Marshall & Ilsley Corporation Credit Quality Third Quarter 2008

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1 Credit Quality Third Quarter 2008 Forward-looking statements This presentation contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of Such forwardlooking statements include, without limitation, statements regarding expected financial and operating activities and results that are preceded by, followed by, or that include words such as may, expects, anticipates, estimates or believes. Such statements are subject to important factors that could cause M&I s actual results to differ materially from those anticipated by the forward-looking statements. These factors include (i) M&I s exposure to the volatile commercial and residential real estate markets, which could result in increased charge-offs and increases in M&I s allowance for loan and lease losses to compensate for potential losses in its real estate loan portfolio, (ii) adverse changes in the financial performance and/or condition of M&I s borrowers, which could impact repayment of such borrowers outstanding loans, (iii) M&I s ability to maintain required level of capital, (iv) fluctuation of M&I s stock price, and (v) those factors referenced in Item 1A. Risk Factors in M&I s annual report on Form 10-K for the year ended December 31, 2007 and in M&I s quarterly report on Form 10-Q for the quarter ended June 30, 2008, and as may be described from time to time in M&I s subsequent SEC filings, which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect only M&I s belief as of the date of this press release. Except as required by federal securities law, M&I undertakes no obligation to update these forward-looking statements or reflect events or circumstances after the date of this report. 2

2 Total loans Loans outstanding at : $50.4 billion By Loan Category By State 1 Residential Real Estate Consumer 31% 14% & Develop. Real Estate 24% Other 2 19% Wisconsin KS 3% 3 IN 3% FL Missouri Minnesota 1 1 Geography based on property zip code. 2 Other category includes Illinois () and states < 2% (14%). 3 Credit quality ratios 3Q07 2Q08 3Q08 Net Charge-Offs / Average Loans 0.23% 3.23% 1.21% Loan Loss Reserve / Period-End Loans 1.01% Non-Performing Loans 1 / Period-End Loans 1.01% % Loan Loss Reserve / Non-Performing Loans 1 100% 99% 7 1 Includes loans 90+ day past due and still accruing interest. 4

3 Enhanced reserve against credit loss 2.2% 2.0% Loan & Lease Loss Reserve to Period-End Loans & Leases M&I 1.8% % Peer group 1 1.2% 1.0% 0.8% /08 6/08 9/08 1 Peer group consists of 16 U.S. banking companies with assets from $22 - $179 billion. 5 Total non-performing loans Non-performing loans at : $1.36 billion By Loan Category By State 1 Consumer Comm. 8% Comm. R.E. & Development Resi. R.E. 14% 61% Other 2 1 KS IN 2% 2% MO 3% Minnesota 4 9% Florida Wisconsin 1 Geography based on property zip code. 2 Other category includes Illinois () and states < 3% (12%). 6

4 Total non-performing loans 1 key statistics Approximately 1 are past due less than 30 days; 2 are past due less than 90 days $345 million in partial charge-offs taken against NPLs approximately of unpaid principal balance Largest non-performing loan ($41 million) Average non-performing loan ($314,000) Number of non-performing loans by dollar range > Greater than $20 million (2) > $10 - $19.9 million (12) > $5 - $9.9 million (23) 1 As of. 7 Total non-performing loans Non-performing loans 1 / Period-end loans by selected loan categories 8% & Development 4% Residential Real Estate 2% Total 2 0% 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 1 Includes loans 90+ day past due and still accruing interest. 2 Total non-performing loans exclude Franklin Credit Management Corp. ($224 million) in 4Q07. 8

5 Total non-performing loans 8% 4% Non-performing loans 1 / Period-end loans by selected states Note: Geography based on property zip code. Florida 2% Total 2 0% 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 1 Includes loans 90+ day past due and still accruing interest. 2 Total non-performing loans exclude Franklin Credit Management Corp. ($224 million) in 4Q07. 9 Total net charge-offs Net charge-offs for 2008 third quarter: $152.3 million By Loan Category By M&I Business Unit CRE RRE Consumer & Development 58% 19% Other 1 WI Nat. Cons. 9% W.C. Florida 4 Kansas City 13% 1 Other category includes Minnesota (2%) and M&I business units < 1% (4%). 10

6 C&D loans by category Loans: $9.8 billion Comm. Indiv. Dev. 12% Residential 22% (C&I) 2 (Housing) 21% NPLs: $825.4 million or 8.4 loans Comm. Constr. (C&I) Comm. 3% 2% Comm. Con. (Housing) Indiv. 8% Developers 30% Residential 3 Note: C&D are construction and development loans. 11 C&D loans by M&I business unit Loans: $9.8 billion NPLs: $825.4 million or 8.4 loans Other 1 12% WC FL MN 4% Natl. Cons. Kansas City Corres. 9% Wisconsin 30% 2 Other 2 WI WC FL 8% MN Natl. Cons Other category includes Indiana (4%), St. Louis (4%), Central Florida (3%), and Private Banking (1%). 2 Other category includes St. Louis (3%), Indiana (2%), Central Florida (1%), and Kansas City (1%). 12

7 C&D loans by state Note: Geography based on property zip code. Loans: $9.8 billion NPLs: $825.4 million or 8.4 loans Comm. Resi. Other Con. 1 Indiv. 21% Resi. 34% KS 3% IN 3% MO MN Wisconsin Dev. Florida 1 Other 2 IN 3% MN Florida WI 54% 1 Other category includes Illinois (), California (3%), and states < 2% (13%). 2 Other category includes Illinois (), California (4%), and states < 2% (9%). 13 C&D loans 1 key statistics Residential Constr. By Constr. By $ Millions Individuals Developers Total loan portfolio size $4,447.9 $957.6 $963.3 $2,189.6 $1,201.3 Average loan size Total non-performing loans Largest non-perforning loan Average non-performing loan # NPLs > $5 million by $ range > $20 million $10 - $19.9 million $5 - $9.9 million Total # NPLs > $5 million by state Florida Ilinois Wisconsin Other states Total As of. 2 Geography based on property zip code. 14

8 C&D non-performing loans 2 Non-performing loans 1 / Period-end loans by selected loan categories Residential by Developers 1 Resi. Total 0% 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 1 Includes loans 90 + day past due and still accruing interest. 15 C&D non-performing loans 2 1 Non-performing loans 1 / Period-end loans by selected M&I business unit Note: Geography based on M&I business unit. West Coast Florida Corres. Bank. Total Other 0% 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 1 Includes loans 90 + day past due and still accruing interest. 16

9 C&D loans Loans: $3.3 billion NPLs: $448 million or 13.6 loans Comm. Constr. (C&I) Comm. Dev. 1 Comm. Con. (Housing) Indiv. Resi. 43% Comm. 2% Developers 28% Residential Comm. Con. 50% (Housing) 8% 1% Indiv. Comm. Constr. (C&I) Note: Geography based on property zip code; numbers include M&I Banking loans in market. 17 C&D non-performing loans 30% 2 Non-performing loans 1 / Period-end loans by selected loan categories Note: Geography based on property zip code. 1 Residential by Developers Resi. Total 0% 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 1 Includes loans 90 + day past due and still accruing interest. 18

10 Total residential land loans Loans outstanding at : $2.2 billion By Customer Type By State 1 Business Purpose 3 9% 21% Individuals 70% Other 2 12% MN 4% FL Wisconsin 12% 6 1 Geography based on property zip code. 2 Other category includes Illinois (2%), Nevada (2%), and other states (8%). 3 Loans to mid-sized local and regional builders to acquire and develop land for 1-4 family homes. 19 residential land loans Key Statistics at 1 Total loans outstanding: $1,431 million Total non-performing loans: $223 million or 15.61% Loans to individuals Loans outstanding: $1,195 million Average loan size: $205,166 Non-performing loans: $124 million or 10.3 Original / updated FICO score: 732 / 711 Original / updated LTV 1 : 7 / 128% By Customer Type 3% Business Purpose 3 13% Home Equity Loans 4 Individuals Home Equity 84% Loans 54% By County 2 Loans to individuals (Maricopa County) Loans outstanding: $806 million Average loan size: $256,400 Non-performing loans: $90 million or 11.1 Original / updated FICO score: 732 / 710 Original / updated LTV 1 : 7 / 129% Other Pima Other 4 Pinal WI 33% 8% 39% Yavapai Maricopa 68% IN OH AZ MN 9% 1 Updated LTV based on market price trends. 2 Geography based on property zip code. 3 Loans to mid-sized local and regional builders to acquire and develop land for 1-4 family homes. 20

11 banking loans Loans outstanding at : $2.6 billion By Loan Category By State 1 Consumer Comm. R.E. & 50% Develop. 34% Illinois 2 Other 2 34% Wisconsin CA 1 FL OH MO 8% 1 Geography based on property zip code. 2 Other category includes Nebraska (4%), Texas (4%), Utah (4%), and states < 3% (22%). 21 banking C&D loans Loans: $867.1 million Comm. 4% Resi. 8% Developers 23% (Housing) 28% (C&I) 3 NPLs: $134.1 million or 15.4 loans Comm. 1% Residential 30% Developers 33% Comm. Constr. (C&I) (Housing) 2 Note: Geography based on M&I business unit. 22

12 West Coast Florida C&D loans Loans: $442.9 million Dev. Indiv. Resi. 12% Comm. 1 13% (Housing) 42% Comm. Constr. (C&I) NPLs: $66.5 million or 15.01% loans Dev. 12% Indiv. 3% Resi. (Housing) 78% Note: Geography based on M&I business unit. 23 real estate loans Total Real Estate Loans: $17.5 billion & Loans: $5.4 billion Real Estate 4 Farm 4% Comm. & Constr. 31% Multi- Family 19% Other 1% Residential Property 22% & Industrial 4 31% By Loan Category By Property Type 24

13 real estate loans Total Comm. R.E. Loans: $17.5 billion (2 Owner Occupied) Comm. R.E. Loans: $8.0 billion (41% Owner Occupied) Farm 4% Multi- Family 19% Comm. & Constr. 31% Real Estate 4 Other 1 21% Medical Lodging Retail Industrial 2 Office By Loan Category By Property Type 1 Other category includes Vehicle Dealership (4%), Gas Station (4%), Restaurants (3%), and other < 2% (). 25 Home equity lines and loans Loans outstanding at : $5.1 billion By Loan Category By State 1 Home Equity Home Equity Lines Loans 51% 49% Other 2 3 Wisconsin 3 IN OH AZ MN 9% 1 Geography based on property zip code. 2 Other category includes Missouri (4%), Florida (3%), Illinois (3%), and states < 3% (2). 26

14 Home equity 1 key statistics Home equity loans Original / updated FICO score (727 / 716) Original / updated LTV 2 (8 / 89%) % secured by first mortgage (81%) Home equity lines Original / updated FICO score (739 / 712) Original / updated LTV 2 (79% / 80%) % secured by first mortgage (1) % drawn (5) 1 As of. 2 Updated LTV based on market price trends. 27 C&D loans definitions Loans primarily to mid-sized local and regional companies to construct a variety of commercial projects, including farmland, industrial, multi-family, office, retail, single-family and condominiums. Loans primarily to mid-sized local and regional companies to acquire and develop land for a variety of commercial projects, including farmland, industrial, multi-family, office, retail, single-family, and condominiums. Residential by Individuals Loans to individuals to construct 1-4 family homes. Residential Loans primarily to individuals and mid-sized local and regional builders to acquire and develop land for 1-4 family homes. Residential by Developers Loans primarily to mid-sized local and regional builders to construct 1-4 family homes in residential subdivisions. 28