Marshall & Ilsley
For the recently completed quarter, the bank reported net income that was more than 18% higher than the year-ago quarter, but only 13% higher on a per-share basis because of some dilution. Results were fueled by an 11% increase in net interest income and a 19.2% increase in non-interest income, along with some improvement in operating efficiency.
As with most banks, Marshall & Ilsley's net interest margin shrank a bit, from 3.42% last year to 3.27% this quarter. The culprit here is no secret or surprise -- competitive pressures are pushing up deposit costs but keeping a lid on the rates that can be charged for new loans. On a more positive note, credit quality is still quite good, and the percentage of non-performing loans to total loans declined.
Because of ongoing strength in commercial lending, average loan balances for the quarter were up about 18% over last year. Residential real estate lending was also very strong on a comparative basis but made up less than 20% of lending. On the other side of the balance sheet, deposits rose 7% as the company continued to balance its need for new funds with discipline on pricing.
Metavante, the bank's data processing and services business, had more than 19% revenue growth for the quarter, but much of that amount came from acquisitions. Underlying growth here appears to be more on the order of mid-single digits as the company continues to build the business. Nevertheless, new contracts with the likes of First Bank of Miami, SunTrust
While a potentially cash-rich business like Metavante won't hurt things at all, this is still mostly a bank. In fact, it's the largest retail bank based in Wisconsin. Although metrics such as net interest margin and return on assets don't really stand out here, Marshall & Ilsley is producing solid growth, has a decent dividend, and doesn't look terribly expensive. Sure, some will be put off by the need to build Metavante, and others may fear competition from the likes of US Bancorp
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).