Incorporated: 1847 as Samuel Marshall & Co.
NAIC: 522110 Commercial Banks
Marshall & Ilsley Corporation is the holding corporation for a major Midwest bank, M&I Bank. M&I is the largest bank in Wisconsin, with over 200 offices. It holds about 20 percent of all deposits in the state. The company has had a presence in Milwaukee and in Madison, Wisconsin, for over 150 years. The company began to grow markedly through acquisitions in the 1980s and 1990s, when it took over many smaller regional banks. M&I also has 25 bank locations in Arizona, and other offices in Florida and in Las Vegas. Its Southwest Bank affiliate operates seven banks in the St. Louis area and in Belleville, Illinois. M&I Bank also has a strong presence in the Minneapolis/St. Paul area. M&I operates a subsidiary company called Metavante that provides data processing services to banks throughout the United States and abroad. Metavante, headquartered in Brown Deer, Wisconsin, is one of the leading companies in the bank data services industry, with particular strengths in Internet banking and electronic billing and payment.
Marshall & Ilsley Corporation was founded as Samuel Marshall & Co. in Milwaukee in 1847. Samuel Marshall was a Pennsylvania Quaker, born in 1820 in the small settlement of Concordville. When he was a teenager, Marshall was apprenticed to a relative who ran a hardware store. Marshall worked in the hardware store for five years, and then began to take exploratory trips out West to look for better business opportunities. After much cautious research, Marshall moved to Milwaukee at the age of 26. He set himself up as an exchange broker, renting space in a downtown cobbler shop. Banking was not legalized in Wisconsin until the following year. In addition, at this time there was no unified national currency, and each state issued its own paper money. Marshall acted as a clearing house for bills and notes of all kinds. His office also kept deposits and made loans. Marshall quickly met Milwaukee's movers and shakers, and his deposits grew quickly as wealthy businessmen patronized his office. Marshall was reputed to be an exceedingly cautious and sober man, and he was very skilled at weeding out counterfeit money and avoiding notes from shaky banks and institutions. He took on a series of partners before hooking up with Charles Ilsley in 1849. Ilsley grew up in Maine and, like Marshall, had come to Milwaukee looking for wider opportunities. The company became known as Marshall & Ilsley in 1850. Two years later, Wisconsin finally passed legislation allowing state-chartered banks. Marshall & Ilsley took out the first Wisconsin bank charter within weeks of passage of the law, and opened the State Bank of Madison with $50,000 in capital.
The two owners' forethought saw their financial institutions through many hard times. Before the Civil War, Marshall & Ilsley had decided not to take notes from Southern banks, fearing that these banks' money would not be good in the chaos of the secession movement. Consequently, Marshall & Ilsley rode out the Civil War as one of the most stable banks in the state. (By this time, Marshall & Ilsley's Milwaukee institution was classified as a private bank.) After the war, Marshall & Ilsley took on two new partners. One was Ilsley's younger brother Frederick, the other was a German immigrant named Gustav Reuss. Reuss was able to bring in much business from Milwaukee's thriving German community. The bank also invested in many area industries, from real estate to mining.
Marshall & Ilsley was the largest private bank in Wisconsin by the mid-1880s. Though periodic banking panics had rocked other area banks, Marshall & Ilsley had never closed its doors, as some did to avert runs on deposits, and it had enjoyed 40 years of relatively steady growth. In 1888 Marshall & Ilsley changed its status from private bank to state-chartered. This gave the bank a more formal management structure, allowing for succession when the founders retired. A few years later, Samuel Marshall and Charles Ilsley sold the State Bank of Madison. Now their business was all based in Milwaukee. Many Milwaukee banks failed or were rumored to be in bad shape during what became known as the Great Crash of 1893. The Marshall & Ilsley Bank, however, had long had a reputation for conservative management, and indeed, it had huge reserves of gold and stable U.S. bonds and treasury notes. As a result, Marshall & Ilsley actually benefited from the crash, drawing depositors from other banks.
Samuel Marshall retired in 1901, though the octogenarian still came to the office every day. His partner Ilsley was 74 that year, and he became the bank's president. Other key figures at Marshall & Ilsley included Reuss, two of Marshall's sons, Ilsley's eldest son James, and John H. Puehlicher. Ilsley died suddenly of a heart attack in 1904, and Reuss became president. Reuss saw the bank through another nationwide banking panic in 1907. As in the 1893 crash, Marshall & Ilsley was untouched while other banks reeled. The bank had deposits of more than $3.2 million in 1907, and held almost $3.5 million in savings accounts. Founder Samuel Marshall died that year, having seen his bank rise to its strongest position yet after 60 years in business. Reuss retired the year after Marshall's death, and Ilsley's son James K. Ilsley became president. He led the bank until 1915. During his tenure, the bank constructed a new headquarters. Marshall & Ilsley stayed in this elegant columned building from 1913 until 1968.
Ilsley retired on the eve of World War I, plagued by health problems. John Cambell became the next Marshall & Ilsley president, but he too stepped aside after only a few years. John H. Puehlicher then took over the top job. Puehlicher became a nationally renowned banker. He and his family steered M&I Bank through the rest of the century. John Puehlicher had worked his way up from cashier, and at Cambell's retirement he was still only a minor shareholder. He had only gone to school through the sixth grade, but he had found many ways to continue his education. He initiated many educational outreach programs while he headed M&I Bank, arranging after-hours classes for bank employees and sponsoring programs to teach schoolchildren and the general public about what banks did. He served as president of the Wisconsin Banking Association, and was a key figure in getting legislation passed that let state-chartered banks like M&I join the Federal Reserve system. Puehlicher also expanded the services M&I Bank offered. He created a trust department, and in 1924 debuted a special women's department. The bank opened a Ladies Lounge where women customers could do their banking as well as use writing desks and telephones.
Puehlicher was also a markedly conservative banker, like Marshall and Ilsley before him. As the stock market took off in the 1920s, Puehlicher spoke before national banking forums urging caution and restraint. The stock market crash of 1929 was followed by the Great Depression, but M&I yet again remained a singularly strong institution while other banks collapsed. Milwaukee was very hard hit, and in 1933 over 100 banks in Wisconsin failed. M&I had over $27 million in deposits in 1929, and total assets of more than $35 million. During the early 1930s the bank's assets shrank, dipping to just over $30 million by the end of 1932. But by 1935 the bank had recovered, and assets stood at more than $42 million. Puehlicher died in 1935. Like many of his predecessors, he suffered from heart trouble. His son Albert S. Puehlicher became M&I Bank's next president. Albert Puehlicher was only 38 when he succeeded his father, but he had been working at the bank since he was 15 years old.
Albert Puehlicher saw the bank through the end of the Depression. During World War II, the bank invested heavily in the area's defense industry, making substantial loans to a Milwaukee shipbuilder and to companies in the metal and ordnance industries. After the war, returning veterans were eager to buy houses and start families. Housing was in great demand, and Milwaukee began to overflow into neighboring suburbs. M&I Bank grasped the trend, and soon became one of the area's leading home mortgage lenders. The bank also did much new business in consumer loans. This department had languished since its inception in the 1930s, but it soon became flourishing and profitable.
In 1958 Charles F. Ilsley, grandson of original partner Charles Ilsley and the chairman of M&I's board, retired at the age of 65. That year Albert Puehlicher reduced his day-to-day work at the bank, letting his son Jack become the effective president. Albert Puehlicher died in 1963, and Jack Puehlicher then became the official president. He oversaw the rapid expansion of the bank in the next decades. Even before he held the title of president, Jack Puehlicher put forward a plan that would let M&I move out into the suburbs. In 1958 the bank reorganized as a stock holding company called the Bank Stock Corporation of Milwaukee. This structure allowed the bank to buy up competitors, in an era where the opening of new branches was restricted by law. The holding company bought the Northern Bank, Milwaukee's fourth largest, in 1959. In 1961 it bought another Milwaukee bank, the Bank of Commerce. The three banks were held by one company, but maintained their own names and headquarters. An antitrust ruling ordered the combination broken up in 1969, and the holding company sold the Bank of Commerce. However, as a result of the suit, the regulations governing where M&I could expand became clearer. The holding company got the go-ahead to buy other banks as long as they were in areas where there were no competing banks. The holding company changed its name to Marshall & Ilsley Corporation in 1971, and began buying up small banks throughout Wisconsin. M&I acquired nine small-town banks in the 1970s, and built several branch banks within a prescribed three-mile radius of Milwaukee. By 1985 M&I had made over 20 acquisitions. These for the most part kept their own names, adding the prefix M&I.
By the mid-1980s, M&I Corp. had assets of around $5.5 billion, and had grown to 33 locations, including several offices in Arizona. Other area banks had also been consolidating, and by 1987 Marshall & Ilsley was the second largest bank in Wisconsin, behind First Wisconsin, which had assets of $6.6 billion. In 1987 M&I announced that it was buying Marine Bank, the state's third largest. The combination would have made M&I again Wisconsin's largest bank, with assets of close to $10 billion. The move was seen as the crowning acquisition in Jack Puehlicher's career. He had worked assiduously to build the bank to its current size, and was about to pull off the biggest merger in Wisconsin banking history. However, before the deal could go through, another suitor appeared, and Marine was sold instead to Bank One Corp. of Ohio. The company moved ahead with a smaller acquisition, picking up the 29-bank Central Wisconsin Bankshares that year instead. M&I made several other small acquisitions over the next two years.
M&I's data services unit continued to grow in the late 1980s and early 1990s. This division sold software and handled computer processing for client banks around the country. It was a very profitable business, bringing in $20.2 million in net income in 1992 on sales of $151.6 million. M&I Bank was also very profitable compared to other banks its size, and it had one of the lowest proportions of bad loans in its portfolio. Jack Puehlicher retired in 1992, leaving James B. Wigdale in charge. Wigdale was the first man outside the Puehlicher family to head the bank since 1920. Wigdale brought off another large merger in 1993, buying Valley Bank. Valley had over 150 branches, and assets of $4.3 billion. The combination gave M&I a strong presence in the Fox River Valley area of Wisconsin. After the merger, M&I had assets of over $12 billion.
By the late 1990s, M&I Corp. held a 20 percent share of all bank deposits in the state of Wisconsin. Its next competitor, Firstar, held 12 percent. It also had more locations than any other bank in the state, with some 230. M&I continued to have very strong earnings, particularly from its data processing services unit. This division had been growing at around 25 percent annually since the mid-1990s, and it contributed as much as 20 percent of the firm's annual operating profit. The data processing unit was founded in 1964, when it began processing data for other area banks. The unit quickly moved ahead with new technology, pulling its president from IBM in 1976. It had 400 employees by the early 1980s, and its own headquarters in Brown Deer, Wisconsin. In 1995 the division began doing Internet banking for clients, and sales grew rapidly through the late 1990s. By 1999 the unit had over 1,000 client banks, but this grew precipitously over the next year, leaving it with 3,300 clients in 2000. These included 19 of the top 20 largest banks in the country. In mid-2000, M&I Corp. announced that it would spin off the data processing unit, releasing it as a publicly owned company called Metavante. At the same time, M&I announced it would cut back in some banking areas, such as issuing student loans and auto loans, and it would expand in its Sunbelt locations in Arizona, Florida, and Nevada. The data processing spinoff was expected to leave both the bank and the new company in better shape. Yet the public offering came at a bad time, when technology stocks in general started to decline. M&I twice cut the price it was offering for the new Metavante stock, and then decided to pull the stock offering altogether. Consequently, the renamed Metavante continued as part of M&I Corp. into the early 2000s. A year after the offering failed, retaining Metavante looked like a wise choice. The unit had continued to grow, despite overall straitened economic circumstances.
M&I also continued to make acquisitions, in 2001 picking up Harris Trust Bank in Phoenix and 11 Arizona branches of Fifth Third Bank as well. M&I also moved into Minneapolis, purchasing that city's National City Bancorporation for $250 million in stock in 2001. James Wigdale, who had led M&I since 1992, stepped down in 2001. He was succeeded by Dennis J. Kuester. Kuester had led the data services unit since 1985. Kuester continued M&I's expansion into far-flung locations. In 2002 M&I bought two more Minnesota banks, and then purchased Mississippi Valley Bancshares, a St. Louis-based bank that also had locations in Illinois and Arizona. M&I Corp. seemed in good shape in 2003, despite an increase in the amount of bad loans it had to write off. Though the national economy was still troubled, M&I announced a 12 percent gain in profits for the first quarter of 2003. But clearly, circumstances were different from the booming 1990s. In 2003 M&I's top managers all agreed to forego salary increases as the company looked for new ways to hold down costs.
Principal Subsidiaries
Metavante Corporation.
Principal Competitors
U.S. Bancorp.; Bank One Corporation; Wells Fargo & Company.
Further Reading
Gaskill, Warren, "M&I Corp. Makes Bid for Marine," Capital Times (Madison), June 29, 1987.
Gores, Paul, "Money in the Bank," Milwaukee Journal Sentinel, July 16, 2000, p. 12.
------, "Suddenly, M&I Feeds Acquisition Appetite," Milwaukee Journal Sentinel, May 6, 2001.
Kenney, Ray, "M&I Merger Is Seen As Crowning a Career," Milwaukee Journal, July 12, 1987.
Langill, Ellen D., Powered By Our Past, Milwaukee: M&I Corp., 1997.
Lassen, Tina, "Inside the M&I-Valley Merger," Madison, March 1994, pp. 41-44.
"M&I Managers to Forgo Year's Salary Increases," Wisconsin State Journal, March 28, 2003.
"M&I Officially Ends Its Bid for Marine," Capital Times, September 28, 1987.
Moyer, Liz, "M&I Commercial Run Takes It into St. Louis," American Banker, June 18, 2002, p. 1.
Newman, Judy, "M&I Expands into St. Louis," Wisconsin State Journal, June 18, 2002.
Norman, Jack, "Data Services Unit Launches M&I Stock to Record Highs," Milwaukee Journal, April 11, 1993.
------, "Quiet M&I Creates Buzz in Industry," Milwaukee Journal, August 9, 1992, pp. D1, D6.
Roth, Andrew, "Metavante Cuts Show Power Imbalance," American Banker, April 16, 2001, p. 1.
Schmelkin, Alissa, "M&I Shedding Seller Image," American Banker, May 13, 2003, p. 1.
Silver, Jonathan D., "Valley, M&I to Merge," Capital Times, September 20, 1993, p. 1A.
Spivak, Cary, and James E. Causey, "Attractive M&I Has Plenty of Options," Milwaukee Journal, July 12, 1998.
Wenzel, Judy, "In Banking, M&I Is a Quiet Giant," Milwaukee Journal, June 4, 1989.
— A. Woodward
