More M&A for M&I

Despite a full plate on the M&A front, Milwaukee-based Marshall & Ilsley (NYSE: MI) was still able to assemble a decent second quarter. Better yet, an upcoming spinoff may interest certain value investors.

For the quarter, M&I posted a slightly more than 6% improvement in "core operating income," to $0.84 per share. Reported results came in a bit lower, at $0.83 per share, but actually grew more than 12% year over year. The difference relates primarily to costs tied to the upcoming move to free Metavante from M&I's corporate fold, and to a more minor gain from the sale of MasterCard (NYSE: MA) stock.

Metavante represents M&I's financial data and banking processing business, which competes in the lucrative payment-processing industry with the likes of First Data (NYSE: FDC), CheckFree (Nasdaq: CKFR), and Fiserv (Nasdaq: FISV). Fellow Fool Emil Lee believes Metavante is worth a further look once it's spun off to shareholders.

The move makes sense, especially since investors have apparently given M&I little credit for Metavante's cash-generating operations. However, once the transaction takes place, M&I will be left to grow in its stodgy Midwestern market, which includes Wisconsin, Missouri, Minnesota, and Oklahoma. Indiana will soon be on the map, now that M&I has announced it will acquire First Indiana (Nasdaq: FINB).

Otherwise, the bank has more favorable exposure to faster-growing markets in Florida and Arizona, with one location in Las Vegas as well. Time will tell whether the new M&I can continue posting double-digit increases in net interest and non-interest income, organically or through external acquisitions. In the meantime, M&A activity should continue to pique investors' interest in the company and its upcoming spinoff.

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