NATIONAL COMMERCE BANCORPORATION, DEF 14A, 1996-03-26

NATIONAL COMMERCE BANCORPORATION
DEF 14A, 1996-03-26
NATIONAL COMMERCIAL BANKS

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<PAGE>

NATIONAL COMMERCE BANCORPORATION
ONE COMMERCE SQUARE
MEMPHIS, TENNESSEE 38150

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 1996

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of National
Commerce Bancorporation will be held in the Auditorium at National Bank of
Commerce, Concourse Level, Commerce Tower, One Commerce Square, Memphis,
Tennessee 38150, on Wednesday, April 24, 1996, at 10:00 a.m., local time, for
the following purposes:

1. To elect the six nominees named in the accompanying Proxy Statement as
directors of the Company;

2. To ratify the appointment of Ernst & Young LLP, independent certified
accountants, as auditors of the Company for 1996; and

3. To transact any and all other business as may properly come before the
meeting or any adjournment thereof.

Only shareholders of record at the close of business on March 1, 1996, will
be entitled to receive notice of and to vote at the Annual Meeting.

Information relating to the above matters is set forth in the accompanying
Proxy Statement dated March 26, 1996.

By Order of the Board of Directors,

Gus B. Denton
Secretary

Memphis, Tennessee
March 26, 1996

WHETHER OR NOT THEY INTEND TO BE PRESENT AT THE ANNUAL MEETING IN PERSON,
SHAREHOLDERS ARE URGED TO COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.

<PAGE>

NATIONAL COMMERCE BANCORPORATION
ONE COMMERCE SQUARE
MEMPHIS, TENNESSEE 38150

---------------------

PROXY STATEMENT

---------------------

ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 1996

---------------------

GENERAL

PURPOSES OF SOLICITATION

The Annual Meeting of the Shareholders of National Commerce Bancorporation
(the "Company" or "NCBC") will be held on April 24, 1996, for the purposes set
forth in the attached Notice of Annual Meeting of Shareholders and in this
Proxy Statement. The accompanying Proxy is solicited on behalf of the Board of
Directors of the Company in connection with such meeting and any adjournments
thereof. The term "NBC" as used in this Proxy Statement refers to National
Bank of Commerce, Memphis, Tennessee, the Company's principal banking
subsidiary. This Proxy Statement and the enclosed Proxy are being first mailed
to the Company's shareholders on or about March 30, 1996.

OUTSTANDING VOTING SECURITIES AND PERSONS ENTITLED TO VOTE

Only shareholders of record as of the close of business on March 1, 1996,
will be entitled to receive notice of and to vote at the Annual Meeting. As of
that date, the Company had outstanding 24,846,704 shares of Common Stock, each
share being entitled to one vote. Appraisal rights for dissenting shareholders
are not applicable to the matters being proposed.

VOTING PROCEDURES

Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the election inspectors appointed for the meeting and will determine whether
or not a quorum is present. The election inspectors will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum but as unvoted for purposes of determining the approval
of any matter submitted to the shareholders for a vote. If a broker indicates
that it does not have discretionary authority to vote certain shares, those
shares will not be considered as present and entitled to vote with respect to
that matter. A majority of the Common Stock outstanding on the record date
must be present to constitute a quorum.

ELECTION OF DIRECTORS

The Company's Charter provides for a Board consisting of not less than three
and not more than twenty-five directors. The Company's Charter divides the
Board into three classes as nearly equal in number as possible, with each
class serving a three-year term and one class elected at each Annual Meeting
of Shareholders. The Board of Directors has set at nineteen the number of
directors constituting the full Board for the ensuing year.

1
<PAGE>

At the Annual Meeting of Shareholders, six directors are to be elected as
Class I directors for terms that expire at the Annual Meeting of Shareholders
to be held in 1999. All of the nominees are members of the present Board and
were elected at the Annual Meeting of Shareholders in 1994.

The remaining thirteen directors presently on the Board will continue as
members of the Board until their respective terms expire as indicated in the
table below. In addition, the Board could, by a majority vote of the entire
Board, increase the number of directors to up to twenty-five and fill the
vacancies resulting from such increase for the remainder of the term of the
classes in which each new directorship is created. Although the Board from
time to time considers qualified candidates to become directors, the Board has
made no decision to increase the number of directors.

The Board of Directors has no reason to believe that any of the nominees for
director will not be available to stand for election as director. However,
should any of such nominees become unable to serve, the proxies may be voted
for a substitute nominee or nominees or to allow the vacancy created thereby
to remain open until filled by the Board.

The presence of a quorum at the Annual Meeting, either in person or by
written proxy, and a favorable vote of a plurality of the votes cast at the
meeting are necessary to elect a nominee as director.

MANAGEMENT OF THE COMPANY

DIRECTORS

The following table sets forth the names of the six nominees for election to
the Board as members of Class I, as well as those incumbent directors who are
members of Classes II and III. The table also contains, as to each nominee and
present director, his or her age, a brief description of his or her principal
occupation and business experience during the last five years, a description
of any position or office held by him or her with the Company or NBC,
directorships of certain publicly held companies (other than the Company)
presently held by him or her, the year in which he or she was first elected or
appointed a director of the Company, the number of shares and percentage of
the Company's outstanding Common Stock beneficially owned by him or her as of
February 1, 1996, and certain other information. The information in the table
has been furnished by the respective individuals. Except as indicated in the
notes to the following table, the persons indicated possess sole voting and
investment power with respect to all shares set forth opposite their names.

2
<PAGE>

<TABLE>
<CAPTION>
SHARES OF
COMMON PERCENT OF
STOCK CLASS
PRINCIPAL BENEFICIALLY BENEFICIALLY
OCCUPATION YEAR FIRST OWNED AS OWNED AS
FOR PAST FIVE YEARS ELECTED OF FEB. 1, OF FEB. 1,
NAME AGE AND DIRECTORSHIPS DIRECTOR 1996(1) 1996(1)
---- --- ------------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
CLASS I: NOMINEES TO SERVE UNTIL ANNUAL MEETING OF SHAREHOLDERS IN 1999:
Frank G. Barton, Jr.# 63 Chairman of the Board of 1977 128,083(2) .5
the Barton Group, Inc.
(retail equipment
sales).
Jack R. Blair 53 Group President Smith & 1992 3,050 --
Nephew North America
since May, 1993;
President of Smith &
Nephew Surgical Products
Group until May, 1993.
Edmond D. Cicala#+ 70 President, Edmond 1978 129,862(3)(4) .5
Enterprises, Inc.
(consulting firm);
Director of Evans, Inc.
until April, 1994;
Director of Proffitts,
Inc.
Thomas C. Farnsworth, 58 Real Estate and 1977 209,716 .8
Jr. Investments.
Sidney A. Stewart, Jr.+ 69 Private investor 1985 80,224(4)(5) .3
R. Lee Taylor 54 Private investor 1990 10,325 --
CLASS II: INCUMBENTS TO SERVE UNTIL ANNUAL MEETING OF SHAREHOLDERS IN 1997:
Christopher W. Canale 46 President, D. Canale 1993 35,371(6) .1
Beverages, Inc.
John D. Canale, III* 50 President of D. Canale 1989 39,027(6)(7) .2
Food Services, Inc.
(wholesale food
distributor); Secretary
of D. Canale & Co;
Secretary-Treasurer of
D. Canale Beverages,
Inc.
R. Lee Jenkins 66 Private investor 1990 13,071(8) .1
W. Neely Mallory, Jr.* 62 President of Memphis 1974 104,588(9) .4
Compress & Storage Co.
(warehousing firm);
Partner, Mallory
Partners.
James E. McGehee, Jr.* 66 President, McGehee 1976 951,179(10) 3.7
Realty and Development
Company.
Lucy Y. Shaw# 48 President, Common 1993 530 --
Denominator, Inc., since
August, 1993; Principal,
Medical Services
Research Group from
September 1994; to
October, 1995; President
and Chief Executive
Officer of Regional
Medical Center at
Memphis from August,
1990 until February,
1994.
Robert M. Solmson# 48 President and Director 1986 51,885(11) .2
of RFS Hotel Investors,
Inc. since August, 1993
(real estate investment
trust); President of
RFS, Inc. from January,
1975 until August, 1993.
</TABLE>

3
<PAGE>

- ----------
* Member of the Executive Committee of the Board of Directors
# Member of the Audit Committee of the Board of Directors
+ Member of the Stock Option and Management Compensation Committee
(1) Under the rules of the Securities and Exchange Commission, a person is
deemed to be a "beneficial owner" of a security if that person has or
shares "voting power," which includes the power to vote or direct the
voting of such security, or "investment power," which includes the power
to dispose or direct the disposition of such security. A person is also
deemed to be a beneficial owner of any securities of which that person has
the right to acquire beneficial ownership within 60 days. Under these
rules, more than one person may be deemed to be a beneficial owner of the
same securities and a person may be deemed to be a beneficial owner of
securities as to which he has no beneficial interest. For purposes of
calculating the percent of Common Stock beneficially owned, all shares
that are subject to options that are exercisable within 60 days are deemed
to be presently outstanding.
(2) Includes 2,085 shares held by Mr. Barton and his wife as custodians for
their sons, as to which Mr. Barton disclaims any beneficial interest.
(3) Includes 29,079 shares held by Mr. Cicala's wife.

4
<PAGE>

(4) Includes as to each of these persons 51,688 shares held by the Company's
Employee Stock Ownership Plan ("ESOP") which are pledged to NBC to secure
a loan to the plan. All other shares in the Company's ESOP are voted by
the employee to whom such shares are attributed. Messrs. Phillips
(Chairman), Cicala and Stewart are members of the administrative
committee of the plan and, as such, share voting and investment power
with respect to shares held by the plan. Messrs. Cicala, Stewart and
Phillips disclaim any beneficial interest in such shares. Mr. Garrott and
Executive Vice President Lewis E. Holland are ex-officio members of the
administrative committee and disclaim any beneficial interest in such
shares except shares attributable to them under the plan.
(5) Does not include 1,343 held by Mr. Stewart's wife.
(6) Does not include shares owned by John D. Canale (deceased February 27,
1996), father of Christopher W. Canale and John D. Canale, III. Messrs.
Christopher W. Canale and John D. Canale, III are brothers. There are no
other family relationships among nominees and directors. See "PRINCIPAL
SHAREHOLDERS."
(7) Includes 100 shares held by John D. Canale III as custodian for his
nephew, as to which he disclaims any beneficial interest.
(8) Includes 1,500 shares owned by Mr. Jenkin's wife, as to which Mr. Jenkins
disclaims any beneficial interest.
(9) Does not include 1,006 shares owned by Mr. Mallory's wife, as to which
Mr. Mallory disclaims any beneficial interest.
(10) Includes 9,904 shares held as trustee for certain family members and
58,758 shares held by Mr. McGehee's wife, as to which Mr. McGehee
disclaims any beneficial interest.
(11) Includes 11,448 shares held by Mr. Solmson as custodian for his children,
21,792 shares held by his wife and 7,071 shares owned by a trust as to
which he has sole voting power, as to all of which shares Mr. Solmson
disclaims any beneficial interest. Also includes 8,574 shares held by a
trust in which Mr. Solmson has a beneficial interest.
(12) Includes 3,592 shares held by Mr. Brown's wife as to which he disclaims
any beneficial interest.
(13) Includes 135,000 shares that Mr. Campbell has the right to purchase upon
the exercise of stock options and 24,477 shares attributable to Mr.
Campbell in the Company's Employee Stock Option Plan as to which Mr.
Campbell has the power to direct voting. Also includes 11,497 shares held
by his wife and sons, as to which he disclaims any beneficial interest,
and 67,126 shares held jointly by Mr. Campbell and his wife.
(14) Includes 54,840 shares that Mr. Garrott has the right to purchase upon
the exercise of stock options. Also includes 17,504 shares attributable
to Mr. Garrott in the Company's Employee Stock Ownership Plan as to which
Mr. Garrott has the power to direct voting. Also includes 109,470 shares
held by Mr. Garrott as trustee for the benefit of his children, 20,450
shares held by Mr. Garrott's wife, and 105,000 shares held by MBA Corp.,
all of which shares of MBA Corp. are owned by his children, as to which
Mr. Garrott disclaims any beneficial interest.
(15) Includes 60,083 owned by Mr. Phillips wife, as to which Mr. Phillips
disclaims any beneficial interest.
(16) Includes 769,510 shares held by Mr. Scheidt as trustee for the benefit of
his children, of which he has sole voting and investment power, and as to
which Mr. Scheidt disclaims any beneficial interest. Does not include
383,023 shares held by his wife.

5
<PAGE>

COMPENSATION OF DIRECTORS

During 1995, the Company's directors were paid a fee of $500 per Board
meeting attended and, except for directors who are officers of the Company or
its subsidiaries, $150 per committee meeting attended. The Company's directors
are also directors of NBC and as such received a fee of $500 per NBC Board
meeting attended and, except for directors who are officers of the Company or
its subsidiaries, $150 per NBC committee meeting attended during 1995. Except
for directors who are officers of the Company or its subsidiaries, the
directors received an annual retainer of $2,000 from the Company, payable
semi-annually, and an annual retainer of $2,000 from NBC, payable semi-
annually. Pursuant to the provisions of the Company's 1994 Stock Plan, the
outside directors of National Bank of Commerce who attended 11 of 12 Board
meetings during 1994 and outside directors of the Company's banks in
Nashville, Knoxville and Belzoni who attended all four quarterly Board
meetings during 1994 received 100 shares of NCBC stock as compensation for
their attendance.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors and greater than 10% shareholders ("Reporting
Powers") to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission. Executive officers and
directors are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on a review of the copies
of such forms furnished to the Company and written representations from such
Reporting Persons with respect to the period from January 1, 1995 through
December 31, 1995, all filing requirements applicable to Reporting Persons
have been met.

6
<PAGE>

MANAGEMENT STOCK OWNERSHIP

The following table sets forth the number of shares of Common Stock and the
percentage of shares of Common Stock outstanding beneficially owned by the
Company's Chief Executive Officer, the four other most highly compensated
executive officers of the Company and its subsidiaries, and all directors and
officers as a group, as of February 1, 1996.

<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK BENEFICIALLY PERCENT OF
OWNED AS OF FEBRUARY 1, 1996 CLASS
---------------------------- ----------
<S> <C> <C>
Thomas M. Garrott...................... 1,074,188(1) 4.2%
Douglas W. Ferris, Jr.................. 163,812(2) .6
Lewis E. Holland....................... 88,106(3) .3
Gary L. Lazarini....................... 139,655(4) .5
William R. Reed, Jr.................... 133,780(5) .5
All directors and executive officers as
a group
(26 persons).......................... 5,747,578(6)(7) 22.4
</TABLE>
- --------
(1) See Notes 4 and 14 under the caption "MANAGEMENT OF THE COMPANY--
Directors" above.
(2) Includes 17,942 shares attributable to Mr. Ferris pursuant to the
Company's Employee Stock Ownership Plan and 9,620 shares that he has the
right to purchase upon the exercise of stock options.
(3) Includes 162 shares attributable to Mr. Holland pursuant to the Company's
Employee Stock Ownership Plan and 26,200 shares that he has the right to
purchase upon the exercise of stock options, and 56 shares attributable to
him under the Company's Taxable Income Reduction Account ("TIRA"). Also,
see Note 4 under the caption "MANAGEMENT OF THE COMPANY--DIRECTORS" ABOVE.
(4) Includes 21,884 shares attributable to Mr. Lazarini pursuant to the
Company's Employee Stock Ownership Plan and 45,367 shares that he has the
right to purchase upon the exercise of stock options, and 1,858 shares
attributable to him under the Company's Taxable Income Reduction Account
("TIRA"). Includes 45,168 shares held by Mr. Lazarini's wife as to which
Mr. Lazarini disclaims any beneficial interest.
(5) Includes 89,607 shares held by Mr. Reed's wife as to which he disclaims
any beneficial interest, 14,293 shares attributable to Mr. Reed pursuant
to the Company's Employee Stock Ownership Plan, and 29,880 shares that he
has the right to purchase upon the exercise of stock options.
(6) Includes an aggregate of 300,907 shares of Common Stock purchasable upon
the exercise of stock options by the Chief Executive Officer, the four
other most highly compensated executive officers and all directors and
executive officers as a group. Also includes an aggregate of 145,058
shares under the Company's Employee Stock Ownership Plan and 6,462 under
the Taxable Income Reduction Account attributable to the Chief Executive
Officer, the four other most highly compensated executive officers and all
directors and executive offices as a group.
(7) Does not include Common Stock beneficially owned by Directors Emeritus,
other officers of the Company or officers of NBC's Management Committee
who are not listed above (approximately 11%).

7
<PAGE>

BOARD COMMITTEES AND ATTENDANCE

The Company's Board of Directors has four principal standing committees--the
Executive Committee, the Audit Committee, the Stock Option and Management
Compensation Committee, and the Management/Nominating Committee. The Executive
Committee, composed of Messrs. Campbell (Chairman), Brown, John Canale,
Garrott, Mallory and McGehee, has, and may exercise, all the authority of the
full Board between Board meetings with respect to matters other than the
amendment of the Charter or By-laws of the Company, the adoption of a plan of
merger or consolidation, or the disposition of substantially all of the assets
or dissolution of the Company.

The membership and principal functions of the Audit Committee are described
under the caption "ACCOUNTING MATTERS" below.

The membership and principal functions of the Stock Option and Management
Compensation Committee are described under the caption "REPORT OF THE STOCK
OPTION AND MANAGEMENT COMPENSATION COMMITTEE" below.

The Company has a Management/Nominating Committee which consults with the
Chairman and Chief Executive Officer concerning management succession. Any
nominees submitted to the full Board of Directors to fill vacancies or new
seats on the Board are the result either of recommendations to the Board by
the Chairman and Chief Executive Officer with a consensus of the Committee, or
recommendations by a majority of the Committee with the concurrence of the
Chairman. Presently, the Company has no formal procedures by which
shareholders may submit nominees to the Committee. The members of the
Management/Nominating Committee are Messrs. Stewart (Chairman), Brown, John
Canale, Jenkins, McGehee, Mallory and Phillips.

During 1995, the Board of Directors held twelve meetings. Due to the
frequent meetings of both the Company's and NBC's Boards and the fact that the
Executive Committee of NBC met bi-weekly and the Audit Committee of NBC met
twelve times during 1995 (the memberships of both committees being identical
to their Company counterparts), neither the Executive Committee nor the Audit
Committee of the Company met during 1995. The Stock Option and Management
Compensation Committee held one meeting and the Management/Nominating
Committee held four meetings during 1995.

Because of conflicting schedules, in 1995 Messrs. Jenkins and Phillips
attended fewer than 75% of the Company's Board meetings and meetings of
committees of the Board on which they served.

8
<PAGE>

COMPENSATION OF MANAGEMENT AND OTHER INFORMATION

SUMMARY COMPENSATION TABLE

The following table sets forth certain summary information for the years
indicated with respect to the compensation awarded to, earned by, or paid to
the Company's Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company and its subsidiaries
(hereinafter referred to as the "named executive officers").

<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION(1) COMPENSATION
-------------------- ---------------------
AWARDS
--------------------- ALL OTHER
SECURITIES UNDERLYING COMPENSA-
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS GRANTED (#) TION ($)
--------------------------- ---- ---------- --------- --------------------- ---------
<C> <S> <C> <C> <C> <C> <C>
Thomas M. Garrott. Chairman of the Board, 1995 334,000 241,500 50,000 9,317(2)
President, Chief 1994 334,000 161,000 50,000 29,672(3)
Executive
Officer and Director of 1993 314,333 151,167 41,400 31,309(4)
the
Company; Chairman of the
Board, Chief Executive
Officer and Director of
NBC
Douglas W. Ferris, Senior Vice President of 1995 117,950 279,231 7,500 4,450(2)
Jr. .............
NBC and President of 1994 117,949 204,543 5,000 11,039(3)
National Commerce Bank 1993 114,950 129,245 10,200 8,727(4)
Services, Inc.
Lewis E. Holland.. Executive Vice 166,000 156,000 15,000 1,962(2)
President, 1995
Treasurer, and Chief 1994 83,000 70,000 58,000 1,135(3)
Financial
Officer of the Company 1993 -- -- -- --
Gary L. Lazarini.. Executive Vice President 1995 161,000 75,670 7,500 4,951(2)
of
NBC, Chairman and 1994 161,000 41,860 -- 16,748(3)
President
of Commerce Investment 1993 156,000 88,000 19,800 14,045(4)
Corporation
William R. Reed, Executive Vice President 1995 165,000 54,250 15,000 4,273(2)
Jr. ............. of the
Company, Director of 1994 165,000 52,700 15,000 12,859(3)
NBC,
Chairman of the Board of 1993 152,833 63,067 19,800 9,807(4)
Nashville Bank of Com-
merce
and NBC Bank, FSB (Knox-
ville), Chairman, Presi-
dent, and Chief Execu-
tive Officer of NBC
Bank, FSB (Belzoni)
</TABLE>
- ----------
(1) The Company also provides certain perquisites and other personal benefits
(i.e., auto allowance) to the named executive officers which do not exceed
in the aggregate either $50,000 or 10% of each named executive officer's
total annual salary and bonus. Includes directors' fees of an aggregate of
$12,000 paid to Mr. Garrott and $9,500 paid to Mr. Reed for 1993; and an
aggregate of $12,000 paid to Mr. Garrott, $3,000 paid to Mr. Holland, and
$10,000 paid to Mr. Reed for 1994; and an aggregate of $12,000 paid to Mr.
Garrott, $6,000 paid to Mr. Holland, and $10,000 paid to Mr. Reed for
1995.
(2) In 1995, all other compensation to named executive officers included (i)
split dollar life insurance premiums of $7,355 for Mr. Garrott, $2,488 for
Mr. Ferris, $2,989 for Mr. Lazarini, and $2,311 for Mr. Reed, and (ii)
allocation of Company contributions under the Company's Employee Stock
Ownership Plan of $1,962 to each Messrs. Garrott, Ferris, Holland,
Lazarini and Reed.
(3) In 1994, all other compensation to named executive officers included (i)
split dollar life insurance premiums of $27,544 for Mr. Garrott, $9,366
for Mr. Ferris, $14,620 for Mr. Lazarini, and $10,731 for Mr. Reed, and
(ii) allocation of Company contributions under the Company's Employee
Stock Ownership Plan of $2,128 each to Messrs. Garrott, Lazarini and Reed
and $1,673 to Mr. Ferris.
(4) In 1993, all other compensation to named executive officers included (i)
split dollar life insurance premiums of $27,781 for Mr. Garrott, $7,007
for Mr. Ferris, $11,711 for Mr. Lazarini, and $7,663 for Mr. Reed, and
(ii) allocation of Company contributions under the Company's Employee
Stock Ownership Plan of $3,528 to Mr. Garrott, $1,720 to Mr. Ferris,
$2,334 to Mr. Lazarini, and $2,144 to Mr. Reed.

9
<PAGE>

STOCK OPTION PLANS

During 1994, the shareholders approved the Company's 1994 Stock Plan (the
"1994 Plan"), which reserved 1,050,000 shares of Company's Common Stock for
use under the 1994 Plan. Unoptioned shares under previous plans were
transferred to reserved shares for the 1994 Plan. During 1990, the Board of
Directors and shareholders approved the Company's 1990 Stock Plan (the "1990
Plan"), which reserved 675,000 shares of the Company's Common Stock for the
granting of options and restricted stock to key employees. The 1990 Plan
amended the Company's 1986 Stock Option Plan (the "1986 Plan") and the 1982
Incentive Stock Option Plan (the "1982 Plan") and merged such amended and
restated plans into the 1990 Plan.

Options are granted at the then prevailing market price. Options became
exercisable six months subsequent to the date of grant under the 1982 Plan and
become exercisable in equal parts at the end of the year of grant over the
succeeding five to ten years under the 1986, 1990 and 1994 Plans. At the
discretion of the 1982 Plan's administering committee, stock appreciation
rights were attached to some of the options, whereby the optionee may receive
cash for the difference between the exercise price of the related option and
the fair market value of the Company's Common Stock. The Plans are restricted
to eligible officers and key employees. Amounts set forth in the following
tables reflect the effect of all stock dividends and splits declared through
1995.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth certain information with respect to the grant
of stock options under the Company's Stock Plans to the named executive
officers for the year ended December 31, 1995.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
- -----------------------------------------------------------
POTENTIAL
REALIZABLE VALUE
PERCENT OF AT ASSUMED
TOTAL ANNUAL RATES
NUMBER OF OPTIONS OF STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION
UNDERLYING EMPLOYEES OR FOR OPTION TERM
OPTIONS IN BASE PRICE EXPIRATION -------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% 10%
---- ----------- ----------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Thomas M.
Garrott.... 50,000 24.9% $24.625 8-10-03 $600,604 $1,478,485
Douglas W.
Ferris,
Jr. ....... 7,500 3.7 24.625 8-10-03 90,091 221,773
Lewis E.
Holland.... 15,000 7.5 24.625 8-10-03 180,181 443,546
Gary L.
Lazarini... 7,500 3.7 24.625 8-10-03 90,091 221,773
William R.
Reed, Jr. . 15,000 7.5 24.625 8-10-03 180,181 443,546
</TABLE>
- --------
(1) Options become exercisable in equal parts over the five to ten years
succeeding the date of grant.

10
<PAGE>

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES

The following table sets forth certain information with respect to the value
of unexercised options and SARs held by the named executive officers of the
Company and its subsidiaries at December 31, 1995.

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED ON VALUE OPTIONS/SARS OPTIONS/SARS
EXERCISE REALIZED AT FY-END (#) AT FY-END($)(2)
NAME (#) ($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Thomas M. Garrott....... -- $ -- 210,765/190,510 $2,930,784/$2,076,773
Douglas W. Ferris, Jr. . -- -- 9,620/ 13,080 30,365/ 33,369
Lewis E. Holland........ -- -- 26,200/ 46,800 103,075/ 166,800
Gary L. Lazarini........ 17,151 336,786 45,367/ 15,420 528,411/ 50,003
William R. Reed, Jr. ... 42,877 781,569 29,880/ 28,920 216,443/ 85,002
</TABLE>
- ----------
(1) Market value of underlying securities at exercise minus the exercise
price.
(2) Market price at year end less exercise price.

PENSION PLAN TABLE

The Company maintains a non-contributory, defined benefit retirement plan,
which covers all eligible employees of the Company. The following table
describes estimated retirement benefits payable under the retirement plan to
employees in the specified period-of-service and compensation classifications,
assuming retirement at age 65 on February 1, 1996. Retirement benefits are not
subject to social security deductions or offsets.

<TABLE>
<CAPTION>
CREDITED SERVICE
FINAL --------------------------------------------------------------------
PAY 5 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- -------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$125,000 $11,934 $35,800 $47,732 $59,667 $71,600 $ 83,533
150,000 14,472 43,414 57,884 72,356 86,828 101,298
175,000 14,472* 43,414* 57,884* 72,356* 86,828* 101,298*
200,000 14,472* 43,414* 57,884* 72,356* 86,828* 101,298*
225,000 14,472* 43,414* 57,884* 72,356* 86,828* 101,298*
250,000 14,472* 43,414* 57,884* 72,356* 86,828* 101,298*
300,000 14,472* 43,414* 57,884* 72,356* 86,828* 101,298*
400,000 14,472* 43,414* 57,884* 72,356* 86,828* 101,298*
450,000 14,472* 43,414* 57,884* 72,356* 86,828* 101,298*
500,000 14,472* 43,414* 57,884* 72,356* 86,828* 101,298*
550,000 14,472* 43,414* 57,884* 72,356* 86,828* 101,298*
600,000 14,472* 43,414* 57,884* 72,356* 86,828* 101,298*
</TABLE>
- ----------
* Represents the maximum legal permissible benefit under the retirement plan
for individuals retiring in 1995.

The retirement plan contains a five-year vesting requirement, effective
January 1, 1989, and provides remuneration upon retirement at age 65 based
generally upon average compensation for the five calendar years preceding
retirement and years of service, with additional preretirement disability and
death benefits. Benefits are calculated on the normal retirement option
available to participants,

11
<PAGE>

which is ten years certain and life. Compensation covered by the retirement
plan includes base salaries, overtime pay, commissions and bonuses. Covered
compensation for commissioned employees is limited to $50,000. In 1995,
covered compensation for Messrs. Garrott, Ferris, Holland, Lazarini and Reed
was $646,500, $400,558, $356,000, $250,670 and $234,250, respectively. At
December 31, 1995, Messrs. Garrott, Ferris, Holland, Lazarini and Reed had 13,
29, 2, 36, and 26 years of credited service, respectively, under the
retirement plan.

The Board of Directors has also adopted a restoration pension plan that
would restore any portion of the pension payable to any participant in the
retirement plan which cannot be paid from such retirement plan due to the
maximum benefit limitations imposed by Section 415 and by the maximum
compensation limitations imposed by Section 401(a)(17) of the Internal Revenue
Code. If Messrs. Garrott, Ferris, Holland, Lazarini and Reed work for NBC
until age 65 at their 1995 rate of compensation, the restoration pension plan
will provide additional annual benefits of $209,013, $186,503, $45,096,
$134,838 and $86,402, respectively.

EMPLOYMENT AGREEMENTS

NBC entered into employment agreements with Mr. Thomas M. Garrott dated as
of September 1, 1993, Mr. William R. Reed, Jr. dated as of January 1, 1992,
Mr. Gary L. Lazarini dated as of September 1, 1993 and Mr. Lewis E. Holland
dated as of July 1, 1994 (the "Agreements"). Except as noted below, each
Agreement contains substantially the same terms and provisions. The Agreements
supersede and terminate any other agreements previously existing concerning
employment or compensation for such officers, except for the Deferred
Compensation Agreement for Mr. Garrott described below, which remains in
effect.

Mr. Garrott will be employed by NBC in his current position for a
continuously renewing term of five years until he reaches age 65, at which
time the term automatically becomes a continuously renewing term of one year
until notice of termination is given by either party. Mr. Garrott is employed
at a guaranteed annual base salary of $334,000 (which may be increased at the
discretion of NBC). Mr. Reed will be employed by NBC in his current position
for a continuously renewing term of three years until he reaches age 65 at a
guaranteed annual base salary of $165,000 (which may be increased at the
discretion of NBC). Mr. Lazarini will be employed by NBC in his current
position for a continuously renewing term of three years until he reaches age
65 at a guaranteed annual base salary of $161,000 (which may be increased at
the discretion of NBC). Mr. Holland will be employed by NBC in his current
position for a continuously renewing term of five years until he reaches age
65 at a guaranteed annual base salary of $166,000 (which may be increased at
the discretion of NBC).

Each Agreement may be terminated by NBC for cause (as defined in the
Agreements). In addition, the Agreements of Messrs. Garrott, Reed and Lazarini
may be terminated without cause upon the giving of five years' notice for Mr.
Garrott and upon the giving of three years' notice to Messrs. Reed and
Lazarini during which time the officer would be converted to part-time status
as described below. The Agreement of Mr. Holland may be terminated without
cause upon the giving of written notice to Mr. Holland and the officer would
immediately be placed on part-time status, as described below, until age
sixty-five (65). Further, under the Agreements of Messrs. Garrott, Reed,
Lazarini and Holland, in the event that (i) NBC breaches the terms of the
respective Agreements in any material respect, (ii) the respective officer is
not reelected or reappointed to his current position (without cause), or (iii)
under Mr. Garrott's Agreement, the officer's duties, responsibilities, powers,
authority and functions are increased, changed or diminished (without cause
and without the officer's consent), or under Mr. Reed's, Mr. Lazarini's and
Mr. Holland's Agreement, their duties, powers, and authority are diminished
(without cause and without the officer's consent), the respective officers are
entitled to convert to part-time status for the terms permitted in their
respective Agreements.

12
<PAGE>

If Messrs. Garrott, Reed or Lazarini converted to part-time status, the
officer would be entitled to a guaranteed annual base salary equal to seventy-
five percent (75%) of the officer's average annual total direct compensation
(as defined in the Agreements) for a period of up to five years for Mr.
Garrott and three years for Mr. Reed and Mr. Lazarini. If Mr. Holland converts
to part-time status, the officer would be entitled to a guaranteed minimum
annual base salary (a) from the date the officer goes on part-time status for
a period of 5 years or (b) from the date he goes on part-time status until he
attains age 65, whichever is shorter, in an amount equal to 75% of the
officer's average of annual total direct compensation (as defined in the
Agreement) provided that the guaranteed minimum annual base salary shall not
be less than 75% of $300,000. Each Agreement also provides that the officer
may elect to terminate the Agreement at any time upon 90 days' notice (with or
without cause) and upon such a termination receive his salary as provided in
the Agreement during the 90-day notice period and a lump-sum payment equal to
three months' pay upon the expiration of such 90-day period. Under Mr.
Garrott's Agreement, on or after November 3, 1999, and while employed on
active status, Mr. Garrott is entitled to convert to part-time status until
age 65.

The Agreements provide that in the event of a "change of control" (as
defined below) involving NBC or the Company, Mr. Garrott, if on full-time or
part-time status, and Mr. Reed and Mr. Lazarini, if on full-time status or
during the first twelve months of part-time status, may elect to receive
severance pay in an amount equal to three times his average annual
compensation for the most recent five-year period preceding the change in
control minus one dollar. Payment of such amount terminates the officer's
right to receive the guaranteed annual base salary pursuant to the Agreement;
however, such amount would be in addition to amounts otherwise payable to the
officer under the Agreement (including reimbursement of expenses and
attorney's fees) and other current or future oral or written agreements or
plans. The Agreements further provide that NBC will indemnify the officer for
adverse tax consequences arising out of the assertion that any payments under
the Agreements are subject to any special excise or similar purpose tax
directed at change of control payments. The value received from accelerated
vesting of stock options as a result of a change in control may also be deemed
to be change in control payments. If aggregate change of control payments
equal or exceed three times the officer's average annual compensation for the
most recent five-year period preceding the change in control, such an excise
tax could be asserted. In such case, the payments also will not be deductible
by the Company for federal income tax purposes. A change in control is deemed
to occur if, with or without the approval of NBC's Board of Directors, (i)
more than 25% of the voting stock of NBC or NBC's parent (a company owning 25%
of the voting stock of NBC) is acquired by any person other than a person that
includes the officer, or (ii) as the result of a tender offer, merger,
consolidation, sale of assets, contested election, or any combination of such
transactions, the persons who were directors of NBC or NBC's parent
immediately before the transaction shall cease to constitute a majority of the
Board of Directors of NBC, NBC's parent, or of any successor to either.

The Agreements also include provisions that prohibit Messrs. Garrott, Reed,
Lazarini and Holland during the terms of their respective Agreements and for
two years thereafter from engaging in commercial banking activity in Shelby
County, Tennessee (or in any other county in which NBC or its affiliates
engage in banking activity representing a specified minimum amount of income
of NBC or its affiliates), unless the officer's employment is terminated for
cause (as defined in the Agreement). In addition, Mr. Garrott is prohibited
from engaging in any business related to banking in supermarkets or other
retail stores for the same period. The Agreements provide for benefits to
Messrs. Garrott, Reed, Lazarini and Holland (or their designated
beneficiaries) in the event of disability or death. Mr. Garrott's Agreement
also provides certain medical and dental insurance benefits for the employee
and his spouse.

13
<PAGE>

On December 1, 1983, NBC and Mr. Garrott entered into a Deferred
Compensation Agreement which entitled Mr. Garrott to receive monthly
retirement benefits equal to the excess, if any, of the monthly retirement
benefits that would have been payable to Mr. Garrott under the Company's
Retirement Plan if Mr. Garrott had been employed by the Company since January
1, 1964, over the monthly retirement benefits actually payable to Mr. Garrott
under his previous employer's pension plan.

14
<PAGE>

REPORT OF THE STOCK OPTION AND MANAGEMENT
COMPENSATION COMMITTEE

The Stock Option and Management Compensation Committee (the "Committee") of
the Board of Directors of the Company reviews the Company's executive
compensation policies and programs and submits recommendations to the Board of
Directors. The members of the Committee are Messrs. Phillips (Chairman),
Cicala and Stewart, all of whom are non-employee directors.

The Committee re-engaged the services of a nationally recognized
compensation consulting firm to update the findings and recommendations of the
1994 executive compensation study. The study compares the compensation
practices of NCBC to other financial institutions based on asset size,
earnings performance and survey data. Although none of the companies in the
Peer Group were included in the KBW 50 Bank Stock Index, an index of national
financial institutions which the Company uses in evaluating its financial
performance, the Committee believes that this is an appropriate Peer Group for
compensation comparison purposes. The Peer Group indicated how comparably
sized financial institutions were compensating executives with similar
responsibilities as those of the Company's executive officers.

Compensation awarded to executive officers is designed to assure that the
Company continues to attract, motivate and retain executives of superior
abilities. The Company's general goal for compensating its executive officers
is to provide competitive compensation in the median or upper range of that
received by executive officers with similar duties and responsibilities at
financial institutions in the Peer Group.

The compensation of the Company's top executive officers, including the
Chief Executive Officer, is specifically linked to the overall financial
performance of the Company. Annual incentive bonuses are awarded to executive
officers on the basis of group, division, individual and overall corporate
performance. The Company's compensation program rewards key officers for the
enhancement of shareholder value by providing key officers with appropriate
ownership interests in the Company through awards of stock options. In
reviewing the performance of the Company's key officers other than Mr.
Garrott, the Committee takes Mr. Garrott's recommendations into account. The
Committee will review the qualifying compensation regulations issued by the
Internal Revenue Service (the "Service"). Currently, compensation is not
expected to exceed the $1 million base; therefore, compensation should not be
affected by the Service's qualifying compensation regulations.

BASE SALARY

Each executive officer's base salary is based primarily upon the competitive
market for the executive officer's services. However, Messrs. Garrott, Holland
and Reed are guaranteed minimum base salaries in accordance with the terms and
conditions of each of their particular employment agreements with NBC. See
"COMPENSATION OF MANAGEMENT AND OTHER INFORMATION--Employment Agreements."

In 1995, the Committee did not increase the base salaries of executive
officers earning more than $50,000 with the exception of one officer whose
salary was significantly below the market for positions of similar
responsibilities.

ANNUAL INCENTIVE PLAN

The Company's annual incentive plan is designed to give executive officers
and other key employees additional incentive to maximize the Company's long-
term return for its shareholders. The

15
<PAGE>

awards under the Company's annual incentive plan to its executive officers are
determined by a two-step process that considers both the performance of the
Company as a whole during the year and the individual performance of each
executive officer. No awards are granted if the Company fails to achieve the
minimum financial goals approved by the Board of Directors.

Annual incentive awards for executive officers in 1995 were awarded pursuant
to an annual incentive plan approved by the Committee and ratified by the
Board of Directors. Under this plan, amounts awarded to executive management
were between 20% and 75% of base salary.

In 1995, the annual incentive plan for certain executive officers allowed
participants to earn a bonus based upon (1) the Company's 1995 earnings
growth, defined as the Company's consolidated net income comparing 1995 to
1994, (2) the individual's performance, and (3) the Company's ranking on the
Keefe, Bruyette and Woods "Honor Roll". Each component was considered
separately. The individual performance criteria of Messrs. Holland, Reed and
Lazarini included a targeted increase in the net income of certain
subsidiaries of the Company and the achievement of specific results for the
Company and its subsidiaries. The individual performance criteria for Mr.
Ferris was based entirely on the target net income performance of a certain
subsidiary of the Company.

STOCK OPTION PLANS

The Committee considers stock options under the 1994 Plan for key employees,
including key executive officers of the Company and its subsidiaries. Stock
options are designed to align the interests of the Company's officers with
those of its shareholders. Stock options are granted by the Committee to those
key employees whose responsibilities place them in a position to make
contributions to the overall financial success of the Company. These options
are granted with an exercise price equal to the market price of the Common
Stock on the day of grant and vest ratably over a period of five years. Since
the full benefits of these options cannot be realized unless the Company's
stock price appreciates over time, the creation of shareholder value is
facilitated. More than 250 key employees of the Company and its subsidiaries
have been granted stock options. This represents approximately 23% of the
total full-time employees of the Company and its subsidiaries.

In 1995, the Committee approved grants of non-qualified stock options to
executive officers based upon the performance contributions of the particular
executive officer in light of the same individual performance factors utilized
in determining incentive awards, as described above, and the recommendations
of an independent executive compensation consulting firm. The consultants
considered comparable levels of responsibilities at peer banks based on asset
size and overall financial performance.

CHIEF EXECUTIVE OFFICER'S 1995 COMPENSATION

Officers earning more than $50,000 per year did not receive an increase in
base salary for 1995. Consistent with this practice, the base salary of Mr.
Garrott was not increased during 1995.

16
<PAGE>

Based on the Company's attaining a 12% growth in consolidated net income and
an improvement in the efficiency ratio, Mr. Garrott earned a bonus equal to
50% of his base salary. Additionally, Mr. Garrott had an opportunity to earn
an additional 25% of base salary if the Company were to rank in the top five
banks of the Keefe, Bruyette and Woods Honor Roll. The Honor Roll includes
those banks with the highest growth in earnings per share over a rolling 10-
year basis with in earnings during the period.

The Company continued to be ranked in the top five for 1995, therefore Mr.
Garrott earned the maximum award of 25% for a total bonus award equal to 75%
of his base salary (i.e., $241,500 bonus award). Mr. Garrott was also awarded
an option grant of 50,000 shares of common stock. The Committee considered the
Company's overall performance, Mr. Garrott's contribution to the Company's
success and the number of options granted to Mr. Garrott.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Cicala, Phillips and Stewart, all of whom are non-employee
directors, served as members of the Company's Stock Option and Management
Compensation Committee. Some of the officers and directors of the Company,
including Messrs. Cicala, Phillips and Stewart, and certain of their
associates and immediate family members (including spouses, parents, children,
siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and
brothers- and sisters-in-law) are customers of the Company's subsidiaries. As
customers, they have had transactions in the ordinary course of business,
including borrowings. These loans were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and, in the opinion of the
Company, do not involve more than normal risk of collectibility or present any
other unfavorable features.

17
<PAGE>

The line graph below reflects the cumulative eleven-year shareholder return
(assuming reinvestment of dividends) on the Company's Common Stock compared to
such return of the S&P 500 Stock Index, the Southeastern regional bank holding
companies listed below, and the Tennessee bank holding companies listed below.
The graph reflects investment of $100 on December 31, 1984 in the Company's
Common Stock, the S&P Stock Index, the Southeastern bank holding companies
listed below (weighted by market capitalization), and the Tennessee bank
holding companies listed below (weighted by market capitalization). In
December 1984, the Company sold its headquarters building complex and
reinvested the proceeds in higher-yielding assets. It was a significant date
in the financial history of the Company.

[PERFORMANCE GRAPH APPEARS HERE]
COMPARATIVE TOTAL RETURNS
NCBC, S&P 500, SOUTHEASTERN BANKS, TENNESSEE BANKS
(Performance through 12/31/95)
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NCBC $183.46 $208.43 $355.38 $372.00 $362.49 $325.48 $607.50 $762.59 $926.06 $962.43 $1,142.01
Southeastern $118.83 $127.95 $114.80 $143.05 $181.54 $139.60 $246.22 $314.52 $316.53 $317.07 $479.99
Tennessee $138.92 $168.72 $128.96 $146.37 $146.98 $ 90.99 $199.56 $298.67 $333.33 $323.67 $527.34
S&P 500 $131.57 $155.87 $164.03 $191.60 $251.93 $243.94 $318.46 $343.24 $377.57 $382.57 $526.06
</TABLE>

(1) Includes the following Southeastern bank holding companies, which are the
five largest Southeastern-based bank holding companies: Barnett Banks, Inc.,
First Union Corporation, NationsBank Corporation, SunTrust Banks, Inc.,
Wachovia Corporation.

(2) Includes the following Tennessee bank holding companies, which are the
only bank holding companies headquartered in Tennessee that are larger than
the Company: First American Corporation, First Tennessee National Corporation,
Union Planters Corporation.

Harry J. Phillips, Sr.
Edmond D. Cicala
Sidney A. Stewart, Jr.

18
<PAGE>

FIVE-YEAR STOCK PERFORMANCE GRAPH

The line graph below reflects the cumulative five-year shareholder return
(assuming reinvestment of dividends) on the Company's Common Stock compared to
such return of the S&P 500 Stock Index and the KBW 50 Bank Stock Index. The
graph reflects investment of $100 on December 31, 1989 in the Company's Common
Stock, the S&P 500 Index and the KBW 50 Bank Stock Index.

[GRAPH APPEARS HERE]

COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG NCBC, S&P 500 INDEX AND KBW 500 INDEX

Measurement period NCBC S&P 500 KBW 500
(Fiscal year Covered) Index Index
- --------------------- -------- --------- ---------
<S> <C> <C> <C>
Measurement PT -
12/31/90 $100 $100 $100
FYE 12/31/91 $186.65 $130.55 $158.30
FYE 12/31/92 $234.30 $140.71 $201.67
FYE 12/31/93 $284.52 $154.78 $212.77
FYE 12/31/94 $295.70 $156.83 $201.92
FYE 12/31/95 $350.87 $215.65 $323.47
</TABLE>

================================================================================

19
<PAGE>

CERTAIN TRANSACTIONS WITH MANAGEMENT

Some of the officers and directors of the Company and its subsidiaries,
including some of the nominees described above, and certain of their
associates and immediate family members (including spouses, parents, children,
siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and
brothers- and sisters-in-law) are customers of the Company's subsidiaries. As
customers, they have had transactions in the ordinary course of business,
including borrowings. As of December 31, 1995, the Company's subsidiary banks
had an aggregate of approximately $31,187,000 (10.51% of NCBC's equity and
1.61% of NCBC's net loans) in loans outstanding to such persons. This
aggregate amount comprised loans to officers, directors and nominees in the
amount of $3,270,000 and loans to immediate family members and corporations or
other organizations that are associates of such persons in the amount of
approximately $27,917,000. An aggregate of approximately $26,518,000 of this
total represented loans outstanding to three directors and their associates.
All of the foregoing loans were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and, in the opinion of the
Company, do not involve more than normal risk of collectibility or present any
other unfavorable features.

Many of the officers, directors and nominees of the Company and their
associates and immediate family members maintain deposit relationships with
the Company's subsidiaries in various types of accounts, including
certificates of deposit. Interest rates paid on deposits of officers,
directors and nominees and their associates and immediate family members are
substantially similar to rates paid for comparable deposits of parties who are
not affiliated with the Company.

In December, 1987, NBC issued $1,025,000 in term notes to the Mallory
Partners, a Tennessee general partnership of which W. Neely Mallory, Jr., a
director of the Company, and two trusts for the benefit of his sons are
general partners. The term notes were issued on substantially the same terms,
including interest rates, as those prevailing for comparable transactions with
other persons.

R. Grattan Brown, Jr., a director of the Company, is a partner in the law
firm of Glankler Brown. That firm from time to time represents NBC and certain
other subsidiaries.

During 1993, Bruce E. Campbell, Jr., the former Chief Executive Officer of
the Company and NBC, and currently a director and the Chairman of the
Executive Committee of the Company, exercised his right under his employment
agreement to convert to part-time status until age 65. Pursuant to his
employment agreement, Mr. Campbell was paid an annual part-time base salary of
$349,371 in 1995, which part-time base salary will be increased annually based
on an increase, if any, in the Consumer Price Index, and additional
compensation in the aggregate of $32,109 consisting of director's fees in the
aggregate of $11,000, split-dollar life insurance premiums of $6,701, an
allocation of Company contributions under the Company's Employee Stock
Ownership Plan of $1,962, and group life insurance replacement premiums of
$12,446. Upon reaching age 65 on March 7, 1996, Mr. Campbell retired and has
been retained by the Company as a consultant.

20
<PAGE>

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information concerning each person
known to the Board of Directors of the Company to be a "beneficial owner," as
such term is defined by the rules of the Securities and Exchange Commission,
of more than 5% of the outstanding shares of Common Stock of the Company as of
February 1, 1996.
<TABLE>
<CAPTION>
AMOUNT BENEFICIALLY
OWNED AS OF
NAME AND ADDRESS FEBRUARY 1, 1996 PERCENT OF CLASS(1)
---------------- ------------------- ------------------
<S> <C> <C>
National Bank of Commerce 1,679,282(2) 6.6%
One Commerce Square
Memphis, Tennessee 38150
National Commerce Bancorporation 1,392,406 5.4
Employee Stock Ownership Plan
One Commerce Square
Memphis, Tennessee 38150
John D. Canale 1,488,969(3) 5.8
D. Canale & Company
P. O. Box 1739
Memphis, Tennessee 38101
Ruane, Cunniff & Co., Inc 1,339,687 5.2
767 Fifth Avenue
New York, NY 10153-4798
Rudi E. Scheidt 1,304,741(4) 5.1
54 South White Station
Memphis, Tennessee 38117
</TABLE>
- ----------
(1) For purposes of calculating the percent of Common Stock beneficially
owned, all shares that are subject to options that are exercisable within
60 days are deemed to be presently outstanding.
(2) NBC has sole voting and investment power with respect to 933,214 of such
shares, shares voting and investment power with respect to 97,067 of such
shares and has no voting or investment power with respect to 649,001 of
such shares. NBC has no beneficial interest in any of such shares. NBC
intends to vote all of the 933,214 shares that it has discretion to vote
in favor of each matter set forth in the attached Notice of Annual Meeting
of Shareholders and in this Proxy Statement. As a general rule, where NBC
shares voting power under these arrangements, it allows the person with
whom that power is shared to vote such shares. The shares shown are held
by NBC in various fiduciary or agency capacities and do not include
1,392,406 shares owned by the Company's Employee Stock Ownership Plan.
(3) Includes 17,266 shares owned by Mr. Canale's wife, as to which Mr. Canale
shares voting and investment power, and as to which he disclaims any
beneficial interest. Does not include shares owned by his sons Christopher
W. Canale and John D. Canale, III, who are on the Board of Directors. See
"MANAGEMENT OF THE COMPANY--Directors" above. Mr. Canale died on February
27, 1996.
(4) See Note 16 under the caption "MANAGEMENT OF THE COMPANY--Directors"
above.

21
<PAGE>

ACCOUNTING MATTERS

At its March 14, 1996 meeting, the Board of Directors appointed Ernst &
Young LLP, independent certified public accountants, as auditors for the
Company for the current year. Ernst & Young LLP has acted in this capacity
since 1971. The Board of Directors considers Ernst & Young LLP to be well
qualified and recommends that the shareholders vote to ratify that
appointment.

In view of the difficulty and expense involved in changing auditors on short
notice, should the shareholders not ratify the selection of Ernst & Young LLP,
it is contemplated that the appointment of Ernst & Young LLP for the fiscal
year ending December 31, 1996 will be permitted to stand unless the Board of
Directors finds other compelling reasons for making a change. Such disapproval
by the shareholders will be considered a recommendation that the Board select
other auditors for the following year.

A representative of Ernst & Young LLP is expected to be available at the
Annual Meeting. The representative will be given the opportunity to make a
statement if he desires to do so and is expected to be available to respond to
appropriate questions from shareholders.

The Audit Committee serves the principal functions of recommending to the
Board of Directors the persons or firm to be employed as independent auditors
of the Company; reviewing with such auditors the scope of their engagement,
their report of audit and the accompanying management letter, if any;
consulting with the independent auditors and management with regard to the
Company's accounting methods and the adequacy of the Company's internal system
of accounting control; approving professional services provided by the
independent auditors; reviewing the independence of the independent auditors;
and considering the range of the independent auditors' audit and non-audit
fees. The members of the Audit Committee of the Board of Directors are Messrs.
Cicala (Chairman), Barton, Scheidt, Solmson, and Mrs. Shaw.

ANNUAL REPORT TO SHAREHOLDERS

The annual report of the Company for the fiscal year ended December 31,
1995, including all financial statements, is being mailed with this Proxy
Statement.

ANNUAL REPORT ON FORM 10-K

The Company will provide without charge, at the written request of any
beneficial shareholder of record on March 1, 1996, a copy of the Company's
Annual Report on Form 10-K, including the financial statements and financial
statement schedules, as filed with the Securities and Exchange Commission,
except exhibits thereto. The Company will provide copies of the exhibits,
should they be requested by eligible shareholders, and the Company may impose
a reasonable fee for providing such exhibits. Requests for copies of the
Company's Annual Report on Form 10-K should be mailed to:

NATIONAL COMMERCE BANCORPORATION
One Commerce Square
Memphis, Tennessee 38150
Attention: Lewis E. Holland

22
<PAGE>

VOTING OF PROXIES AND REVOCABILITY

When the Proxy is properly executed and returned to the Board of Directors,
the shares represented by the Proxy will be voted as directed by the
shareholder executing the Proxy unless it is revoked. If no directions are
given on the Proxy with respect to any particular matter to be acted upon, the
shares represented by the Proxy will be voted in favor of such matter. Any
shareholder giving a Proxy may revoke it at any time before it is voted.
Revocation of a Proxy is effective upon receipt by the Secretary of the
Company of either (i) an instrument revoking it or (ii) a duly executed Proxy
bearing a later date. A shareholder who is present at the Annual Meeting may
revoke the Proxy and vote in person if he so desires.

EXPENSES OF SOLICITATION

The cost of soliciting proxies will be borne by the Company. The Board of
Directors will request banks and brokers to solicit their customers having a
beneficial interest in the Company's stock registered in the names of
nominees, and the Company will reimburse such banks and brokers for their
reasonable out-of-pocket expenditures made in such solicitations. Proxies may
be solicited by employees of the Company or NBC by mail, telephone, telecopy,
telegraph and personal interview. The Board of Directors does not presently
intend to pay compensation to any individual or firm for the solicitation of
proxies; however, if the Board of Directors should deem it necessary and
appropriate, it may retain the services of an outside individual or firm to
assist in the solicitation of Proxies.

SHAREHOLDER PROPOSALS

Any shareholder proposals intended to be presented at the Company's 1997
Annual Meeting of Shareholders must be received by the Company at its
corporate offices no later than December 24, 1996 in order to be considered by
the Board of Directors for inclusion in the proxy statement and form of proxy
relating to such meeting.

OTHER MATTERS

The minutes of the Annual Meeting of the Shareholders held on April 26,
1995, will be presented at the meeting for approval. It is not intended that
approval of the minutes will constitute ratification of the matters referred
to therein.

The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if any other matter properly comes before the Annual
Meeting or any adjournment thereof, it is intended that the persons named in
the enclosed Proxy will vote such Proxy on such matter in accordance with
their best judgment.

Gus B. Denton
Secretary

March 26, 1996

23
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NATIONAL COMMERCE BANCORPORATION

PROXY

PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF
SHAREHOLDERS APRIL 24, 1996

The undesigned hereby appoints THOMAS M. GARROTT; JAMES E. MCGEHEE, JR.;
and GUS B. DENTON, and each of them, proxies with full power of substitution and
resubstitution, for and in the name of the undersigned, to vote all shares of
stock of National Commerce Bancorporation which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Shareholders to
be held on Wednesday, April 24, 1996, at 10:00 a.m. local time, in the
Auditorium at National Bank of Commerce, Concourse Level, Commerce Tower, One
Commerce Square, Memphis, Tennessee 38150, and at any adjournments thereof, upon
the matters described in the accompanying Notice of Annual Meeting of
Shareholders and Proxy Statement, receipt of which is hereby acknowledged, and
upon any other business that may properly come before the meeting or any
adjournments thereof. Said proxies are directed to vote on the matters described
in the Notice of Annual Meeting and Proxy Statement as follows, and otherwise in
their discretion upon such other business as may properly come before the
meeting and any adjournments thereof.

(Continued and to be dated and signed on the reverse side.)

NATIONAL COMMERCE BANCORPORATION
P.O. BOX 11444
NEW YORK, N.Y. 10203-0444

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[ ]

1. ELECTION OF DIRECTORS

FOR all nominees
listed below. [X]

WITHHOLD AUTHORITY to vote
for all nominees listed below. [X]

*EXCEPTIONS [X]

Class 1 to serve until Annual Meeting of Shareholders in 1999; Frank G. Barton,
Jr.; Jack R. Blair; Edmond D. Cicala; Thomas C. Farnsworth, Jr.; Sidney A.
Stewart, Jr.; and R. Lee Taylor
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)

*Exceptions _________________________________________________________________

2. RATIFICATION of the Board of Director's appointment of Ernst & Young LLP,
independent certified public accountants, as auditors of the Company
for the year ending December 31, 1996. FOR [X] AGAINST [X] ABSTAIN [X]

THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED,
THE PROXY WILL BE VOTED "FOR" EACH OF THE ABOVE-STATED PROPOSALS.

Change of Address or
--------------------
Comments Mark Here [X]
------------------

Please date this proxy and sign exactly as your names appear
hereon. When more than one owner is shown below, each should sign.
When signing in fiduciary or representative capacity, please give full
title. If this proxy is submitted by a corporation, it should be executed
in the full corporate name by a duly authorized officer. If this proxy is
submitted by a partnership, it should be executed in partnership name
by an authorized person.

Dated: ___________________________________________________________, 1996

| ________________________________________________________________________
|
____| ________________________________________________________________________

Please sign and date and return the proxy immediately in the enclosed envelope,
whether or not you plan to attend the annual meeting.

Votes must be indicated
(X) in Black or Blue Ink. [X]

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