Milwaukee-based Marshall & Ilsley (NYSE:MI), or M&I, is not the largest bank in the nation, but it has put together a decent string of growth and has a division that sets it apart from the competition. Is that enough to make it a core financial holding?

M&I reported fourth-quarter and year-end 2006 results Tuesday. Quarterly growth in total revenue, net interest income, and net profit all were in the double digits, while diluted earnings advanced only 6.8% after an accounting charge from an interest-rate swap was taken into account. Results were similar for the full year even though net interest margins fell and bottom-line numbers were boosted by a venture capital gain.

The company's Metavante data-service segment also posted decent numbers, with revenue expanding nearly 10% for the quarter and 17% for the year. This division exposes M&I to the technology realm of financial services and could provide an offset should the spread between deposits taken in and loans made remain tight.

M&I is pursuing acquisitions to enhance growth in its core banking and data-service businesses. On Friday, it announced it had purchased North Star Financial, a small Chicago-based wealth management firm. On the same day, it also announced it had acquired Valutec, a smaller prepaid and gift-card solutions provider.

The recent acquisitions likely won't have a major impact on M&I, but demonstrate that it can grow by buying smaller industry players. Buying market share is becoming increasingly difficult for the largest domestic banks, including Bank of America, JPMorgan Chase (NYSE:JPM), and Wachovia (NYSE:WB), which are bumping up against the 10% deposit limit set for national financial institutions. M&I won't have this problem for many years.

The problem is that the big guys are growing just as fast and M&I has a much smaller dividend yield than its larger peers. It also posts lower return on equity and asset metrics because the giants are able to use their scale advantages to more efficiently manage asset levels. Again, Metavante is unique and offers a potential offset should M&I's core Wisconsin and other key markets slow, but at the current share price, I don't think that's enough to make up for the better numbers the larger players are posting.

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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.