.bodytext {float: left; } .floatimg-left-hort { float:left; margin-top:10px; margin-right: 10px; width:300px; clear:left;} .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 10px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 10px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 10px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} Dear Mr. Berko:

Dear E.W.:

Until February of 2001 I thought Marshall & Ilsley Corp. (MI-$31.16) was a funeral home in Valdosta, Ga. Then I met a member of the Marshall family, who said that his great-grandfather leased space from a shoemaker in 1847, and in 1849 Charles Ilsley joined his great-grandfather in the banking business in Milwaukee, Wis.

Though this newfound knowledge was not on par with the discovery of penicillin or the law of gravity, it did introduce me to a classy bank stock that has increased its dividend every year since 1987. I bought 40 shares at $50 per share for my two kids, a year later MI split 2-for-1, and today they each have about 91 shares (all dividends are reinvested) trading at $31.16.

MI has 14,000 employees staffing offices in Arizona, Illinois, Wisconsin, Florida, Minnesota, Kansas, Missouri, Oklahoma and Nevada and has become a superb acquisition machine. In 2001 and 2002 MI bought three banks in Minnesota and one bank in Missouri. In 2006 MI bought Gold Bank in Kansas, Trustcorp Financial in Missouri and United Heritage Bank in Florida. And this year MI will have bought Excel Bank in Wisconsin and First Bank in Indiana. These acquisitions were elegantly executed and the “fits” were as comfortable as an old shoe.

Due to unique conditions in the banking industry, MI is likely to find a few sweet deals in the coming year. Today MI has 260 branches, which have produced a long string of impressive revenue and earnings growth, vaulting MI to its current position as the 16th-largest bank in the U.S. of A. There’s nothing super about MI; it’s not a sparkling diamond nor does it glitter like gold. MI is just a well-run, by-the-numbers bank that enjoys good success because it practices good “bankmanship” for the community, for its customers and for its shareholders.

Metavante, which I thought was a Mexican health-care clinic, was spun off Nov. 1. But to my surprise, Metavante turned out to be a data service segment of MI that provides banking and payment technologies to financial services firms and businesses. Metavante is electronic banking, consulting services, sales and service automation, image-based check and document processing, risk and compliance software, PIN, signature, credit card accounting and processing, ATM services and myriad other support services.

This data services division represents 37 percent of MI’s revenues and was spun off (tax-free) on the basis of one share of Metavante for every three shares of MI. Meanwhile, Warburg Pincus (one of those evil private equity firms) purchased 25 percent of Metavante for $625 million, so MI shareholders ended up owning 75 percent of Metavante.

Metavante Technologies Inc. (MV-$24.11) has 5,500 employees, generated 2006 revenues of $1.5 billion delivering banking and payment technologies to 9,000 financial service firms and produced a net profit of $160 million. This spinoff gave MI a $1.65 billion capital infusion to continue its acquisition course. The spinoff also gave MV more financial flexibility enhancing its ability to expand its business through complementary acquisitions.

Standard and Poor’s recently downgraded Marshall & Ilsley, and perhaps they know a few things I don’t. However, Value Line believes MI could trade in the low $60s four years out. Its $1.24 dividend provides an attractive 4 percent yield and could be raised next year. AG Edwards has a “hold” on the stock, and Deutsche Securities rates it as a “buy.” MSN’s “StockScouter” ranks MI as a nine out of 10, and millions of shares are held by Northwestern, Barclays, Vanguard, State Street, T. Rowe Price, JP Morgan, Lazard, Bank of America and Growth Fund of America.