarter of 2007 compared to the second quarter of 2006. For the six
  months ended June 30, 2007 compared to the six months ended June 30,
  2006 total average commercial real estate loan organic growth was 6.9%.
  The Corporation continues to experience some slowing in the construction
  market for both commercial and residential developers, and to some
  extent throughout the commercial real estate business. The Corporation
  expects organic commercial real estate loan growth in 2007 will be in
  the mid single digit percentage range.

  Home equity loans and lines, which includes the Corporation's wholesale
  activity, continue to be one of the Corporation's primary consumer loan
  products. Average home equity loans and lines declined in the second
  quarter and first half of 2007 compared to the second quarter and first
  half of 2006. This is consistent with what is occurring in many parts of
  the country. It is expected that the softer home equity market, combined
  with the Corporation's continued sales of certain loans at origination
  will continue to impact balance sheet organic loan growth. Management
  does not expect this trend to change in the near term.

  The Corporation sells some of its residential real estate 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. For each of the three months ended June 30, 2007 and
  2006, real estate loans sold to investors amounted to $0.6 billion. For
  each of the six months ended June 30, 2007 and 2006, real estate loans
  sold to investors amounted to $1.2 billion. At June 30, 2007 and 2006,
  the Corporation had approximately $50.3 million and $123.4 million of
  mortgage loans held for sale, respectively. Gains from the sale of
  mortgage loans amounted to $10.4 million in the second quarter of 2007
  compared to $11.8 million in the second quarter of 2006. For the six
  months ended June 30, 2007, gains from the sale of mortgage loans
  amounted to $19.2 million compared to $23.7 million in the six months
  ended June 30, 2006.

  The Corporation maintains a conservative credit profile in its home
  equity and mortgage portfolios. At June 30, 2007, the Corporation's
  average loan-to-value ratios and credit scores were 78% and 725 for its
  residential real estate loan portfolio and 80% and 729 for its home
  equity portfolios, respectively.  The Corporation does not originate for
  portfolio, sub-prime mortgages or sub-prime home equity loans or lines.
  The Corporation's exposure to residential real estate and home equity
  borrowers with credit scores that were less than 620 was approximately
  $285 million at June 30, 2007.

  During the second quarter of 2007, the Corporation opted to discontinue
  the sale and securitization of automobile loans into the secondary
  market. The loans previously classified as held for sale, were
  reclassified as portfolio loans at the lower of cost or market. Auto
  loans securitized and sold in the second quarters of 2007 and 2006
  amounted to $0.05 billion and $0.2 billion, respectively. For the six
  months ended June 30, 2007, auto loans securitized and sold amounted to
  $0.2 billion compared to $0.3 billion in the six months ended June 30,
  2006. Net gains from the sale and securitization of auto loans for the
  three and six months ended June 30, 2007 amounted to $1.3 million and
  $1.1 million, respectively. Net gains and losses from the sale and
  securitization of auto loans were not significant in either the three or
  six months ended June 30, 2006.

<PAGE> 30
  The growth and composition of the Corporation's quarterly average
  deposits for the current and previous four quarters are as follows ($ in
  millions):

                     Consolidated Average Deposits
                     -----------------------------
<TABLE>
<CAPTION>
                                       2007                     2006                  Growth Pct.
                              -------------------- ----------------------------- ------------------
                                 Second    First     Fourth    Third     Second             Prior
                                Quarter   Quarter   Quarter   Quarter   Quarter   Annual   Quarter
                              ---------- --------- --------- --------- --------- -------- ---------
<S>                          <C>        <C>       <C>       <C>       <C>       <C>       <C>
Bank issued deposits
  Noninterest bearing deposits
    Commercial                $  3,849   $  3,769  $  4,000  $  3,948  $  3,873    (0.6)%    2.1%
    Personal                       996        964       951       953       998    (0.2)     3.3
    Other                          586        586       575       561       533    10.1      0.0
                               --------   --------  --------  --------  -------- -------  -------
  Total noninterest
    bearing deposits             5,431      5,319     5,526     5,462     5,404     0.5      2.1

  Interest bearing activity deposits
    Savings and NOW              2,929      2,951     2,961     3,081     3,251    (9.9)    (0.7)
    Money market                 8,587      8,260     8,128     7,795     7,389    16.2      3.9
    Foreign activity             1,394      1,424     1,427     1,151     1,000    39.3     (2.1)
                               --------   --------  --------  --------  -------- -------  -------
  Total interest bearing
    activity deposits           12,910     12,635    12,516    12,027    11,640    10.9      2.2

  Time deposits
    Other CDs and time deposits  4,882      4,832     4,847     4,843     4,769     2.4      1.0
    CDs greater than $100,000    3,636      3,401     3,264     3,137     2,878    26.4      6.9
                               --------   --------  --------  --------  -------- -------  -------
  Total time deposits            8,518      8,233     8,111     7,980     7,647    11.4      3.5
                               --------   --------  --------  --------  -------- -------  -------
Total bank issued deposits      26,859     26,187    26,153    25,469    24,691     8.8      2.6

Wholesale deposits
  Money market                   1,795        938       835       795       737   143.5     91.4
  Brokered CDs                   3,635      4,332     5,257     5,510     5,382   (32.5)   (16.1)
  Foreign time                     829      1,101       892     1,147     1,931   (57.1)   (24.7)
                               --------   --------  --------  --------  -------- -------  -------
Total wholesale deposits         6,259      6,371     6,984     7,452     8,050   (22.3)    (1.8)
                               --------   --------  --------  --------  -------- -------  -------
Total consolidated
  average deposits            $ 33,118   $ 32,558  $ 33,137  $ 32,921  $ 32,741     1.2%     1.7%
                               ========   ========  ========  ========  ======== =======  =======
</TABLE>

  Average total bank issued deposits increased $2.2 billion or 8.8% in the
  second quarter of 2007 compared to the second quarter of 2006. Excluding
  the effect of the banking acquisitions, average total bank issued
  deposit organic growth was 5.8% in the second quarter of 2007 compared
  to the second quarter of 2006.  Approximately $0.7 billion of the growth
  in average total bank issued deposits was attributable to the banking
  acquisitions and $1.5 billion of the growth was organic. Of the $0.7
  billion of average growth attributable to the banking acquisitions, $0.1
  billion was attributable to average noninterest bearing deposits, $0.3
  billion was attributable to average interest bearing deposits and $0.3
  billion was attributable to average time deposits. Of the $1.5 billion
  of average bank issued deposit organic growth, $1.0 billion was
  attributable to average interest bearing deposits and $0.5 billion was
  attributable to average time deposits. Excluding the effect of the
  banking acquisitions, average noninterest bearing deposits were
  relatively unchanged in the second quarter of 2007 compared to the
  second quarter of 2006.

  For the six months ended June 30, 2007, average total bank issued
  deposits increased $3.7 billion or 16.2% compared to the six months
  ended June 30, 2006.  Excluding the effect of the 2007 and 2006 banking
  acquisitions, average total bank issued deposit organic growth was 7.4%
  in the six months ended June 30, 2007 compared to the six months ended
  June 30, 2006. Approximately $1.9 billion of the growth in average total
  bank issued deposits was attributable to the banking acquisitions and
  $1.8 billion of the growth was organic.  Of the $1.9 billion of average
  growth attributable to the banking acquisitions, $0.3 billion was
  attributable to average noninterest bearing deposits, $0.6 billion was
  attributable to average interest bearing deposits and $1.0 billion was
  attributable to average time deposits. Of the $1.8 billion of average
  bank issued deposit organic growth, $1.1 billion was attributable to
  average interest bearing deposits and $0.7 billion was attributable to
  average time deposits. Excluding the effect of the banking acquisitions,
  average noninterest bearing deposits were relatively unchanged in the
  first half of 2007 compared to the first half of 2006.

  Noninterest bearing 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, especially commercial
  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.

<PAGE> 31
  For the three and six months ended June 30 2007 compared to the three
  and six months ended June 30 2006, the Corporation has been able to
  competitively price deposit products which has contributed to the growth
  in average bank issued interest bearing activity deposits and average
  bank issued time deposits. In addition, the Corporation continues to
  experience shifts in the bank issued deposit mix. In their search for
  higher yields, both new and existing customers have been migrating their
  deposit balances to higher cost money market and time deposit products.
  Management expects this behavior to continue.

  Wholesale deposits are funds in the form of deposits generated through
  distribution channels other than the Corporation's own banking branches.
  The Corporation continues to make use of wholesale funding alternatives,
  especially brokered and institutional certificates of deposit. These
  deposits allow the Corporation's bank subsidiaries to gather funds
  across a wider geographic base and at pricing levels considered
  attractive, where the underlying depositor may be retail or
  institutional. Recently, the Corporation has placed less reliance on
  wholesale deposits. For the three months ended June 30, 2007, average
  wholesale deposits decreased $1.8 billion, or 22.3% compared to the
  three months ended June 30, 2006. For the six months ended June 30, 2007
  average wholesale deposits decreased $1.0 billion, or 13.4% compared to
  the six months ended June 30, 2006.  Average wholesale deposits for the
  six months ended June 30, 2007 include approximately $0.2 billion of
  wholesale deposits that were assumed in the 2006 banking acquisitions.

  Total borrowings increased $0.9 billion to $15.4 billion at June 30,
  2007, compared to $14.5 billion at December 31, 2006. During the second
  quarter of 2007, the Corporation's lead bank, M&I Marshall & Ilsley Bank
  ("M&I Bank") issued $600 million of floating rate subordinated bank
  notes indexed to the three month London Inter-Bank Offered Rate
  ("LIBOR") with a final maturity date of 2012 subject to the
  Corporation's option to call the notes at par on December 4, 2007, March
  4, 2008 and June 4, 2008. During the first quarter of 2007, the
  Corporation issued floating rate long term borrowings in the amount of
  $1.2 billion which are indexed to the one month LIBOR and mature at
  various times from 2008 through 2013. In addition, a $0.3 billion fixed
  rate borrowing with an interest rate of 5.15% and a maturity date of
  2012 was issued in the first quarter of 2007. During the first quarter
  of 2007, the Corporation called its $200 million in principal amount of
  7.65% junior subordinated deferrable interest debentures and the related
  M&I Capital Trust A 7.65% trust preferred securities.


<PAGE>
<PAGE> 32
  The Corporation's consolidated average interest earning assets and
  interest bearing liabilities, interest earned and interest paid for the
  three and six months ended June 30, 2007 and 2006, are presented in the
  following tables ($ in millions):

                     Consolidated Yield and Cost Analysis
                     ------------------------------------
<TABLE>
<CAPTION>
                                         Three Months Ended          Three Months Ended
                                            June 30, 2007               June 30, 2006
                                   ---------------------------- ----------------------------
                                                        Average                     Average
                                      Average          Yield or    Average          Yield or
                                      Balance Interest Cost (b)    Balance Interest Cost (b)
                                   ---------------------------- ----------------------------
<S>                               <C>        <C>     <C>       <C>        <C>     <C>
Loans and leases: (a)
  Commercial loans and leases      $ 13,000.8 $ 245.8    7.58%  $ 11,944.7 $ 218.1    7.32%
  Commercial real estate loans       14,781.7   279.3    7.58     13,580.4   248.6    7.34
  Residential real estate loans       9,388.7   170.5    7.28      7,985.7   139.7    7.01
  Home equity loans and lines         4,223.2    79.1    7.52      4,595.7    82.6    7.21
  Personal loans and leases           1,514.3    29.4    7.80      1,591.5    28.5    7.20
                                    ---------- ------- -------   ---------- ------- -------
Total loans and leases               42,908.7   804.1    7.52     39,698.0   717.5    7.25

Investment securities (b):
  Taxable                             6,325.7    78.7    4.94      5,818.3    70.9    4.79
  Tax Exempt (a)                      1,300.1    21.6    6.72      1,316.1    22.9    7.04
                                    ---------- ------- -------   ---------- ------- -------
Total investment securities           7,625.8   100.3    5.24      7,134.4    93.8    5.19

Trading securities (a)                   58.4     0.3    2.47         50.3     0.2    1.70
Other short-term investments            273.3     3.7    5.40        374.2     5.0    5.37
                                    ---------- ------- -------   ---------- ------- -------
Total interest earning assets      $ 50,866.2 $ 908.4    7.16%  $ 47,256.9 $ 816.5    6.91%
                                    ========== ======= =======   ========== ======= =======

Interest bearing deposits:
  Bank issued deposits:
    Bank issued interest
      bearing activity deposits    $ 12,910.2 $ 114.9    3.57%  $ 11,639.6 $  94.5    3.26%
    Bank issued time deposits         8,518.1   104.9    4.94      7,646.9    81.0    4.25
                                    ---------- ------- -------   ---------- ------- -------
  Total bank issued deposits         21,428.3   219.8    4.11     19,286.5   175.5    3.65

  Wholesale deposits                  6,258.5    79.4    5.09      8,050.6    96.0    4.78
                                    ---------- ------- -------   ---------- ------- -------
Total interest bearing deposits      27,686.8   299.2    4.33     27,337.1   271.5    3.98

Short-term borrowings                 4,297.7    56.0    5.23      3,418.6    43.1    5.06
Long-term borrowings                 11,941.9   150.3    5.05     10,050.2   117.4    4.69
                                    ---------- ------- -------   ---------- ------- -------
Total interest bearing liabilities $ 43,926.4 $ 505.5    4.62%  $ 40,805.9 $ 432.0    4.25%
                                    ========== ======= =======   ========== ======= =======
Net interest margin (FTE)                     $ 402.9    3.17%             $ 384.5    3.26%
                                               ======= =======              ======= =======
Net interest spread (FTE)                                2.54%                        2.66%
                                                       =======                      =======
</TABLE>

  (a) Fully taxable equivalent ("FTE") basis, assuming a Federal income
      tax rate of 35%, and excluding disallowed interest expense.
  (b) Based on average balances excluding fair value adjustments for
      available for sale securities.

<PAGE>
<PAGE> 33
                     Consolidated Yield and Cost Analysis
                     ------------------------------------
<TABLE>
<CAPTION>
                                          Six Months Ended           Six Months Ended
                                            June 30, 2007               June 30, 2006
                                   ---------------------------- ----------------------------
                                                        Average                     Average
                                      Average          Yield or    Average          Yield or
                                      Balance Interest Cost (b)    Balance Interest Cost (b)
                                   ---------------------------- ----------------------------
<S>                               <C>        <C>     <C>       <C>        <C>     <C>
Loans and leases: (a)
  Commercial loans and leases      $ 12,839.8 $ 483.9    7.60%  $ 11,161.7 $ 394.9    7.14%
  Commercial real estate loans       14,600.0   549.4    7.59     12,088.7   429.7    7.17
  Residential real estate loans       9,275.8   335.8    7.30      7,632.5   262.5    6.94
  Home equity loans and lines         4,259.0   159.1    7.53      4,650.5   163.6    7.09
  Personal loans and leases           1,535.4    59.5    7.82      1,668.8    57.7    6.97
                                    ---------- ------- -------   ---------- ------- -------
Total loans and leases               42,510.0 1,587.7    7.53     37,202.2 1,308.4    7.09

Investment securities (b):
  Taxable                             6,240.0   155.7    4.98      5,401.1   128.8    4.72
  Tax Exempt (a)                      1,294.1    43.1    6.79      1,328.3    46.3    7.12
                                    ---------- ------- -------   ---------- ------- -------
Total investment securities           7,534.1   198.8    5.29      6,729.4   175.1    5.18

Trading securities (a)                   49.9     0.5    2.03         42.3     0.3    1.37
Other short-term investments            275.2     7.5    5.49        345.1     8.6    5.01
                                    ---------- ------- -------   ---------- ------- -------
Total interest earning assets      $ 50,369.2$1,794.5    7.18%  $ 44,319.0$1,492.4    6.78%
                                    ========== ======= =======   ========== ======= =======

Interest bearing deposits:
  Bank issued deposits:
    Bank issued interest
      bearing activity deposits    $ 12,773.0 $ 226.5    3.58%  $ 11,055.2 $ 169.2    3.09%
    Bank issued time deposits         8,376.3   203.2    4.89      6,601.4   134.3    4.10
                                    ---------- ------- -------   ---------- ------- -------
  Total bank issued deposits         21,149.3   429.7    4.10     17,656.6   303.5    3.47
  Wholesale deposits                  6,314.5   159.5    5.09      7,293.6   166.8    4.61
                                    ---------- ------- -------   ---------- ------- -------
Total interest bearing deposits      27,463.8   589.2    4.33     24,950.2   470.3    3.80
Short-term borrowings                 4,273.3   111.0    5.24      3,394.9    82.5    4.90
Long-term borrowings                 11,783.7   294.0    5.03      9,728.9   222.1    4.60
                                    ---------- ------- -------   ---------- ------- -------
Total interest bearing liabilities $ 43,520.8 $ 994.2    4.61%  $ 38,074.0 $ 774.9    4.10%
                                    ========== ======= =======   ========== ======= =======
Net interest margin (FTE)                     $ 800.3    3.20%             $ 717.5    3.26%
                                               ======= =======              ======= =======
Net interest spread (FTE)                                2.57%                        2.68%
                                                       =======                      =======
</TABLE>

  (a) Fully taxable equivalent ("FTE") basis, assuming a Federal income
      tax rate of 35%, and excluding disallowed interest expense.
  (b) Based on average balances excluding fair value adjustments for
      available for sale securities.

  The net interest margin FTE decreased 9 basis points from 3.26% in the
  second quarter of 2006 to 3.17% in the second quarter of 2007. For the
  six months ended June 30, 2007, the net interest margin FTE was 3.20%
  compared to 3.26% for the six months ended June 30, 2006, a decrease of
  6 basis points. Compared to the first quarter of 2007, the net interest
  margin FTE decreased 6 basis points from 3.23% in the first quarter of
  2007 to 3.17% in the second quarter of 2007. The net interest margin in
  the second quarter of 2007 was negatively impacted by the effect of the
  common stock repurchases that required $294.7 million in cash and
  positively impacted by the lower interest rate on funds used for the
  early retirement of the Corporation's $200 million in principal amount
  of 7.65% junior subordinated deferrable interest debentures.

  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. Similar to the
  general trends being experienced throughout the industry, the
  Corporation continues to be challenged by narrowing loan spreads,
  slowing loan growth and the shift in the bank issued deposit mix by new
  and existing depositors into higher yielding products.  Management
  expects these trends to continue and expects that there will be downward
  pressure, particularly during periods of elevated levels of
  nonperforming loans and leases, on the net interest margin FTE for the
  remainder of 2007.


<PAGE>
<PAGE> 34
       PROVISION FOR LOAN AND LEASE LOSSES AND CREDIT QUALITY
       ------------------------------------------------------
  The following tables present comparative consolidated credit quality
  information as of June 30, 2007 and the prior four quarters:

                          Nonperforming Assets
                          --------------------
                                 ($000's)
<TABLE>
<CAPTION>
                                                   2007                         2006
                                         -----------------------  -----------------------------------
                                            Second      First       Fourth      Third        Second
                                           Quarter     Quarter     Quarter     Quarter      Quarter
                                         ----------- -----------  ----------- ----------- -----------
<S>                                     <C>         <C>          <C>         <C>         <C>
Nonaccrual                               $  373,387  $  340,684   $  264,890  $  213,920  $  193,028
Renegotiated                                    113         117          125         130         133
Past due 90 days or more                     10,463      10,858        2,991       5,132       4,855
                                          ----------  ----------   ----------  ----------  ----------
Total nonperforming loans and leases        383,963     351,659      268,006     219,182     198,016
Other real estate owned                      24,462      26,580       25,452      15,152      11,701
                                          ----------  ----------   ----------  ----------  ----------
Total nonperforming assets               $  408,425  $  378,239   $  293,458  $  234,334  $  209,717
                                          ==========  ==========   ==========  ==========  ==========
Allowance for loan and lease losses      $  431,012  $  423,084   $  420,610  $  417,375  $  415,201
                                          ==========  ==========   ==========  ==========  ==========
</TABLE>
                         Consolidated Statistics
                         -----------------------
<TABLE>
<CAPTION>
                                                   2007                         2006
                                         -----------------------  -----------------------------------
                                            Second      First       Fourth      Third        Second
                                           Quarter     Quarter     Quarter     Quarter      Quarter
                                         ----------- -----------  ----------- ----------- -----------
<S>                                     <C>         <C>          <C>         <C>         <C>
Net charge-offs to average
  loans and leases annualized                  0.22%       0.14%        0.14%       0.08%       0.10%
Total nonperforming loans and leases
  to total loans and leases                    0.89        0.83         0.64        0.53        0.49
Total nonperforming assets to total loans
  and leases and other real estate owned       0.94        0.89         0.70        0.57        0.52
Allowance for loan and lease losses
  to total loans and leases                    1.00        1.00         1.00        1.01        1.03
Allowance for loan and lease losses
  to total nonperforming loans and leases       112         120          157         190         210
</TABLE>

                     Nonaccrual Loans and Leases By Type
                     -----------------------------------
                                 ($000's)

<TABLE>
<CAPTION>
                                                   2007                         2006
                                         -----------------------  -----------------------------------
                                            Second      First       Fourth      Third        Second
                                           Quarter     Quarter     Quarter     Quarter      Quarter
                                         ----------- -----------  ----------- ----------- -----------
<S>                                     <C>         <C>          <C>         <C>         <C>
Commercial
  Commercial, financial and agricultural $   48,525  $   60,331   $   50,855  $   56,541  $   59,558
  Lease financing receivables                 1,101       1,510        1,119         539         454
                                          ----------  ----------   ----------  ----------  ----------
Total commercial                             49,626      61,841       51,974      57,080      60,012

Real estate
  Construction and land development         152,554     129,061       71,298      47,265      32,602
  Commercial mortgage                        70,835      66,596       57,705      40,234      40,669
  Residential mortgage                       98,994      78,578       82,675      67,799      58,255
                                          ----------  ----------   ----------  ----------  ----------
Total real estate                           322,383     274,235      211,678     155,298     131,526

Personal                                      1,378       4,608        1,238       1,542       1,490
                                          ----------  ----------   ----------  ----------  ----------
Total nonaccrual loans and leases        $  373,387  $  340,684   $  264,890  $  213,920  $  193,028
                                          ==========  ==========   ==========  ==========  ==========
</TABLE>

<PAGE>
           Reconciliation of Allowance for Loan and Lease Losses
           -----------------------------------------------------
                                 ($000's)
<TABLE>
<CAPTION>
                                                   2007                         2006
                                         -----------------------  -----------------------------------
                                            Second      First       Fourth      Third        Second
                                           Quarter     Quarter     Quarter     Quarter      Quarter
                                         ----------- -----------  ----------- ----------- -----------
<S>                                     <C>         <C>          <C>         <C>         <C>
Beginning balance                        $  423,084  $  420,610   $  417,375  $  415,201  $  368,760
Provision for loan and lease losses          26,026      17,148       18,253      10,250      11,053
Allowance of banks and loans acquired         5,513          --          --           --      45,258
Loans and leases charged-off
  Commercial                                 15,433       7,222        2,213       4,073       6,125
  Real estate                                 7,789       6,616       11,483       4,971       3,385
  Personal                                    4,473       4,290        4,216       3,516       3,088
  Leases                                        464         173          256         165       1,253
                                          ----------  ----------   ----------  ----------  ----------
Total charge-offs                            28,159      18,301       18,168      12,725      13,851

Recoveries on loans and leases
  Commercial                                  1,764       1,712        1,097       2,251         847
  Real estate                                 1,070         488          415         783       1,224
  Personal                                    1,095         935        1,096       1,031       1,149
  Leases                                        619         492          542         584         761
                                          ----------  ----------   ----------  ----------  ----------
Total recoveries                              4,548       3,627        3,150       4,649       3,981
                                          ----------  ----------   ----------  ----------  ----------
Net loans and leases charged-off             23,611      14,674       15,018       8,076       9,870
                                          ----------  ----------   ----------  ----------  ----------
Ending balance                           $  431,012  $  423,084   $  420,610  $  417,375  $  415,201
                                          ==========  ==========   ==========  ==========  ==========
</TABLE>

  Nonperforming assets consist of nonperforming loans and leases and other
  real estate owned ("OREO").

  OREO is principally comprised of commercial and residential properties
  acquired in partial or total satisfaction of problem loans and amounted
  to $24.5 million at June 30, 2007, compared to $26.6 million at March
  31, 2007 and $11.7 million at June 30, 2006. Construction and land
  development and residential real estate properties acquired in partial
  or total satisfaction of problem loans accounted for 27.3% and 58.6% of
  OREO at June 30, 2007, 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 can fluctuate widely based on the timing of cash collections,
  renegotiations and renewals.

  At June 30, 2007, nonperforming loans and leases amounted to $384.0
  million or 0.89% of consolidated loans and leases compared to $351.7
  million or 0.83% of consolidated loans and leases at March 31, 2007, and
  $198.0 million or 0.49% of consolidated loans and leases at June 30,
  2006.

  Nonaccrual loans and leases continue to be the primary source of
  nonperforming loans and leases. Since March 31, 2007, nonaccrual
  commercial and industrial loans decreased $11.8 million or 19.6%,
  nonaccrual personal loans decreased $3.2 million or 70.1% and nonaccrual
  lease financing receivables decreased $0.4 million or 27.1% . Since
  March 31, 2007, nonaccrual construction and land development increased
  $23.5 million or 18.2%, nonaccrual residential real estate loans,
  including home equity loans and lines, increased $20.4 million or 26.0%
  and nonaccrual commercial real estate increased $4.2 million or 6.4% .

  At June 30, 2007, nonperforming loans and leases continue to be
  concentrated in housing-related loans. The housing slowdown is impacting
  the performance of some of the Corporation's construction and land
  development and residential real estate loans. A re-balancing of supply
  and demand within the national housing market has reduced both
  absorption rates and valuations, causing stress for some borrowers
  within these loan segments. These loans are geographically dispersed and
  are in both the Corporation's originated and acquired loan portfolios.

  Nonperforming loans and leases associated with the 2006 banking
  acquisitions amounted to $75.2 million or 1.91% of the acquired loans
  and leases and 19.6% of total consolidated nonperforming loans and
  leases at June 30, 2007.  Nonperforming loans and leases associated with
  the 2007 banking acquisition were insignificant at June 30, 2007.

<PAGE>
<PAGE> 36
  Throughout this credit cycle, the Corporation has maintained its
  underwriting standards including its typical loan to value standards in
  real estate lending.  As stated in the Corporation's Annual Report on
  Form 10-K for the year ended December 31, 2006, the Corporation does not
  hold loans with below market or so-called teaser interest rates and does
  not hold 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's comprehensive approval process is
  critical to ensuring that the risk of loss from nonperforming loans and
  leases on a long-term basis is minimized within the overall framework of
  acceptable levels of credit risk.

  Managing nonperforming loans and leases is important to the ongoing
  success of a financial services institution. 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. The Corporation's comprehensive credit review
  process is critical to ensuring that potential nonperforming loans and
  leases as well as nonperforming loans and leases are aggressively
  identified and isolated in a timely manner so that strategies can be
  developed to minimize the risk of loss to the Corporation. At June 30,
  2007 approximately $52.3 million or 13.6% of the Corporation's
  nonperforming loans and leases were 60 days or less past due.

  Net charge-offs amounted to $23.6 million or 0.22% of average loans and
  leases in the second quarter of 2007 compared to $14.7 million or 0.14%
  of average loans and leases in the first quarter of 2007 and $9.9
  million or 0.10% of average loans and leases in the second quarter of
  2006. For the six months ended June 30, 2007, net charge-offs amounted
  to $38.3 million or 0.18% of average loans and leases compared to $15.9
  million or 0.09% of average loans for the six months ended June 30,
  2006. The most recent five year historical average net charge-off ratio
  was 0.15% . The ratio of recoveries to charge-offs was 16.2% for the
  three months ended June 30, 2007 compared to 19.8% for the three months
  ended March 31, 2007 and 28.7% in the second quarter of 2006. The ratio
  of recoveries to charge-offs was 17.6% for the six months ended June 30,
  2007. The most recent five year average ratio of recoveries to
  charge-offs was 30.4%.

  The provisions for loan and lease losses amounted to $26.0 million for
  the three months ended June 30, 2007 compared to $11.1 million for the
  three months ended June 30, 2006. For the six months ended June 30,
  2007, the provisions for loan and lease losses amounted to $43.2 million
  compared to approximately $22.1 million for the six months ended June
  30, 2006. The allowance for loan and lease losses as a percent of
  consolidated loans and leases outstanding was 1.00% at June 30, 2007,
  1.00% at March 31, 2007 and 1.03% at June 30, 2006.

  During the second quarter the Corporation experienced an increase in the
  level of problem loan resolutions, decline in nonperforming commercial
  and industrial loans and slowing in the rate of increase of
  nonperforming real estate loans compared to the prior two quarters.
  While these may be signs that nonperforming loan and lease trends are
  beginning to stabilize, negative economic events, adverse developments
  in industry segments within the loan and lease portfolios or
  deterioration of a large loan or loans could continue to have an adverse
  impact on the level of nonperforming loans and leases. Management
  believes that in the near term the expected level of nonperforming loans
  and leases may continue to increase from current levels. This
  expectation is based in part on the fact that real estate related loans
  such as construction and land development loans tend to be more complex
  and may take additional time to satisfactorily resolve. At the present
  time, the Corporation's nonperforming loans and leases continue to be
  generally well-collateralized, geographically dispersed and the risk of
  loss on a per loan basis remains manageable.

  Management continues to expect that its annual historical net charge-off
  range of 15 to 20 basis points of average loans and leases is
  representative of the net charge-offs expected for the year ended
  December 31, 2007.

                              OTHER INCOME
                              ------------
  Other income or noninterest sources of revenue represented 57.6% and
  55.0% of the Corporation's total sources of revenues for the three
  months ended June 30, 2007 and 2006, respectively. Total other income in
  the second quarter of 2007 amounted to $537.0 million compared to $461.0
  million in the same period last year, an increase of $76.0 million or
  16.5% . As previously discussed, other income for the three months ended
  June 30, 2007 included a pre-tax gain of $19.0 million from the sale of
  MasterCard Class B shares. Other income for the three months ended June
  30, 2006 included $20.7 million of mark-to-market losses for derivative
  financial instruments that did not qualify for hedge accounting. The
  remaining increase in other income was primarily due to growth in data
  processing services and wealth management services revenue.

  For the six months ended June 30, 2007 and 2006, noninterest sources of
  revenue represented 57.0% and 56.5% of the Corporation's total sources
  of revenues, respectively. Total other income in the six months ended
  June 30, 2007 amounted to $1,044.1 million compared to $911.8 million in
  the same period last year, an increase of $132.3 million or 14.5% . As
  previously discussed, other income for the six months ended June 30,
  2007 included a pre-tax gain of $19.0 million on the sale of MasterCard
  Class B shares and $7.0 million in net gains related to Metavante's
  investment in Firstsource. Other income for the six months ended June
  30, 2006 included $42.0 million of mark-to-market losses for derivative
  financial instruments that did not qualify for hedge accounting.  The
  remaining increase in other income was primarily due to growth in data
  processing services and wealth management services revenue.

<PAGE> 37
  Data processing services external revenue (Metavante) amounted to $363.8
  million in the second quarter of 2007 compared to $345.0 million in the
  second quarter of 2006, an increase of $18.8 million or 5.5% . For the
  six months ended June 30, 2007, Data processing services external
  revenue amounted to $720.2 million compared to $688.0 million for the
  six months ended June 30, 2006, an increase of $32.2 million or 4.7% .
  Revenue growth continued throughout the segment due to revenue
  associated with acquisitions and higher transaction volumes in core
  processing and payment processing activities.  Revenue associated with
  Metavante's acquisition completed in the first quarter of 2007 and the
  acquisition completed in the third quarter of 2006 contributed
  approximately $7.5 million and $15.0 million of the revenue growth in
  the three and six months ended June 30, 2007 compared to the three and
  six months ended June 30, 2006, respectively. Metavante estimates that
  total revenue growth (internal and external) for the three and six
  months ended June 30, 2007 compared to the three and six months ended
  June 30, 2006 excluding the acquisitions ("organic revenue growth"), was
  approximately 2.8% and 2.4%, respectively.  To determine the estimated
  organic revenue growth rate, Metavante adjusts its prior year revenue
  for the acquisitions as if they had been consummated on January 1 of the
  prior year.

  Management continues to expect that Metavante revenue (internal and
  external) for the year ended December 31, 2007 will be within a range of
  $1.60 billion to $1.64 billion and annual organic revenue growth in 2007
  will be in the mid-single digits.

  Wealth management revenue amounted to $65.6 million in the second
  quarter of 2007 compared to $56.3 million in the second quarter of 2006,
  an increase of $9.3 million or 16.5% . For the six months ended June 30,
  2007, Wealth management revenue amounted to $126.3 million compared to
  $109.1 million for the six months ended June 30, 2006, an increase of
  $17.2 million or 15.7%.  Wealth management revenue growth attributable
  to the 2007 and 2006 acquisitions amounted to $1.3 million and $2.3
  million for the three and six months ended June 30, 2007 compared to the
  three and six months ended June 30, 2006, respectively. Continued
  success in cross-selling and integrated delivery initiatives, improved
  investment performance and improving results in institutional sales
  efforts and outsourcing activities were the primary contributors to the
  remaining revenue growth over the respective periods.  Assets under
  management were approximately $24.6 billion at June 30, 2007 compared to
  $22.5 billion at December 31, 2006, and $20.4 billion at June 30, 2006.

  Service charges on deposits amounted to $28.1 million in the second
  quarter of 2007 compared to $25.0 million in the second quarter of 2006,
  an increase of $3.1 million or 12.2% .  For the six months ended June
  30, 2007, service charges on deposits amounted to $53.9 million compared
  to $47.6 million for the six months ended June 30, 2006, an increase of
  $6.3 million or 13.4% . The banking acquisitions contributed $0.2
  million and $2.3 million of the growth in service charges on deposits
  for the three and six months ended June 30, 2007 compared to the three
  and six months ended June 30, 2006, respectively. The remainder of the
  growth was primarily attributable to fees associated with new products.
  A portion of this source of fee income is sensitive to changes in
  interest rates.

  Total mortgage banking revenue was $12.0 million in the second quarter
  of 2007 compared with $12.9 million in the second quarter of 2006, a
  decrease of $0.9 million or 7.5% . For the six months ended June 30,
  2007, total mortgage banking revenue amounted to $22.1 million compared
  to $25.9 million for the six months ended June 30, 2006, a decrease of
  $3.8 million or 14.5%.  For each of the three months ended June 30, 2007
  and 2006, the Corporation sold $0.6 billion of residential mortgage and
  home equity loans to the secondary market.  For each of the six months
  ended June 30, 2007 and 2006, the Corporation sold $1.2 billion of
  residential mortgage and home equity loans to the secondary market. The
  Corporation continues to sell home equity loans at origination.

  Net investment securities gains amounted to $19.5 million in the second
  quarter of 2007 compared to $1.0 million in the second quarter of 2006,
  an increase of $18.5 million. For the six months ended June 30, 2007 and
  2006, Net investment securities gains amounted to $21.0 million and $2.1
  million, respectively. As previously discussed, gains related to the
  sale of MasterCard Class B shares for both the three and six month
  periods ended June 30, 2007 amounted to $19.0 million, respectively.

  As previously discussed, Net derivative losses-discontinued hedges that
  amounted to $20.7 million and $42.0 million for the three and six months
  ended June 30, 2006, respectively, represent the mark-to-market
  adjustments associated with certain interest rate swaps. Based on
  expanded interpretations of the accounting standard for derivatives and
  hedge accounting, it was determined that certain transactions did not
  qualify for hedge accounting. As a result, any fluctuation in the fair
  value of the interest rate swaps was recorded in earnings with no
  corresponding offset to the hedged items or accumulated other
  comprehensive income. Management believes the changes in earnings based
  on market volatility are not reflective of the core performance trends
  of the Corporation.

<PAGE> 38
  Other income in the second quarter of 2007 amounted to $41.1 million
  compared to $34.0 million in the second quarter of 2006, an increase of
  $7.1 million or 20.7%.  For the six months ended June 30, 2007, other
  income amounted to $78.0 million compared to $66.9 million for the six
  months ended June 30, 2006, an increase of $11.1 million or 16.6% . The
  growth in other income in the three and six months ended June 30, 2007
  compared to the three and six month ended June 30, 2006, respectively
  was primarily attributable to an increase in a variety of sources of
  fees and other income.

                             OTHER EXPENSE
                             -------------
  Total other expense for the three months ended June 30, 2007 amounted to
  $576.5 million compared to $544.3 million for the three months ended
  June 30, 2006, an increase of $32.2 million or 5.9% . For the six months
  ended June 30, 2007, total other expense amounted to $1,129.5 million
  compared to $1,049.4 million, an increase of $80.1 million or 7.6%.

  Total other expense for the three and six months ended June 30, 2007
  includes the operating expenses associated with Metavante's 2007 and
  2006 acquisitions, and the 2007 and 2006 banking and wealth management
  acquisitions. The operating expenses of the acquired entities have been
  included in the Corporation's consolidated operating expenses from the
  dates the transactions were completed, which had an impact on the period
  to period comparability of operating expenses in 2007 compared to 2006.
  Approximately $14.0 million of the operating expense growth in the
  second quarter of 2007 compared to the second quarter of 2006 and $40.8
  million of the operating expense growth in the six months ended June 30,
  2007 compared to the six months ended June 30, 2006 was attributable to
  the acquisitions. Total other expense for the three and six months ended
  June 30, 2007 included transaction expenses of $2.6 million and $4.0
  million, respectively, associated with the plan to separate Marshall &
  Ilsley Corporation and Metavante into two separate publicly traded
  companies. Total other expense for the six months ended June 30, 2007
  included the loss of $9.5 million related to the call of the
  Corporation's 7.65% junior subordinated deferrable interest debentures
  and the related M&I Capital Trust A 7.65% trust preferred securities.

  The Corporation estimates that its expense growth in the three months
  ended June 30, 2007 compared to the three months ended June 30, 2006,
  excluding the effects of the acquisitions and the Metavante transaction
  costs, was approximately $15.7 million or 2.9% . For the six months
  ended June 30, 2007 compared to the six months ended June 30, 2006, the
  estimated expense growth excluding the acquisitions, the Metavante
  transaction costs and the loss related to the call of the Corporation's
  7.65% junior subordinated deferrable interest debentures, was
  approximately $25.8 million or 2.5 %.

  Expense control is sometimes measured in the financial services industry
  by the efficiency ratio statistic.  The efficiency ratio is calculated
  by taking total other expense (excluding Metavante transaction costs)
  divided by the sum of total other income (including Capital Markets
  revenue but excluding investment securities gains or losses and net
  derivative losses-discontinued hedges) and net interest income on a
  fully taxable equivalent basis. The Corporation's efficiency ratios for
  the three months ended June 30, 2007 and prior four quarters were:

                            Efficiency Ratios
                            -----------------

<TABLE>
<CAPTION>
                                                    Three Months Ended
                        -------------------------------------------------------------------------
                           June 30,       March 31,    December 31,   September 30,     June 30,
                             2007           2007           2006            2006          2006
                        -------------- -------------- -------------- -------------- -------------
<S>                     <C>            <C>            <C>            <C>            <C>
Consolidated Corporation        62.3%          61.0%          62.2%          62.6%         62.9%

Consolidated Corporation
  Excluding Metavante           51.3%          50.5%          50.6%          52.4%         51.2%
</TABLE>

  Salaries and employee benefits expense amounted to $317.8 million in the
  second quarter of 2007 compared to $307.1 million in the second quarter
  of 2006, an increase of $10.7 million or 3.5% . For the six months ended
  June 30, 2007, salaries and employee benefits expense amounted to $614.9
  million compared to $584.5 million for the six months ended June 30,
  2006, an increase of $30.4 million or 5.2% . Salaries and benefits
  expense associated with the acquisitions previously discussed accounted
  for approximately $7.4 million and $21.4 million of the increase in the
  three and six months ended June 30, 2007 compared to the three and six
  months ended June 30, 2006, respectively.

  For the second quarter of 2007, occupancy and equipment expense amounted
  to $62.3 million compared to $63.8 million in the second quarter of
  2006, a decrease of $1.5 million or 2.4% . For each of the six months
  ended June 30, 2007 and 2006, occupancy and equipment expense amounted
  to $121.6 million, respectively.  The increase in occupancy and
  equipment expense associated with the acquisitions and bank branch
  expansion was offset by reduced occupancy and equipment expense by
  Metavante in the three and six months ended June 30, 2007 compared to
  the three and six months ended June 30, 2006, respectively.

<PAGE> 39
  Software expenses, processing charges, supplies and printing,
  professional services and shipping and handling expenses totaled $105.8
  million in the second quarter of 2007 compared to $89.1 million in the
  second quarter of 2006, an increase of $16.7 million or 18.8% . For the
  six months ended June 30, 2007, software expenses, processing charges,
  supplies and printing, professional services and shipping and handling
  expenses totaled $203.7 million compared to $175.0 million for the six
  months ended June 30, 2006, an increase of $28.7 million or 16.4% . The
  acquisitions accounted for $1.3 million and $3.2 million of the expense
  growth for the three and six months ended June 30, 2007 compared to the
  three and six months ended June 30, 2006, respectively. Metavante's
  expense growth accounted for the majority of the remaining increase in
  expense for these items in the three and six months ended June 30, 2007
  compared to the three and six months ended June 30, 2006.

  Amortization of intangibles amounted to $12.3 million in the second
  quarter of 2007 compared to $12.0 million in the second quarter of 2006,
  an increase of $0.3 million.  For the six months ended June 30, 2007,
  amortization of intangibles amounted to $23.6 million compared to $20.9
  million for the six months ended June 30, 2006, an increase of $2.7
  million. The increase in amortization associated with the acquisitions
  amounted to $1.4 million and $4.0 million for the three and six months
  ended June 30, 2007 compared to the three and six months ended June 30,
  2006, respectively. Those increases were offset by lower amortization of
  core deposit intangibles from previous acquisitions, which are based on
  a declining balance method.

  As previously discussed, the Corporation incurred certain transaction
  costs associated with the announced plan to separate Marshall & Ilsley
  Corporation and Metavante into two separate publicly held companies. For
  the three and six months ended June 30, 2007, these costs amounted to
  $2.6 million and $4.0 million, respectively and consisted primarily of
  consulting and legal fees.

  Other expense amounted to $75.8 million in the second quarter of 2007
  compared to $72.3 million in the second quarter of 2006, an increase of
  $3.5 million or 4.9% .  For the six months ended June 30, 2007, other
  expense amounted to $161.7 million compared to $147.4 million for the
  six months ended June 30, 2006, an increase of $14.3 million or 9.7% .
  The acquisitions accounted for $2.6 million and $7.9 million of the
  growth in other expense for the three and six months ended June 30, 2007
  compared to the three and six months ended June 30, 2006, respectively.
  As previously discussed, other expense for the six months ended June 30,
  2007 includes the loss of $9.5 million related to the call of the
  Corporation's 7.65% junior subordinated deferrable interest debentures
  and the related M&I Capital Trust A 7.65% trust preferred securities.

                             INCOME TAXES
                             ------------
  The provision for income taxes for the three months ended June 30, 2007
  amounted to $110.0 million or 33.3% of pre-tax income compared to $91.9
  million or 32.5% of pre-tax income for the three months ended June 30,
  2006. For the six months ended June 30, 2007, the provision for income
  taxes amounted to $220.6 million or 33.5% of pre-tax income compared to
  $178.7 million or 33.0% of pre-tax income for the six months ended June
  30, 2006. During the second quarter of 2006, an income tax benefit was
  recognized for the integration and realignment of Metavante subsidiaries
  that resulted in a lower provision for income taxes in the consolidated
  statements of income for the three and six months ended June 30, 2006.


<PAGE>
              RECONCILIATION OF NON-GAAP TO GAAP RESULTS
              ------------------------------------------
  The Corporation has provided non-GAAP ("Generally Accepted Accounting
  Principles") operating results for the three and six months ended June
  30, 2007 and 2006 as a supplement to its GAAP financial results. The
  Corporation believes that these non-GAAP financial measures are useful
  because they allow investors to assess, on a consistent basis, the
  Corporation's core operating performance, exclusive of items management
  believes are not reflective of the operations of the Corporation.
  Management uses such non-GAAP financial measures to evaluate financial
  results and to establish operational goals. These non-GAAP financial
  measures should be considered a supplement to, and not as a substitute
  for, financial measures prepared in accordance with GAAP.
<TABLE>
<CAPTION>
                                                       Three Months Ended
                                   -----------------------------------------------------------
                                            June 30, 2007                 June 30, 2006
                                   ----------------------------   ----------------------------
                                                         Per                            Per
                                       Amount          Diluted        Amount          Diluted
                                   ($ in millions)      Share     ($ in millions)      Share
                                   ---------------   ----------   ---------------   ----------
<S>                               <C>               <C>          <C>               <C>
Net Income                         $        220.3    $    0.83    $        190.5    $    0.74
Metavante Transaction Costs, net of tax       2.3         0.01                --           --
Net Derivative Losses -
  Discontinued Hedges, net of tax              --           --              13.2         0.05
                                    --------------    ---------    --------------    ---------
Net Income as Adjusted             $        222.6    $    0.84    $        203.7    $    0.79
                                    ==============    =========    ==============    =========

Average Shareholders' Equity                                      $        5,664
Cumulative Net Derivative Losses - Discontinued Hedges, net of tax            27
                                                                   --------------
Adjusted Average Shareholders' Equity                             $        5,691
                                                                   ==============
Based on Net Income as Adjusted:
  Return on Assets                                        1.55%                          1.52%
  Return on Equity                                       13.69                          14.36
</TABLE>
<TABLE>
<CAPTION>

                                                        Six Months Ended
                                   -----------------------------------------------------------
                                            June 30, 2007                 June 30, 2006
                                   ----------------------------   ----------------------------
                                                         Per                            Per
                                       Amount          Diluted        Amount          Diluted
                                   ($ in millions)      Share     ($ in millions)      Share
                                   ---------------   ----------   ---------------   ----------
<S>                               <C>               <C>          <C>               <C>
Net Income                         $        437.1    $    1.66    $        363.6    $    1.46
Metavante Transaction Costs, net of tax       3.6         0.02                --           --
Net Derivative Losses -
  Discontinued Hedges, net of tax              --           --              26.9         0.11
                                    --------------    ---------    --------------    ---------
Net Income as Adjusted             $        440.7    $    1.68    $        390.5    $    1.57
                                    ==============    =========    ==============    =========

Average Shareholders' Equity                                      $        5,241
Cumulative Net Derivative Losses - Discontinued Hedges, net of tax            24
                                                                   --------------
Adjusted Average Shareholders' Equity                             $        5,265
                                                                   ==============
Based on Net Income as Adjusted:
  Return on Assets                                        1.56%                          1.57%
  Return on Equity                                       13.90                          14.96
</TABLE>

                     LIQUIDITY AND CAPITAL RESOURCES
                     -------------------------------
  Shareholders' equity was $6.44 billion or 11.0% of total consolidated
  assets at June 30, 2007, compared to $6.15 billion or 10.9% of total
  consolidated assets at December 31, 2006, and $5.73 billion or 10.5% of
  total consolidated assets at June 30, 2006.

  During the second quarter of 2007, the Corporation issued 441,252 shares
  of its common stock valued at $21.0 million in conjunction with the
  Corporation's acquisition of North Star. Also during the second quarter
  of 2007, the Corporation issued 4,410,647 shares of its common stock
  valued at $204.3 million and exchanged vested stock options valued at
  approximately $15.3 million in conjunction with the Corporation's
  acquisition of United Heritage.

  During the first quarter of 2007, the Corporation issued 403,508 shares
  of its common stock valued at $19.2 million to fund its 2006 obligations
  under its retirement and employee stock ownership plans. Also during the
  first and second quarters of 2007, the Corporation issued 85,777 shares
  of its common stock for $3.4 million and 81,036 shares of its common
  stock for $3.3 million, respectively, to fund its obligation under its
  employee stock purchase plan.

  At June 30, 2007, the net loss in accumulated other comprehensive income
  amounted to $63.8 million, which represented a negative change in
  accumulated other comprehensive income of $46.2 million since December
  31, 2006. Net accumulated other comprehensive income associated with
  available for sale investment securities was a net loss of $79.9 million
  at June 30, 2007, compared to a net loss of $22.0 million at December
  31, 2006, resulting in a net loss of $57.9 million over the six month
  period. The net unrealized gain associated with the change in fair value
  of the Corporation's derivative financial instruments designated as cash
  flow hedges was $12.4 million for the six months ended June 30, 2007.
  The change in the postretirement benefit obligation plan funded status
  at June 30, 2007 compared to December 31, 2006, declined $0.7 million
  due to periodic amortization included in postretirement expense.

  On April 24, 2007, the Corporation announced that its Board of Directors
  increased the quarterly cash dividend on its common stock 14.8%, to
  $0.31 per common share from $0.27 per common share.

  The Corporation has a Stock Repurchase Program under which it may
  repurchase up to 12 million shares of its common stock annually. During
  the second quarter of 2007, the Corporation completed two accelerated
  share repurchase transactions under its authorized Stock Repurchase
  Program. In the aggregate, the Corporation acquired 6,117,070 shares of
  its common stock in these transactions. Total consideration in these
  transactions amounted to $297.3 million and consisted of cash of $294.7
  million and common treasury stock valued at $2.6 million.  In
  conjunction with the first accelerated share repurchase transaction
  executed during the second quarter of 2007, the Corporation used 54,035
  shares of its treasury common stock to share-settle the final settlement
  obligation. After these repurchases, approximately 5,882,930 shares
  remain available under prior repurchase authorizations by the
  Corporation's Board of Directors.  There were no purchases under the
  program during the first quarter of 2007. During the first quarter of
  2006, the Corporation repurchased 1.0 million shares at an aggregate
  cost of $41.8 million. There were no purchases under the program in the
  second quarter of 2006.

  The shares of common stock acquired during the second quarter of 2007
  are expected to somewhat mitigate the impact of the common stock to be
  issued to settle the common stock purchase contracts that are a
  component of the 6.50% Common SPACES that were issued in 2004.

  Each Common SPACES has a stated amount of $25 and consists of (i) a
  stock purchase contract under which the holder agrees to purchase, and
  the Company agrees to sell, for $25, shares of common stock on the stock
  purchase date and (ii) a 1/40, or 2.5%, undivided beneficial interest in
  a preferred security, also referred to as the STACKS, of M&I Capital
  Trust B with an initial liquidation amount of $1,000. The Company has
  guaranteed payments on the STACKS as described in the prospectus
  supplement for the Common SPACES.

  The stock purchase date is expected to be August 15, 2007, but could be
  deferred for quarterly periods until August 15, 2008.  The STACKS
  underlying the Common SPACES are being remarketed, and the proceeds of
  such remarketing will be used to settle the obligations of the holders
  of Common SPACES under the stock purchase contract, unless a holder
  elects not to participate in the remarketing, in which case, the holder
  will be required to deliver cash, in the amount of $1,000 per STACKS, to
  the collateral agent.  The Common SPACES will only be suspended from
  trading following a successful remarketing of the STACKS, or in the
  event that there is a failure to remarket the STACKS for settlement on
  or before August 15, 2008, in which case there will be a failed
  remarketing.

<PAGE> 42
  The settlement rate of the stock purchase contracts will be as follows:

  If the adjusted applicable market value of common stock is equal to or
  greater than the "threshold appreciation price" of $46.28, the
  settlement rate will be 0.5457 shares of common stock.

  If the adjusted applicable market value of common stock is less than the
  threshold appreciation price but greater than the "reference price" of
  $37.32, the settlement rate will be a number of shares of common stock
  equal to $25 divided by the applicable market value.

  If the adjusted applicable market value of common stock is less than or
  equal to the reference price, the settlement rate will be 0.6768 shares
  of common stock.

  The "applicable market value" means the average of the closing price per
  share of common stock on each of the 20 consecutive trading days ending
  on August 10, 2007. The "adjusted applicable market value" shall be
  calculated by multiplying the closing price for each of the 20
  consecutive trading days by an Adjustment Factor of 1.0103, and dividing
  the sum of all such adjusted closing prices by 20.

  The Corporation currently expects that the adjusted applicable market
  value of common stock will be less than the threshold appreciation price
  but greater than the reference price. Therefore, the settlement rate is
  expected to be a number of shares of common stock equal to $25 divided
  by the applicable market value. Assuming an applicable market value of
  $43.7675, the average of the closing prices of the Corporation's common
  stock for the period from July 16, 2007 through July 31, 2007, the
  Corporation estimates that it would issue approximately 9.1 million
  shares of its common stock to settle the common stock purchase contracts
  that are a component of the 6.50% Common SPACES.

  The 6.50% Common SPACES of the Corporation will be suspended from
  trading before the opening of business on August 15, 2007 following, and
  subject to, the consummation of the successful remarketing of the STACKS
  issued as a component of the Common SPACES.

  The Corporation continues to have a strong capital base and its
  regulatory capital ratios are significantly above the minimum
  requirements as shown in the following tables.

                        RISK-BASED CAPITAL RATIOS
                        -------------------------
                             ($ in millions)
<TABLE>
<CAPTION>
                                       June 30, 2007                  December 31, 2006
                            ---------------------------------  ---------------------------------
                                  Amount           Ratio             Amount           Ratio
                            ---------------------------------  ---------------------------------
<S>                       <C>                <C>             <C>                <C>
 Tier 1 Capital            $           3,751           7.39 % $           3,873           7.88 %
 Tier 1 Capital
   Minimum Requirement                 2,031           4.00               1,965           4.00
                            -----------------  -------------   -----------------  -------------
 Excess                    $           1,720           3.39 % $           1,908           3.88 %
                            =================  =============   =================  =============

 Total Capital             $           5,947          11.71 % $           5,489          11.17 %
 Total Capital
   Minimum Requirement                 4,063           8.00               3,930           8.00
                            -----------------  -------------   -----------------  -------------

 Excess                    $           1,884           3.71 % $           1,559           3.17 %
                            =================  =============   =================  =============

 Risk-Adjusted Assets      $          50,785                  $          49,128
                            =================                  =================
</TABLE>

                             LEVERAGE RATIOS
                             ---------------
                             ($ in millions)
<TABLE>
<CAPTION>
                                       June 30, 2007                  December 31, 2006
                            ---------------------------------  ---------------------------------
                                  Amount           Ratio             Amount           Ratio
                            ---------------------------------  ---------------------------------
<S>                       <C>                <C>             <C>                <C>
 Tier 1 Capital            $           3,751           6.88 % $           3,873           7.38 %
 Minimum Leverage
   Requirement                 1,634 - 2,724    3.00 - 5.00       1,575 - 2,625    3.00 - 5.00
                            -----------------  -------------   -----------------  -------------
 Excess                    $   2,117 - 1,027    3.88 - 1.88 % $   2,298 - 1,248    4.38 - 2.38 %
                            =================  =============   =================  =============
 Adjusted Average
   Total Assets            $          54,489                  $          52,508
                            =================                  =================
</TABLE>


<PAGE>
<PAGE> 43
  The Corporation 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.  The Corporation 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 $7.2 billion at June 30, 2007, represent a highly accessible
  source of liquidity.  The Corporation's portfolio of held-to-maturity
  investment securities, which totaled $0.4 billion at June 30, 2007,
  provides liquidity from maturities and amortization payments.  The
  Corporation's loans held for sale provide additional liquidity. These
  loans represent recently funded loans that are prepared for delivery to
  investors, which are generally sold within thirty to ninety days after
  the loan has been funded.

  Depositors within the Corporation's defined markets are another source
  of liquidity. Core deposits (demand, savings, money market and consumer
  time deposits) averaged $21.8 billion in the second quarter of 2007. 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 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 subsidiaries 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. Wholesale deposits
  averaged $6.3 billion in the second quarter of 2007.

  The Corporation has historically used 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 vehicles provide access to
  funding sources substantially separate from the general credit risk of
  the Corporation and its subsidiaries.  See Note 10 to the Consolidated
  Financial Statements for an update of the Corporation's securitization
  activities in the second quarter of 2007.

  M&I Bank, the Corporation's lead bank, has implemented a bank note
  program.  During the second quarter of 2006, the Bank amended the bank
  note program into a global bank note program which permits it to issue
  and sell up to a maximum of US$13.0 billion aggregate principal amount
  (or the equivalent thereof in other currencies) at any one time
  outstanding of its senior global bank notes with maturities of seven
  days or more from their respective date of issue and subordinated global
  bank notes with maturities more than five years from their respective
  date of issue. The notes may be fixed rate or floating rate and the
  exact terms will be specified in the applicable Pricing Supplement or
  the applicable Program Supplement. This program is intended to enhance
  liquidity by enabling the Bank to sell its debt instruments in global
  markets in the future without the delays which would otherwise be
  incurred. Bank notes outstanding at June 30, 2007 amounted to $8.2
  billion of which $1.9 billion is subordinated and qualifies as
  supplementary capital for regulatory capital purposes.

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

  During the third quarter of 2005, the Corporation amended the shelf
  registration statement originally filed with the Securities and Exchange
  Commission during the third quarter of 2004 to include the equity
  distribution agreement. The amended shelf registration statement enables
  the Corporation to issue various securities, including debt securities,
  common stock, preferred stock, depository shares, purchase contracts,
  units, warrants, and trust preferred securities, up to an aggregate
  amount of $3.0 billion. At June 30, 2007, approximately $1.3 billion was
  available for future securities issuances.

  During the fourth quarter of 2004, the Corporation filed a shelf
  registration statement with the Securities and Exchange Commission
  enabling 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 acquisitions by M&I, Metavante and/or other consolidated
  subsidiaries of the Corporation. At June 30, 2007, there were 3.1
  million shares of common stock available for future issuances.

<PAGE> 44
  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 June 30,
  2007, Series F notes issued amounted to $250.0 million in aggregate
  principal amount. 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 June 30, 2007, MiNotes
  issued amounted to $0.2 billion in aggregate principal amount.
  Additionally, the Corporation has a commercial paper program.  At June
  30, 2007, commercial paper outstanding amounted to $0.7 billion in
  aggregate principal amount.

  Short-term borrowings represent contractual debt obligations with
  maturities of one year or less and amounted to $3.3 billion at June 30,
  2007.  Long-term borrowings amounted to $12.1 billion at June 30, 2007.
  The scheduled maturities of long-term borrowings including estimated
  interest payments at June 30, 2007 were as follows: $5.4 billion is due
  in less than one year; $3.7 billion is due in one to three years; $2.6
  billion is due in three to five years; and $3.3 billion is due in more
  than five years. During the first quarter of 2007, the Corporation
  issued shares of its common stock valued at $19.2 million to fund a
  portion of its 2006 obligations under its retirement and employee stock
  ownership plans.  There have been no other substantive changes to the
  Corporation's contractual obligations as reported in the Corporation's
  Annual Report on Form 10-K for the year ended December 31, 2006.

                      OFF-BALANCE SHEET ARRANGEMENTS
                      ------------------------------
  As previously discussed, the Corporation held all of the common interest
  in M&I Capital Trust A, which issued cumulative preferred capital
  securities which were supported by junior subordinated deferrable
  interest debentures and a full guarantee issued by the Corporation.
  During the first quarter of 2007, the Corporation exercised its call
  option on its $200.0 million in principal amount of 7.65% junior
  subordinated deferrable interest debentures and the related cumulative
  preferred capital securities.

  In conjunction with the 2006 banking acquisitions, the Corporation
  acquired all of the common interests in four trusts that issued
  cumulative preferred capital securities which are supported by junior
  subordinated deferrable interest debentures in the principal amounts of
  $16.0 million, $30.0 million, $38.0 million and $15.0 million,
  respectively and full guarantees assumed by the Corporation. The
  Corporation does not consolidate these trusts in accordance with United
  States generally accepted accounting principles.  At June 30, 2007,
  there have been no other substantive changes with respect to the
  Corporation's off-balance sheet activities as disclosed in the
  Corporation's Annual Report on Form 10-K for the year ended December 31,
  2006. See Note 10 to the Consolidated Financial Statements for an update
  of the Corporation's securitization activities in the second quarter of
  2007.  The Corporation continues to believe that based on the
  off-balance sheet arrangements with which it is presently involved, such
  off-balance sheet arrangements neither have, nor 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 which 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 in the Corporation's Annual Report on Form 10-K for
  the year ended December 31, 2006, 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:

<PAGE> 45
  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 Statement of Financial Accounting Standard No.
  114, Accounting by Creditors for Impairment of a Loan. 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 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 June 30, 2007:

      The housing slowdown is impacting the performance of some of the
      Corporation's construction and land development loans. A
      re-balancing of supply and demand within the national housing market
      has reduced both absorption rates and valuations causing stress for
      some borrowers within this loan segment.  These loans are
      geographically dispersed and are in both the Corporation's core and
      acquired loan portfolios.

      At June 30, 2007, allowances for loan and lease losses continue to
      be carried for exposures to construction and land development loans,
      vacant residential land, manufacturing, healthcare, production
      agriculture (including dairy and cropping operations), truck
      transportation, accommodation, general contracting and motor vehicle
      and parts dealers. The majority of the commercial charge-offs
      incurred during the past three years were in these industry
      segments.  While most loans in these categories are still
      performing, the Corporation continues to believe these sectors
      present a higher than normal risk due to their financial and
      external characteristics. Reduced revenues causing a declining
      utilization of the industry's capacity levels can affect collateral
      values and the amounts realized through sale or liquidation.

      During the second quarter of 2007, the Corporation's commitments to
      Shared National Credits were approximately $3.6 billion with usage
      averaging around 47%. Over time, many of the Corporation's largest
      charge-offs have come from the Shared National Credit portfolio. At
      June 30, 2007, Shared National Credit nonperforming loans amounted
      to $1.0 million after partial write-downs.  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, Missouri and Florida.  The vast majority of the assets
      acquired on April 1, 2006 from Gold Banc Corporation, Inc are in
      entirely new markets for the Corporation. Included in these new
      markets are the Kansas City metropolitan area, Tulsa, Oklahoma, and
      Tampa, Sarasota and Bradenton, Florida. Each of these regions and
      markets has cultural and environmental factors that are unique to
      them. At June 30, 2007, the level of nonperforming loans for this
      portfolio segment was higher than the Corporation's average level of
      nonperforming loans. In addition with the acquisition of United
      Heritage, the Orlando, Florida market is a new market for the
      Corporation. Nonperforming loans and leases associated with the
      acquisition of United Heritage were insignificant at June 30, 2007.

      At June 30, 2007, nonperforming loans and leases amounted to $384.0
      million or 0.89% of consolidated loans and leases compared to $351.7
      million or 0.83% of consolidated loans and leases at March 31, 2007,
      and $198.0 million or 0.49% of consolidated loans and leases at June
      30, 2006. Nonaccrual loans and leases continue to be the primary
      source of nonperforming loans and leases.

<PAGE> 46
      Net charge-offs amounted to $23.6 million or 0.22% of average loans
      and leases in the second quarter of 2007 compared to $14.7 million
      or 0.14% of average loans and leases in the first quarter of 2007
      and $9.9 million or 0.10% of average loans and leases in the second
      quarter of 2006.  The ratio of recoveries to charge-offs was 16.2%
      and 17.6% for the three and six months ended June 30, 2007,
      respectively.  The Corporation's most recent five year average ratio
      of recoveries to charge-offs was 30.4%.

  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 $431.0 million or 1.00% of loans and leases
  outstanding at June 30, 2007. The allowance for loan and lease losses
  was $420.6 million or 1.00% of loans and leases outstanding at December
  31, 2006 and $415.2 million or 1.03% of loans and leases outstanding at
  June 30, 2006. Consistent with the credit quality trends noted above,
  the provision for loan and lease losses amounted to $26.0 million for
  the three months ended June 30, 2007 and $43.2 million for the six
  months ended June 30, 2007. By comparison, the provision for loan and
  lease losses amounted to $11.1 million for the three months ended June
  30, 2006 and approximately $22.1 million for the six months ended June
  30, 2006. 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 three months ended June 30, 2007 and 2006, the amount of software
  costs capitalized amounted to $12.6 million and $13.7 million,
  respectively. Amortization expense of software costs amounted to $14.4
  million for the three months ended June 30, 2007 compared to $13.4
  million for the three months ended June 30, 2006. For the six months
  ended June 30, 2007 and 2006, the amount of software costs capitalized
  amounted to $26.7 million and $25.0 million, respectively. Amortization
  expense of software costs amounted to $28.7 million for the six months
  ended June 30, 2007 compared to $27.6 million for the six months ended
  June 30, 2006.

  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 penalties (buyout fees) in
  case of early termination. For the three months ended June 30, 2007 and
  2006, the amount of conversion costs capitalized amounted to $3.3
  million and $3.1 million, respectively.  Amortization expense of
  conversion costs amounted to $2.3 million and $2.8 million for the three
  months ended June 30, 2007 and the three months ended June 30, 2006,
  respectively.  For the six months ended June 30, 2007 and 2006, the
  amount of conversion costs capitalized amounted to $6.0 million and $5.5
  million, respectively.  Amortization expense of conversion costs
  amounted to $4.6 million for the six months ended June 30, 2007 and $5.0
  million for the six months ended June 30, 2006.


<PAGE>
<PAGE> 47
  Net unamortized costs were ($ in millions):

                                      June 30,
                             ----------------------------
                                 2007            2006
                             ------------    ------------
            Software         $     157.8     $     152.5
            Conversions             30.8            27.7
                              -----------     -----------
              Total          $     188.6     $     180.2
                              ===========     ===========

  The Corporation has not substantively changed any aspect of 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 has historically used 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 a cash
  reserve account. 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.

  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.

  For the three months ended June 30, 2007, net losses with the retained
  interests, held in the form of interest-only strips amounted to $0.1
  million and are included in Net investment securities gains in the
  Consolidated Statements of Income. During the second quarter and first
  half of 2007, the Corporation determined that there was a decline in the
  value of certain retained interests that was other than temporary
  because actual credit losses exceeded expected credit losses. Impairment
  losses of $0.5 million were offset by realized gains of $0.4 million for
  the three months ended June 30, 2007. For the six months ended June 30,
  2007, impairment losses of $1.0 million were offset by realized gains of
  $1.0 million.

  The Corporation has historically sold automobile loans to an
  unconsolidated multi-seller special purpose entity commercial paper
  conduit in securitization transactions in which servicing
  responsibilities and subordinated interests were retained. The
  outstanding balances of automobile loans sold in these securitization
  transactions were $787.4 million at June 30, 2007. At June 30, 2007, the
  carrying amount of retained interests amounted to $33.2 million.

<PAGE> 48
  From time to time, the Corporation also purchases and immediately sells,
  certain 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 that is
  used to finance the purchase of the debt securities. In order to be
  sold, the debt securities must meet predetermined eligibility
  requirements that are primarily based on their credit rating. For the
  six months ended June 30, 2007, debt securities sold amounted to $93.9
  million. No gain or loss was realized from the sale of debt securities
  for the six months ended June 30, 2007. Highly rated investment
  securities in the amount of $425.8 million were outstanding in the QSPE
  to support the outstanding commercial paper at June 30, 2007.

  The Corporation provides liquidity back-up in the form of liquidity
  purchase agreements. In addition, 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 interests
  and the debt securities.  The beneficial interests in the form of
  commercial paper have been issued 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. Generally, the interest rate risk associated with the
  interest rate swaps is the basis risk resulting from differences between
  commercial paper interest rates and LIBOR.  Historically, that interest
  rate risk has not been material to the Corporation and the Corporation
  has chosen not to mitigate the risk of these swaps by entering into
  offsetting swap contracts with independent third parties. At June 30,
  2007, the aggregate fair value of the interest rate swaps was a negative
  $1.3 million.

                              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.

  Effective January 1, 2007, the Corporation adopted the provisions of
  FASB Interpretation No. 48 ("FIN 48"), Accounting for Uncertainty in
  Income Taxes - an interpretation of FASB Statement No. 109, and there
  was no effect on the consolidated financial statements.  FIN 48
  clarifies the accounting for uncertainty in income taxes recognized in
  financial statements in accordance with FASB Statement No. 109,
  Accounting for Income Taxes. FIN 48 prescribes a recognition threshold
  and measurement attribute for the financial statement recognition and
  measurement of a tax position taken or expected to be taken in a tax
  return.  FIN 48 also provides guidance on derecognition, classification,
  interest and penalties, accounting in interim periods, disclosure and
  transition.

  As of the date of adoption the total amount of unrecognized tax benefits
  was $92.1 million, of which $71.8 million related to benefits that, if
  recognized, would impact the annual effective tax rate.  Upon adoption
  of FIN 48, the Corporation changed its policy to include interest and
  penalties related to income tax liabilities in income tax expense. Prior
  to adoption of FIN 48, the Corporation recorded interest and penalties
  related to income tax liabilities to other expense, a component of
  Income Before Income Taxes. Included in the total liability for
  unrecognized tax benefits as of the date of adoption is $6.8 million of
  interest and no penalties.

  The Corporation, along with its subsidiaries, files income tax returns
  in the U.S. and various state jurisdictions. With limited exceptions,
  the Corporation is no longer subject to examinations by federal and
  state taxing authorities for taxable years before 2003.

<PAGE> 49
  The Corporation anticipates it is reasonably possible within 12 months
  of the adoption date that unrecognized tax benefits could be reduced up
  to approximately $22 million. The reduction would principally result
  from settlements with taxing authorities as it relates to the tax
  benefits associated with a 2002 stock issuance.

                          FORWARD-LOOKING STATEMENTS
                          --------------------------
  Items 2 and 3 of this Form 10-Q, "Management's Discussion and Analysis
  of Financial Condition and Results of Operations" and "Quantitative and
  Qualitative Disclosures about Market Risk," respectively, contain
  forward-looking statements within the meaning of the safe harbor
  provisions of the Private Securities Litigation Reform Act of 1995. Such
  forward-looking statements include, without limitation, statements
  regarding expected financial and operating activities and results which
  are preceded by words such as "expects", "anticipates" or "believes".
  Such statements are subject to important factors that could cause the
  Corporation's actual results to differ materially from those anticipated
  by the forward-looking statements. These factors include those
  referenced in Item 1A. Risk Factors, of the Corporation's Annual Report
  on Form 10-K for the year ended December 31, 2006, in this Quarterly
  Report on Form 10-Q and under the heading "Forward-Looking Statements,"
  and as may be described from time to time in the Corporation's
  subsequent SEC filings, and such factors are incorporated herein by
  reference.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

  The following updated information should be read in conjunction with the
  Corporation's Annual Report on Form 10-K for the year ended December 31,
  2006. Updated information regarding the Corporation's use of derivative
  financial instruments is contained in Note 14 -- Derivative Financial
  Instruments and Hedging Activities in Notes to Financial Statements
  contained in Item 1 herein.

  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 non-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.  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.


<PAGE>
<PAGE> 50
  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 the indicated dates:
<TABLE>
<CAPTION>
                                         Impact to Annual Pretax Income as of
                    ----------------------------------------------------------------------------------
                                                                                               As
                                                                                          Historically
                                                                 Pro Forma                  Reported
                      June 30,       March 31,    December 31, September 30, September 30,   June 30,
                        2007           2007          2006          2006           2006          2006
                    ------------- ------------- ------------- ------------- ------------- ------------
<S>                 <C>           <C>           <C>           <C>           <C>           <C>
Hypothetical Change in Interest Rate
------------------------------------
 100 basis point gradual:
   Rise in rates           (0.5) %        0.0 %         0.5 %        0.7 %        (3.2) %      (0.3) %

   Decline in rates         0.3 %        (0.2) %       (0.6) %      (0.8) %        2.2 %        0.3 %
</TABLE>

  The results as of September 30, 2006 reflect the effect of
  mark-to-market accounting (versus hedge accounting) for certain interest
  rate swaps that the Corporation determined did not qualify for hedge
  accounting as previously discussed. The interest rate swaps were
  designed to hedge the change in fair value or cash flows of the
  underlying assets or liabilities and have performed effectively as
  economic hedges. Prior period results as shown and previously reported,
  were based on the assumption that the affected interest rate swaps
  qualified for hedge accounting.  The Corporation terminated the affected
  interest rate swaps early in the fourth quarter of 2006 in order to
  eliminate the earnings volatility associated with fluctuations in
  valuations under mark-to-market accounting. The pro forma results as of
  September 30, 2006, assumes that the affected interest rate swaps were
  terminated on September 30, 2006.

  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.

  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 June 30, 2007, the fair value of equity
  at risk for a gradual 100bp shift in rates changed less than 2.0%.

                             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 portfolio companies.  However, fair values are difficult to
  determine until an actual sale or liquidation transaction actually
  occurs.  At June 30, 2007, the carrying value of total active capital
  markets investments amounted to approximately $51.9 million.

  As of June 30, 2007, M&I Wealth Management administered $103.8 billion
  in assets and directly managed a portfolio of $24.6 billion. The
  Corporation is exposed 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.

ITEM 4.  CONTROLS AND PROCEDURES

  Marshall & Ilsley Corporation maintains a set of disclosure controls and
  procedures that are designed to ensure that information required to be
  disclosed by it in the reports filed by it under the Securities Exchange
  Act of 1934, as amended, are recorded, processed, summarized and
  reported within the time periods specified in the SEC's rules and forms,
  and to ensure that information required to be disclosed by the
  Corporation in such reports is accumulated and communicated to the
  Corporation's Chief Executive Officer and Chief Financial Officer, as
  appropriate, to allow timely decisions regarding required disclosure.
  The Corporation carried out an evaluation, under the supervision and
  with the participation of its management, including its President and
  Chief Executive Officer and its 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 of the
  Exchange Act.  Based on that evaluation, the President and Chief
  Executive Officer and the Senior Vice President and Chief Financial
  Officer conclude that the Corporation's disclosure controls and
  procedures are effective as of the end of the period covered by this
  report for the purposes for which they are designed.

  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 last fiscal
  quarter that have materially affected, or are reasonably likely to
  materially affect the Corporation's internal control over financial
  reporting.


<PAGE>
<PAGE> 51
                        PART II - OTHER INFORMATION

Item 1A. Risk Factors.
----------------------
  The risk factors set forth below represent material additions or changes
  to the Risk Factors set forth in Item 1A. to Part 1 of the Corporation's
  Annual Report on Form 10-K for the year ended December 31, 2006. For
  purposes of this Item, the Corporation's planned separation of Marshall
  & Ilsley Corporation and Metavante into two separate public companies,
  as described elsewhere in this Quarterly Report on Form 10-Q, is
  referred to as the "Separation."

Risks Relating to the Separation
--------------------------------
  The Corporation's historical consolidated financial information and
  unaudited condensed pro forma consolidated financial information are not
  representative of the Corporation's future financial position, future
  results of operations or future cash flows nor do they reflect what the
  Corporation's financial position, results of operations or cash flows
  would have been as a stand-alone company during the periods presented.

  Following the Separation, the Corporation will be considered the
  divesting entity in the transactions and treated as the "accounting
  successor" for financial reporting purposes in accordance with EITF No.
  02-11.  After the Separation occurs, the Corporation will report the
  historical consolidated results of operations of Metavante as
  discontinued operations in accordance with the provisions of SFAS No.
  144.  Pursuant to SFAS No. 144, this presentation is not permitted until
  the closing date.  Because the Corporation's historical consolidated
  financial statements include the results of Metavante, they are not
  representative of the Corporation's future financial position, future
  results of operations or future cash flows, nor do they reflect what the
  Corporation's financial position, results of operations or cash flows
  would have been as a stand-alone company during the periods presented.

  The unaudited condensed pro forma consolidated financial information
  attached as an exhibit hereto includes adjustments to reflect the
  divestiture of Metavante.  The pro forma adjustments are based upon
  available information and assumptions that the Corporation believes are
  reasonable; however, the Corporation's assumptions may not prove to be
  accurate. In addition, the Corporation's unaudited condensed pro forma
  consolidated financial statements do not give effect to ongoing
  additional costs that the Corporation expects to incur in connection
  with being a stand-alone company. The unaudited condensed pro forma
  consolidated statements of earnings also do not give effect to certain
  initial separation costs.  Accordingly, the Corporation's unaudited
  condensed pro forma consolidated financial statements are not
  representative of the Corporation's future financial position, future
  results of operations or future cash flows nor do they reflect what the
  Corporation's financial position, results of operations or cash flows
  would have been as a stand-alone company during the periods presented.

The Corporation may not realize the anticipated benefits from the
Separation.

  The success of the Separation will depend, in part, on the ability of
  the Corporation to realize the anticipated benefits of the Separation.
  These anticipated benefits include the availability of increased capital
  for the Corporation to continue its internal growth and acquisition
  strategies, the Corporation's ability to use its capital stock as a form
  of currency in respect of certain acquisitions and equity-based
  compensation arrangements and the better alignment of employee incentive
  awards. There can be no assurance that these benefits will be realized.

The Separation may present significant challenges.

  There is a significant degree of difficulty and management distraction
  inherent in the process of separating the Corporation and Metavante.
  These difficulties include:

      the challenge of the Corporation's effecting the Separation while
      carrying on its ongoing operations;

      preserving customer, distribution, supplier and other important
      relationships;

      the potential difficulty in retaining key officers and personnel;
      and

      separating corporation infrastructure, including systems, insurance,
      accounting, legal, finance, tax and human resources, for each of two
      new public companies.

  The Corporation and Metavante may not successfully or cost-effectively
  separate the companies. The failure to do so could have an adverse
  effect on the Corporation's business, financial condition and results of
  operations.

<PAGE> 52
  The process of separating operations could cause an interruption of, or
  loss of momentum in, the Corporation's business. Members of the
  Corporation's senior management will be required to devote considerable
  amounts of time to this separation process, which will decrease the time
  they will have to manage their respective businesses, service existing
  customers, attract new customers and develop new products or strategies.
  If the Corporation's senior management is not able to manage effectively
  the separation process, or if any significant business activities are
  interrupted as a result of the separation process, the Corporation's
  business could suffer.

As a separate entity, the Corporation will not enjoy all of the benefits
of scale that it achieves with the combined banking and Metavante
businesses.

  Currently, the Corporation benefits from the scope and scale of the
  banking and Metavante businesses in certain areas, including, among
  other things, risk management, employee benefits, regulatory compliance,
  administrative services, legal support and human resources.  The
  Corporation's loss of these benefits as a consequence of the Separation
  could have an adverse effect on the Corporation's business, results of
  operations and financial conditions following completion of the
  Separation. In addition, it is possible that some costs will be greater
  at the separate companies than they are for the combined company due to
  the loss of volume discounts and the position of being a large customer
  to service providers and vendors.

If the Corporation's share distribution and transactions related to the
Separation do not qualify as tax-free distributions or reorganizations
under the Internal Revenue Code, then the Corporation and the
Corporation's shareholders may be responsible for payment of significant
U.S. federal income taxes.

  In transactions related to the Separation, the Corporation will
  distribute shares of its common stock to effect the Separation. If the
  share distribution does not qualify as a tax-free distribution under
  Section 355 of the Internal Revenue Code, Metavante would recognize a
  taxable gain that would result in significant U.S. federal income tax
  liabilities to Metavante.  Metavante would be primarily liable for these
  taxes and the Corporation would be secondarily liable. Under the terms
  of a tax allocation agreement related to the Separation, the Corporation
  will generally be required to indemnify Metavante against any such taxes
  unless such taxes would not have been imposed but for an act of
  Metavante or its affiliates, subject to specified exceptions.

  Even if the Corporation's share distribution otherwise qualifies as a
  tax-free distribution under Section 355 of the Internal Revenue Code,
  the distribution would result in significant U.S. federal income tax
  liabilities to Metavante if there is an acquisition of the Corporation's
  stock or Metavante stock as part of a plan or series of related
  transactions that includes the Corporation's share distribution and that
  results in an acquisition of 50% or more of the Corporation's
  outstanding common stock or Metavante stock. In this situation, the
  Corporation may be required to indemnify Metavante under the terms of a
  tax allocation agreement related to the Separation unless such taxes
  would not have been imposed but for specified acts of Metavante or its
  affiliates. In addition, mutual indemnity obligations in the tax
  allocation agreement could discourage or prevent a third party from
  making a proposal to acquire either the Corporation or Metavante.

The Corporation's loss of the assets, revenue and cash flows resulting
from the Separation may adversely affect its financial position and
results of operations.

  The assets, revenue, cash flows and results of operations of each of the
  Corporation and Metavante are currently included in the Corporation's
  consolidated financial statements. If the transactions are completed,
  the Corporation's assets, revenue, cash flows and results of operations
  will no longer be included in the Corporation's consolidated financial
  statements, and the Corporation's financial position and results of
  operations will therefore be significantly different than they were
  prior to completion of the Separation and, following completion of the
  Separation, the Corporation will have fewer assets and less revenue and
  cash flows than it currently has on a consolidated basis.

The trading price and trading volume of the Corporation's common stock may
be more volatile following completion of the Separation.

  The Corporation cannot predict how investors who hold shares of its
  common stock prior to the completion of the Separation will behave after
  completion of the Separation.  The trading price for shares of the
  Corporation's common stock following completion of the Separation may be
  more volatile than before completion of the Separation. The trading
  price of shares of the Corporation's common stock could fluctuate
  significantly for many reasons, including the risks identified herein,
  selling by existing holders of the Corporation's common stock who decide
  that they do not want to hold some or all of their securities of the
  Corporation after the completion of the transactions, or reasons
  unrelated to the Corporation's performance. In addition, the
  Corporation's common stock may not continue to be included in the S&P
  500 Index, which could ultimately result in reduced trading volume
  relative to the Corporation's historic trading volume.  These factors
  and other factors beyond either the Corporation's control may result in
  reduced trading volume and/or increased volatility in the Corporation's
  common stock and/or short- or long-term reductions in the value of the
  Corporation's securities.

<PAGE>  53
If the transactions are completed, any financing the Corporation obtains
in the future could involve higher costs.

  Following completion of the transactions, any financing that the
  Corporation obtains will be with the support of a reduced pool of
  diversified assets and a significant amount of outstanding debt, and
  therefore the Company may not be able to secure adequate debt or equity
  financing on desirable terms. The cost to the Corporation of financing
  without Metavante may be materially higher than the cost of financing
  prior to the transactions. If the Corporation has a credit rating lower
  than it currently has, it will be more expensive for it to obtain debt
  financing than it has been prior to the Separation.

Failure to complete the Separation could adversely impact the market price
of the Corporation's common stock and its business and operating results.

  If the Separation is not completed for any reason, the price of the
  Corporation's common stock may decline to the extent that the market
  price reflects positive assumptions that the transactions will be
  completed and the related benefits will be realized.  The Corporation
  may also be subject to additional risks if the transactions are not
  completed, including:

      depending on the reasons for termination of the investment agreement
      with Warburg Pincus, the requirement that the Corporation pay
      Warburg Pincus a termination fee of $75 million;

      substantial costs related to the Separation, such as legal,
      accounting, registration, advisory and printing fees, must be paid
      regardless of whether the Separation is completed; and

      potential disruption to the Corporation's business and distraction
      of its workforce and management team.

Risks Relating to the Corporation
---------------------------------
The Corporation will be restricted in its ability to issue equity for at
least two years following completion of the Separation, which could limit
its ability to make acquisitions or to raise capital required to service
its debt and operate its business.

  The amount of equity that the Corporation can issue to make acquisitions
  (excluding acquisitions with respect to which the Corporation can prove
  the absence of "substantial negotiations" during applicable safe harbor
  periods) or raise additional capital will be limited for at least two
  years following completion of the Separation, except in limited
  circumstances.  These limitations may restrict the ability of the
  Corporation to carry out its business objectives and to take advantage
  of opportunities such as acquisitions that could supplement or grow the
  Corporation's business.

Risks Relating to Metavante
---------------------------
Ongoing consolidation within the banking and financial services industry
could adversely affect Metavante's financial results.

  Ongoing consolidation within the banking and financial services industry
  could result in a smaller number of purchasers for Metavante's products
  and services. As banks and other financial services providers
  consolidate, they may experience a realignment of management
  responsibilities and a reexamination of strategic and purchasing
  decisions and Metavante may lose relationships with key constituencies
  within its clients' organizations due to budget cuts, layoffs or other
  disruptions. In addition, acquiring institutions may have their own
  in-house systems or outsource to competitors. The loss of business due
  to consolidation, in particular the loss of a large client due to
  consolidation, such as the Corporation, could have a material adverse
  effect on Metavante's business, operating results and financial
  condition.

Effect of business cycles and other risks in the banking industry.

  Metavante's revenues are heavily dependent on services it provides to
  the banking industry and related financial service providers.  To the
  extent that the health and stability of the banking industry are
  adversely affected by business cycles in general or business conditions
  that affect the banking industry in particular, Metavante's revenues and
  profits may also be adversely affected due to reduced expenditures for
  Metavante's products and services by banks and related financial service
  providers. In addition, Metavante's revenue and profits, including
  organic growth, are dependent on its banking clients' ability to
  acquire, activate and retain customers.

<PAGE> 54
Metavante faces intense competition in all areas of its business.

  The markets for Metavante's products and services are intensely
  competitive and it expects to face increased competition in the future
  as new companies enter the market and existing competitors expand their
  product lines and services.

  Competitors vary in size and in the scope and breadth of their products
  and services. Some current and potential competitors have better name
  recognition and significantly greater resources, and many competitors
  are consolidating, creating larger competitors with even greater
  resources and broader product lines. In addition, many of these
  competitors have established, or may in the future establish,
  cooperative relationships or strategic alliances among themselves or
  with third parties to compete with Metavante's products and services. It
  is possible that new competitors or alliances among competitors may
  emerge and rapidly acquire market share to Metavante's detriment.

  Metavante will also face competition from its clients and potential
  clients who develop their own financial services offerings. Metavante's
  inability to compete successfully in light of these competitive
  pressures could result in a material adverse effect on its business,
  operating results and financial condition.

  Metavante faces intense pricing pressure in obtaining and retaining its
  larger clients. Larger clients are often able to seek price reductions
  from Metavante when they renew a contract, when a contract is extended,
  when service or performance issues arise with the client, or when the
  client's business has significant volume changes. On some occasions,
  this pricing pressure results in lower revenue from a client than
  Metavante had anticipated based on its previous agreement with that
  client.  This reduction in revenue can result in a material adverse
  effect on Metavante's business, operating results and financial
  condition.

Failures in outsourcing or transaction processing facilities could
adversely affect Metavante's business and reputation.

  An operational failure in its outsourcing or transaction processing
  facilities could cause Metavante to lose business.  Damage or
  destruction that interrupts Metavante's services to customers could
  damage its relationship with customers and may require it to incur
  substantial additional expense to repair or replace damaged equipment
  and recover data loss caused by the interruption. Metavante has
  installed back-up systems and procedures to prevent or reduce
  disruption, but such steps may not be sufficient to prevent an
  interruption of services. An interruption that lasts more than several
  hours could cause Metavante to experience a reduction in revenues as a
  result and could have a negative impact on its reputation and business.

A failure to comply with privacy regulations could adversely affect
relations with customers and have a negative impact on busines.

  In the course of providing services to its customers, Metavante may
  collect, process and retain sensitive and confidential information on
  its customers and their clients. A failure of Metavante's security
  facilities and systems due to security breaches, acts of vandalism,
  computer viruses, misplaced or lost data, programming and/or human
  errors, or other similar causes could result in the misappropriation,
  loss or other unauthorized disclosure of confidential customer
  information.  Any such failure could result in damage to Metavante's
  reputation with its customers, expose it to the risk of litigation and
  liability, disrupt its operations, and negatively impact its business,
  results of operations, and financial condition.


ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table reflects the purchases of Marshall & Ilsley
Corporation stock for the specified period:
<TABLE>
<CAPTION>
                                                 Total Number of    Maximum Number
                                                Shares Purchased    of Shares that
                                                    as Part of        May Yet Be
                     Total Number    Average       of Publicly     Purchased Under
                      of Shares    Price Paid    Announced Plans      the Plans
      Period         Purchased(1)   per Share      or Programs       or Programs
 -----------------  -------------  ----------- ------------------ -----------------
<S>                 <C>            <C>         <C>                <C>
     April 1 to
   April 30, 2007      3,255,118    $   48.84          3,250,000         8,750,000

      May 1 to
    May 31, 2007             915        50.61                --          8,750,000

     June 1 to
   June 30, 2007       2,869,694        48.32          2,867,070         5,882,930

                     ------------   ----------   ----------------
       Total           6,125,727    $   48.60          6,117,070
                     ============   ==========   ================
</TABLE>

 (1)  Includes shares purchased by rabbi trusts pursuant to nonqualified
      deferred compensation plans.

The Corporation's Share Repurchase Program was publicly reconfirmed in
April 2006 and again in April 2007. 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.

In connection with the Corporation's accelerated repurchase of 3,250,000
shares of its common stock on April 26, 2007, the Corporation was required
to pay a price adjustment based on an adjusted weighted average price
defined in its agreement with Merrill Lynch International, which
facilitated the accelerated share repurchase. On June 4, 2007, the
Corporation transferred 54,035 shares of its common stock to Merrill Lynch
International in settlement of this obligation. With respect to this
transfer, the Corporation relied on the exemption provided by Section 4(2)
of the Securities Act of 1933, as amended, relating to transactions by an
issuer not involving any public offering.


Item 4. Submission of Matters to a Vote of Security Holders.

 (a)    The Corporation held its Annual Meeting of Shareholders on April
        24, 2007.

 (b)    Votes cast for the election of six directors to serve as Class II
        directors until the 2008 Annual Meeting of Shareholders are as
        follows:
<TABLE>
<CAPTION>
     <S>                     <C>              <C>
               Director              For           Withheld
      ----------------------  -------------    -----------
        Jon F. Chait             206,978,294      3,913,515
        Dennis J. Kuester        205,644,598      5,247,211
        David J. Lubar           207,033,211      3,858,598
        San W. Orr, Jr.          206,987,179      3,904,630
        Debra S. Waller          202,681,132      8,210,677
        George E. Wardeberg      207,190,305      3,701,504
</TABLE>


<PAGE>
<PAGE> 56
The continuing directors of the Corporation are as follows:

        Malcolm M. Aslin         John A. Mellowes
        Andrew N. Baur           Robert J. O'Toole
        John W. Daniels, Jr.     Peter M. Platten, III
        Mark F. Furlong          John S. Shiely
        Ted D. Kellner           James B. Wigdale
        Katharine C. Lyall

 (c)    Votes cast for the ratification of the appointment of Deloitte &
        Touche LLP to audit the statements of the Corporation for the
        fiscal year ending December 31, 2007 are as follows:

                                      For         Against    Abstentions
                                 -------------  -----------  -----------
        Ratification of Auditors    207,265,859    1,524,196    2,101,754

        Votes cast to approve the Corporation's 2007 Annual Executive
        Equity Incentive Compensation Plan are as follows:

                                      For         Against    Abstentions
                                 -------------  -----------  -----------
        Ratification of Plan        192,586,212   13,030,220    5,275,377

        Votes cast for the shareholder proposal to request the Board of
        Directors of the Corporation to declassify the board are as
        follows:

                                      For         Against    Abstentions
                                 -------------  -----------  -----------
        Request to declassify
        the Board of Directors    204,284,909    3,368,600    3,238,300


<PAGE>
<PAGE> 57
ITEM 6.   EXHIBITS

      Exhibit 2(a) -  Investment Agreement, dated as of April 3, 2007,
                      among Marshall & Ilsley Corporation, Metavante
                      Holding Company, Metavante Corporation, Montana
                      Merger Sub Inc. and WPM, L.P., incorporated by
                      reference to the Corporation's Current Report
                      on Form 8-K filed April 9, 2007.

      Exhibit 2(b) -  Separation Agreement, dated as of April 3, 2007,
                      among Marshall & Ilsley Corporation,  Metavante
                      Holding Company, Metavante Corporation and
                      New Marshall & Ilsley Corporation, incorporated
                      by reference to the Corporation's Current Report
                      on Form 8-K filed April 9, 2007.

      Exhibit 3(a) -  Restated Articles of Incorporation of Marshall &
                      Ilsley Corportion, as amended.

      Exhibit 3(b) -  By-Laws of Marshall & Ilsley Corporation, as
                      amended.

      Exhibit 10(a) - Tax Allocation Agreement, dated as of April 3,
                      2007, among Marshall & Ilsley Corporation,
                      Metavante Holding Company, Metavante Corporation
                      and New Marshall & Ilsley Corporation,incorporated
                      by reference to the Corporation's Current Report
                      on Form 8-K filed April 9, 2007.

      Exhibit 10(b) - Employee Matters Agreement, dated as of April 3,
                      2007, among Marshall & Ilsley Corporation,
                      Metavante Holding Company, Metavante Corporation
                      and New Marshall & Ilsley Corporation,incorporated
                      by reference to the Corporation's Current Report
                      on Form 8-K filed April 9, 2007.

      Exhibit 10(c) - Form of Shareholders Agreement, incorporated by
                      reference to the Corporation's Current Report
                      on Form 8-K filed April 9, 2007.

      Exhibit 10(d) - Form of Stock Purchase Right Agreement,
                      incorporated by reference to the Corporation's
                      Current Report on Form 8-K filed April 9, 2007.

       Exhibit 11  -  Statement Regarding Computation of Earnings
                      Per Share, Incorporated by Reference to NOTE 6
                      of Notes to Financial Statements contained in
                      Item 1 - Financial Statements (unaudited) of
                      Part I - Financial Information herein.

       Exhibit 12  -  Statement Regarding Computation of Ratio of
                      Earnings to Fixed Charges

      Exhibit 31(a) - Certification of Chief Executive Officer
                      pursuant to Rule 13a-14(a) under the Securities
                      Exchange Act of 1934, as amended.

      Exhibit 31(b) - Certification of Chief Financial Officer
                      pursuant to Rule 13a-14(a) under the Securities
                      Exchange Act of 1934, as amended.

      Exhibit 32(a) - Certification of Chief Executive Officer
                      pursuant to 18 U.S.C. Section 1350.

      Exhibit 32(b) - Certification of Chief Financial Officer
                      pursuant to 18 U.S.C. Section 1350.

      Exhibit 99(a)-  Description of the Marshall & Ilsley Corporation
                      and Metavante Corporation Separation Transaction.

      Exhibit 99(b)-  Unaudited Condensed Pro Forma Consolidated
                      Financial Statements.


<PAGE>
<PAGE> 58
                               SIGNATURES
                               ----------

Pursuant to the requirements 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 CORPORATION
                                  (Registrant)


                                  /s/  Patricia R. Justiliano
                                  __________________________________

                                  Patricia R. Justiliano
                                  Senior Vice President and
                                    Corporate Controller
                                  (Chief Accounting Officer)


                                  /s/  James E. Sandy
                                  __________________________________

                                  James E. Sandy
                                  Vice President




August 8, 2007


<PAGE>
<PAGE> 42
                               EXHIBIT INDEX
                               -------------

     Exhibit Number                Description of Exhibit
     ______________     ____________________________________________

         (2)(a)         Investment Agreement, dated as of April 3, 2007,
                        among Marshall & Ilsley Corporation,  Metavante
                        Holding Company, Metavante Corporation, Montana
                        Merger Sub Inc. and WPM, L.P., incorporated by
                        reference to the Corporation's Current Report
                        on Form 8-K filed April 9, 2007.

         (2)(b)         Separation Agreement, dated as of April 3, 2007,
                        among Marshall & Ilsley Corporation,  Metavante
                        Holding Company, Metavante Corporation and
                        New Marshall & Ilsley Corporation, incorporated
                        by reference to the Corporation's Current Report
                        on Form 8-K filed April 9, 2007.

         (3)(a)         Restated Articles of Incorporation of Marshall &
                        Ilsley Corporation, as amended.

         (3)(b)         By-Laws of Marshall & Ilsley Corporation,
                        as amended.

        (10)(a)         Tax Allocation Agreement, dated as of April 3,
                        2007, among Marshall & Ilsley Corporation,
                        Metavante Holding Company, Metavante Corporation
                        and New Marshall & Ilsley Corporation,
                        incorporated by reference to the Corporation's
                        Current Report on Form 8-K filed April 9, 2007.

        (10)(b)         Employee Matters Agreement, dated as of
                        April 3, 2007, among Marshall & Ilsley
                        Corporation,  Metavante Holding Company,
                        Metavante Corporation and New Marshall &
                        Ilsley Corporation,  incorporated by reference
                        to the Corporation's Current Report on Form 8-K
                        filed April 9, 2007.

        (10)(c)         Form of Shareholders Agreement, incorporated
                        by reference to the Corporation's Current
                        Report on Form 8-K filed April 9, 2007.

        (10)(d)         Form of Stock Purchase Right Agreement,
                        incorporated by reference to the Corporation's
                        Current Report on Form 8-K filed April 9, 2007.

          (11)          Statement Regarding Computation of Earnings
                        Per Share, Incorporated by Reference to
                        NOTE 6 of Notes to Financial Statements
                        contained in Item 1 - Financial Statements
                        (unaudited) of Part I - Financial Information
                        herein.

          (12)          Statement Regarding Computation of Ratio
                        of Earnings to Fixed Charges.

        (31)(a)         Certification of Chief Executive Officer
                        pursuant to Rule 13a-14(a) under the
                        Securities Exchange Act of 1934, as amended.

        (31)(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.

        (32)(b)         Certification of Chief Financial Officer
                        pursuant to 18 U.S.C. Section 1350.

        (99)(a)         Description of the Marshall & Ilsley Corporation
                        and Metavante Corporation Separation Transaction.

        (99)(b)         Unaudited Condensed Pro Forma Consolidated
                        Financial Statements.