Updated from 10:57 a.m. EDT

Marshall & Isley

( MI), a holding company with 27 bank subsidiaries and one thrift, said it will spin off its data services division as a separately traded public company.

The Milwaukee-based company also announced that it met Wall Street's earnings expectations for the second quarter.

In the third quarter of 2000 and subsequent quarters, Marshall & Isley will take a charge of about $19 million for costs related to the initial public offering, as well as its plan to reduce the number of banking charters under which it operates. It will also take a $33 million charge related to asset sales and the realignment of its investment portfolio.

Shares of Marshall & Isley finished up 1 5/16, or 2.9%, at 47 1/8.

The spinoff,

M&I Data Services

, provides software to financial institutions. It will be renamed

Metavante

. Marshall & Isley will retain over 80% of the company's shares after the IPO, with those shares distributed to its shareholders in the form of a dividend within a year after the IPO.

"Being its own publicly held company will give Metavante the ability to compete even more effectively in the marketplace," said James Wigdale, chairman of Marshall & Isley, in a statement.

Donaldson, Lufkin & Jenrette

,

Salomon Smith Barney

and

UBS Warburg

will underwrite the offering.

Separately, Marshall & Isley said that for the second quarter ended June 30, net income rose 2.8% to $90.3 million, or 83 cents a diluted share, from $87.5 million, or 77 cents a share, a year earlier, matching the consensus estimate of analysts polled by

First Call/Thomson Financial

.

Return on average assets was 1.45% compared to 1.57% for the same quarter a year ago, while return on tangible equity was 21.4% compared to 20.04% last year.

The company said it continues to experience slow deposit growth and pressure on the margin, as it has in prior quarters. The trend will continue for the balance of the year.