<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C., 20549
FORM 10-Q - A
AMENDMENT TO APPLICATION OR REPORT
FILED PURSUANT TO SECTION 12, 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
MICHIGAN NATIONAL CORPORATION
(Exact name of registrant as specified in charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Quarterly Report on Form 10-Q for
the quarter ended September 30, 1993 as set forth in the pages attached hereto:
o Part I, Item 1. Financial Statements
o Part I, Item 2. Management's Discussion & Analysis
Financial Review
Non-Interest Income and Non-Interest Expense
Tables 1, 2, 3, 5, 6, 11, 12, 13, 14, 15, 16,
17, & 18
o Part I, Exhibit 11, Computation of Earnings Per Share
These amended items reflect the postponement, for accounting purposes, of the
recognition of a sale of mortgage servicing rights from June of 1993 to
November of 1993. As a result, second and third quarter earnings have been
restated to reflect the delayed recognition of the gain on sale for accounting
purposes. Substantially all of the gain on sale will be recognized in the
fourth quarter of 1993.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
MICHIGAN NATIONAL CORPORATION
(Registrant)
January 10, 1994 Eric D. Booth
Executive Vice President
(Chief Financial Officer)
January 10, 1994 Robert V. Panizzi
First Vice President and Controller
(Chief Accounting Officer)
<PAGE> 2
<TABLE>
<CAPTION>
MICHIGAN NATIONAL CORPORATION CONSOLIDATED STATEMENT OF INCOME This is a revised schedule. Revised per
AND SUBSIDIARIES (UNAUDITED) form 10Q-A dated January 10, 1994
- -------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED INCREASE
SEPTEMBER 30 (DECREASE)
(IN THOUSANDS, EXCEPT PER SHARE) 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
INTEREST INCOME
<S> <C> <C> <C>
Interest-bearing deposits with banks $ 282 $ 1,291 $ (1,009)
Federal funds sold and resale agreements 2,823 3,155 (332)
Money market investments 63 40 23
Investment securities 22,607 31,567 (8,960)
Trading securities 1,792 1,762 30
Loans and lease financing, including related fees 142,863 140,164 2,699
Income from covered assets 2,056 (2,056)
FDIC assistance 1,204 (1,204)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL GUARANTEED YIELD ON COVERED ASSETS 3,260 (3,260)
Note receivable-FDIC 5,623 9,140 (3,517)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 176,053 190,379 (14,326)
INTEREST EXPENSE
Money market accounts 15,461 17,246 (1,785)
Savings deposits 7,675 7,415 260
Time deposits < $100,000 38,984 49,330 (10,346)
Time deposits > $100,000 7,728 11,366 (3,638)
Short-term borrowings 4,460 5,963 (1,503)
Long- term debt 1,574 1,664 (90)
FDIC assistance (3,236) (3,599) 363
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 72,646 89,385 (16,739)
NET INTEREST INCOME 103,407 100,994 2,413
PROVISION FOR POSSIBLE CREDIT LOSSES 8,000 18,571 (10,571)
- -------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE CREDIT LOSSES 95,407 82,423 12,984
- -------------------------------------------------------------------------------------------------------------------------------
NON-INTEREST INCOME
Service charges 33,443 33,012 431
Trust and investment services income 4,619 4,164 455
Gains (losses) from sale of mortgage servicing rights 73 (73)
Securities gains (losses) 12 (170) 182
Other income 27,892 15,780 12,112
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME 65,966 52,859 13,107
NON-INTEREST EXPENSE
Salaries and wages 47,489 43,788 3,701
Other employee benefits 12,198 11,170 1,028
Net occupancy expense 7,460 7,632 (172)
Equipment expense 9,748 9,147 601
Outside services 8,795 7,698 1,097
Defaulted loan expense, net 6,026 4,997 1,029
Amortization of purchased mortgage servicing rights (Note B) 14,154 14,293 (139)
Other expenses 29,982 23,926 6,056
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST EXPENSE 135,852 122,651 13,201
- -------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 25,521 12,631 12,890
Income tax provision (benefit) (Note L) (1,506) 1,078 (2,584)
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 27,027 $ 11,553 $ 15,474
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Consolidated Statement of Income is continued on the next page.
1
<PAGE> 3
<TABLE>
<CAPTION>
MICHIGAN NATIONAL CORPORATION CONSOLIDATED STATEMENT OF INCOME This is a revised schedule. Revised per
AND SUBSIDIARIES continued (UNAUDITED) Form 10Q-A dated January 10, 1994
- -------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED INCREASE
SEPTEMBER 30 (DECREASE)
(IN THOUSANDS, EXCEPT PER SHARE) 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET INCOME PER COMMON SHARE $1.77 $0.76 $1.01
- -------------------------------------------------------------------------------------------------------------------------------
AVERAGE COMMON SHARES OUTSTANDING 15,289 15,148 141
- -------------------------------------------------------------------------------------------------------------------------------
CASH DIVIDENDS DECLARED PER COMMON SHARE $0.50 $0.50
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Certain prior period amounts have been reclassified to conform to current year presentation.
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 4
<TABLE>
<CAPTION>
MICHIGAN NATIONAL CORPORATION CONSOLIDATED STATEMENT OF INCOME This is a revised schedule. Revised per
AND SUBSIDIARIES (UNAUDITED) Form 10Q-A dated January 10, 1994
- -------------------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED INCREASE
SEPTEMBER 30 (DECREASE)
(IN THOUSANDS, EXCEPT PER SHARE) 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Interest-bearing deposits with banks $ 2,477 $ 4,576 $ (2,099)
Federal funds sold and resale agreements 9,618 10,882 (1,264)
Money market investments 156 179 (23)
Investment securities 71,211 97,631 (26,420)
Trading securities 5,072 5,508 (436)
Loans and lease financing, including related fees 418,697 429,164 (10,467)
Income from covered assets 10,734 (10,734)
FDIC assistance 4,081 (4,081)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL GUARANTEED YIELD ON COVERED ASSETS 14,815 (14,815)
Note receivable-FDIC 17,558 29,131 (11,573)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 524,789 591,886 (67,097)
INTEREST EXPENSE
Money market accounts 45,982 55,765 (9,783)
Savings deposits 22,408 24,372 (1,964)
Time deposits < $100,000 123,931 154,436 (30,505)
Time deposits > $100,000 25,270 41,026 (15,756)
Short-term borrowings 12,747 22,899 (10,152)
Long-term debt 4,839 5,367 (528)
FDIC assistance (10,168) (10,177) 9
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 225,009 293,688 (68,679)
NET INTEREST INCOME 299,780 298,198 1,582
PROVISION FOR POSSIBLE CREDIT LOSSES 33,000 55,353 (22,353)
- -------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE CREDIT LOSSES 266,780 242,845 23,935
- -------------------------------------------------------------------------------------------------------------------------------
NON-INTEREST INCOME
Service charges 96,487 98,144 (1,657)
Trust and investment services income 14,600 13,363 1,237
Gains(losses) from sale of mortgage servicing rights 51 3,510 (3,459)
Securities gains(losses) 6,139 1,495 4,644
Other income 55,790 41,455 14,335
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME 173,067 157,967 15,100
NON-INTEREST EXPENSE
Salaries and wages 136,635 125,191 11,444
Other employee benefits 38,445 34,569 3,876
Net occupancy expense 22,326 22,850 (524)
Equipment expense 31,062 28,139 2,923
Outside services 24,567 20,888 3,679
Defaulted loan expense, net 12,326 12,156 170
Amortization of purchased mortgage servicing rights (Note B) 95,148 27,793 67,355
Other expenses 89,713 75,980 13,733
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST EXPENSE 450,222 347,566 102,656
- -------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES (10,375) 53,246 (63,621)
Income tax provision (benefit) (Note L) (1,506) 5,330 (6,836)
- -------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE (8,869) 47,916 (56,785)
Cumulative Effect of a Change in Accounting Principle 6,265 (6,265)
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ (8,869) $ 54,181 $ (63,050)
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Consolidated Statement of Income is continued on the next page.
3
<PAGE> 5
<TABLE>
<CAPTION>
MICHIGAN NATIONAL CORPORATION CONSOLIDATED STATEMENT OF INCOME This is a revised schedule. Revised per
AND SUBSIDIARIES continued (UNAUDITED) Form 10Q-A dated January 10, 1994
- -------------------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED INCREASE
SEPTEMBER 30 (DECREASE)
(IN THOUSANDS, EXCEPT PER SHARE) 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET INCOME PER COMMON SHARE
Income before cumulative effect of accounting change $(0.59) $3.18 $(3.77)
Cumulative effect of accounting change $0.42 $(0.42)
Net income $(0.59) $3.60 $(4.19)
- -------------------------------------------------------------------------------------------------------------------------------
AVERAGE COMMON SHARES OUTSTANDING 15,057 15,064 (7)
- -------------------------------------------------------------------------------------------------------------------------------
CASH DIVIDENDS DECLARED PER COMMON SHARE $ 1.50 $1.50
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Certain prior period amounts have been reclassified to conform to current year
presentation.
See notes to consolidated financial statements.
4
<PAGE> 6
<TABLE>
<CAPTION>
This is a revised schedule. Revised per
form 10Q-A dated January 10, 1994
MICHIGAN NATIONAL CORPORATION CONSOLIDATED STATEMENT OF CONDITION
AND SUBSIDIARIES (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1993 1992
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 524,077 $ 547,697
Federal funds sold and resale agreements 311,581 466,298
- -------------------------------------------------------------------------------------------------------------
Total Cash and Cash Equivalents 835,658 1,013,995
Interest-bearing deposits with banks 32,597 136,565
Money market investments 9,487 6,469
Trading securities 103,058 79,668
Investments available for sale (Note F) 894 189,880
Investment securities, (market value of $1,356,157 and $1,348,098
at 09/30/93 and 12/31/92, respectively) (Note F)
Mortgage-backed securities 1,037,293 1,049,303
Government and other securities 277,481 256,371
Covered assets and FDIC assistance (Note G) 18,524
Residential mortgages held for sale (Note H) 635,363 670,800
Loans and lease financing (Note H) 6,079,411 6,057,593
- -------------------------------------------------------------------------------------------------------------
Total Loans and Lease Financing 6,714,774 6,746,917
Less: Unearned income (18,192) (15,869)
Less: Allowance for possible credit losses (189,055) (175,471)
- -------------------------------------------------------------------------------------------------------------
Net Loans and Lease Financing 6,507,527 6,555,577
Note receivable-FDIC 462,535 624,828
Premises and equipment, net 202,675 202,056
Due from customers on acceptances 551 183
Accrued income receivable 77,170 69,111
Purchased mortgage servicing rights, net (Note B) 70,524 155,083
Capitalized excess service fees, net (Note B) 10,052 22,277
Property from defaulted loans and other real estate owned, net 122,451 152,207
Other assets 645,457 149,751
- -------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $10,395,410 $10,663,324
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The Consolidated Statement of Condition is continued on the next page.
5
<PAGE> 7
<TABLE>
<CAPTION>
This is a revised schedule. Revised per
form 10Q-A dated January 10, 1994
MICHIGAN NATIONAL CORPORATION CONSOLIDATED STATEMENT OF CONDITION
AND SUBSIDIARIES (UNAUDITED) continued
- -------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1993 1992
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES
Non-interest bearing demand deposits $ 1,870,817 $ 1,787,771
Interest-bearing deposits:
Money market accounts 2,093,296 2,168,453
Savings deposits 1,135,284 1,026,132
Time deposits < $100,000 2,647,169 2,996,756
Time deposits > $100,000 807,980 996,181
- -------------------------------------------------------------------------------------------------------------
Total Deposits 8,554,546 8,975,293
Short-term borrowings (Note I) 556,432 528,094
Customer acceptances outstanding 551 183
Accrued liabilities 424,486 271,328
Long-term debt 77,998 82,651
- -------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 9,614,013 9,857,549
Contingencies and Commitments (Notes E and J)
SHAREHOLDERS' EQUITY (NOTE K)
Preferred stock, authorized 6,000,000 shares:
6% cumulative, convertible, $36 stated value, no shares
authorized at September 30, 1993, 166,667 shares authorized at
December 31, 1992; Series B junior participating,
$10 par value, authorized 500,000 shares, none outstanding 6,000
Common stock, $10 par value, authorized 50,000,000 shares 151,263 149,079
Surplus 193,960 185,759
Retained earnings 451,386 482,949
Note receivable-ESOP (15,212) (18,012)
- -------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 781,397 805,775
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $10,395,410 $10,663,324
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Preferred stock outstanding 166,667
Common stock outstanding 15,126,197 14,907,895
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Certain prior period amounts were reclassified in order to
conform to current year presentation.
See notes to consolidated financial statements.
6
<PAGE> 8
<TABLE>
<CAPTION>
This is a revised schedule. Revised per
form 10Q-A dated January 10, 1994
MICHIGAN NATIONAL CORPORATION CONSOLIDATED STATEMENT OF CHANGES
AND SUBSIDIARIES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------
CONVERTIBLE NOTE
PREFERRED COMMON RETAINED RECEIVABLE
(IN THOUSANDS) STOCK STOCK SURPLUS EARNINGS ESOP TOTAL
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1992 $ 6,000 $146,372 $181,527 $446,811 $(20,812) $759,898
Net income 54,181 54,181
Common stock issued, net 1,680 2,102 3,782
ESOP payment 2,800 2,800
Cash dividends
Common stock (22,117) (22,117)
Convertible preferred stock (270) (270)
- -----------------------------------------------------------------------------------------------------------------------
BALANCE, SEPTEMBER 30, 1992 6,000 148,052 183,629 478,605 (18,012) $798,274
- -----------------------------------------------------------------------------------------------------------------------
BALANCE, JANUARY 1, 1993 $ 6,000 $149,079 $185,759 $482,949 $(18,012) 805,775
Net income / (loss) (8,869) (8,869)
Unrealized loss on marketable
equity securities 14 14
Common stock issued, net 984 3,401 4,385
Conversion of preferred stock (6,000) 1,200 4,800
ESOP payment 2,800 2,800
Cash dividends
Common stock (22,618) (22,618)
Convertible preferred stock (Note K) (90) (90)
- -----------------------------------------------------------------------------------------------------------------------
BALANCE, SEPTEMBER 30, 1993 151,263 193,960 451,386 (15,212) $781,397
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 9
<TABLE>
<CAPTION>
This is a revised schedule. Revised per
form 10Q-A dated January 10, 1994
MICHIGAN NATIONAL CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
AND SUBSIDIARIES (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30 (IN THOUSANDS) 1993 1992
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ (8,869) $ 54,181
Adjustments to reconcile net income to net cash
(used) provided by operating activities:
Provision for possible credit losses 33,000 55,353
Depreciation and amortization expense 129,451 58,791
Net amortization(accretion) associated with investment securities 746 1,269
Write-downs of property from defaulted loans 8,249 10,087
Net deferred income taxes (29,830) (13,019)
Gain from sale of securities (6,139) (1,494)
Gain from sale of mortgage servicing rights (51) (3,510)
(Gain) Loss from sale of fixed assets 776 (371)
(Gain) Loss from sale of property from defaulted loans (2,793) (1,873)
(Increase) decrease in operating assets:
Trading account securities (23,390) (43,233)
Accrued interest receivable (8,059) 6,134
Residential mortgages held for sale 35,437 (138,159)
Pending investment and trading securities sales (151,931) (25,399)
Capitalized excess service fees 5,101 (8,960)
Other assets (314,605) (20,593)
Increase (decrease) in operating liabilities:
Accrued interest payable (2,382) 1,770
Pending investment and trading securities purchases 38,042 54,113
Accrued liabilities 116,276 32,911
Other, net 2,587 1,627
- ---------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $(178,384) $ 19,625
- ---------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Payments for:
Purchase of investment securities $(397,230) $(491,418)
Purchase of premises and equipment (21,699) (26,301)
Purchase of mortgage servicing rights (10,588) (16,442)
Capital expenditures on property from defaulted loans (4,604) (2,437)
Purchase of subsidiary, net of cash and cash equivalents acquired 3,373 (198,693)
Proceeds from:
Sale of investment securities 266,116 80,242
Principal collection of investment securities 330,854 386,049
Sale of premises and equipment 108 580
Sale of mortgage servicing rights 8
Sales and principal collection of property
from defaulted loans 33,866 26,641
Net decrease (increase) in:
Interest-bearing deposits with banks 103,968 67,924
Money market investments (3,018) (1,501)
Loans and lease financing 34,338 (170,380)
Covered assets and FDIC assistance 18,410 210,282
Note receivable-FDIC 162,293 105,491
- ---------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY INVESTING ACTIVITIES $ 516,187 $ (29,955)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
The Consolidated Statement of Cash Flows is continued on the next page.
8
<PAGE> 10
<TABLE>
<CAPTION>
This is a revised schedule. Revised per
form 10Q-A dated January 10, 1994
MICHIGAN NATIONAL CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
AND SUBSIDIARIES (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30 (IN THOUSANDS) 1993 1992
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Financing Activities
Payments for:
Long-term debt $ (4,137) $ (8,591)
Common stock dividends (22,618) (22,117)
Preferred stock dividends (90) (270)
Repurchase of common stock (29)
Proceeds from issuance of:
Common stock 4,414 3,782
Long-term debt
Payments on note receivable--ESOP 2,800 2,800
Net (decrease) increase in:
Deposits (524,818) 43,578
Short-term borrowings 28,338 (136,306)
- ---------------------------------------------------------------------------------------------------------------------
NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES $ (516,140) $(117,124)
- ---------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ (178,337) $(127,454)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,013,995 811,161
- ---------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT SEPTEMBER 30 $ 835,658 $ 683,707
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash flow information:
a.) Cash transactions:
Interest paid $ 227,391 $ 291,918
Federal income taxes paid (net of refunds) 10,016 1,515
State taxes paid (net of refunds) 634 570
b.) Non-cash transactions in property from defaulted loan accounts:
Transfer from loans to property from defaulted loans 12,547 51,226
Loans originated to finance sales of property from defaulted loans 5,288 2,355
Transfer from covered assets to assets held for sale 4,581
c.) Non-cash transactions in covered assets:
Transfer from covered assets to loans and lease financings 114
d.) Fair market value of assets acquired less liabilities assumed (Note D) 16,746 203,786
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
Certain prior period amounts have been reclassified in order to conform to
current year presentation.
9
<PAGE> 11
<TABLE>
<CAPTION>
Michigan National Corporation This is a revised schedule. Revised per
and Subsidiaries form 10Q-A dated January 10, 1994
MANANGEMENT'S DISCUSSION AND ANALYSIS 1993 1993 1993 1992 1992
- ----------------------------------------------------------------------------------------------------------------------------------
Third Second First Fourth Third
TABLE 1 SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Quarter Quarter Quarter Quarter Quarter
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS (IN THOUSANDS)
Interest income $176,053 $177,591 $171,142 $187,187 $190,379
Interest expense 72,646 73,682 78,678 84,274 89,385
- ----------------------------------------------------------------------------------------------------------------------------------
Net interest income 103,407 103,909 92,464 102,913 100,994
Provision for possible credit losses 8,000 12,494 12,506 15,317 18,571
Non-interest income 65,966 55,674 51,427 66,826 52,859
Non-interest expense 135,852 138,187 176,183 141,210 122,651
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income tax expense 25,521 8,902 (44,798) 13,212 12,631
Income tax provision (benefit) (1,506) 1,322 1,078
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 27,027 $ 8,902 $(44,798) $ 11,890 $ 11,553
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE
Net income (loss) $ 1.77 $ 0.58 $(3.00) $ 0.78 $ 0.76
Cash dividends declared $ 0.50 $ 0.50 $ 0.50 $ 0.50 $ 0.50
Book value end-of-period $51.66 $50.19 $50.11 $53.65 $53.51
Market value end-of-period $58.88 $56.50 $60.00 $51.25 $44.00
Closing market value: high $59.88 $61.63 $64.25 $52.25 $50.38
Closing market value: low $54.50 $52.00 $50.00 $44.00 $43.50
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
SELECTED PERIOD-END BALANCES (IN MILLIONS)
Total assets $ 10,395 $ 10,517 $ 10,442 $ 10,663 $ 10,705
Earning assets 8,932 9,388 9,291 9,540 9,507
Total loans and lease financing, net of unearned income 6,697 6,929 6,534 6,731 6,788
Non-performing assets 276 290 293 304 309
Deposits 8,555 8,613 8,582 8,975 8,699
Long-term debt 78 81 82 83 83
Shareholders' equity 781 759 757 806 798
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
SELECTED AVERAGE BALANCES (IN MILLIONS)
Total assets $ 10,390 $ 10,372 $ 10,184 $ 10,658 $ 10,471
Earning assets 9,292 9,255 9,117 9,529 9,405
Total loans and lease financing, net of unearned income 6,880 6,742 6,477 6,737 6,560
Deposits 8,610 8,718 8,550 8,867 8,687
Long-term debt 79 82 82 83 88
Shareholders' equity 770 766 810 806 801
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
SELECTED FINANCIAL RATIOS
Return on average shareholders' equity 14.04% 4.65% (22.13)% 5.90% 5.77%
Return on average total assets 1.04 0.34 (1.76) 0.45 0.44
Average equity to average total assets 7.41 7.38 7.95 7.56 7.65
Allowance to period-end loans 2.82 2.68 2.79 2.61 2.56
Non-performing assets to total loans (net of unearned
income) plus property from defaulted loans and other reo , net 4.05 4.11 4.38 4.42 4.44
Net interest spread 3.84 3.95 3.67 3.92 3.87
Net interest margin 4.65 4.74 4.38 4.67 4.62
Equity to asset ratio (period end) 7.51 7.22 7.25 7.56 7.45
Leverage ratio 7.09 6.90 7.12 7.24 7.27
Tier 1 risk based capital ratio 9.01 8.79 9.12 9.69 9.54
Total risk based capital ratio 11.16 10.99 11.34 11.91 11.76
Dividend payout ratio 28.25 86.21 N/M 64.10 65.79
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
N/M = Not meaningful
Certain prior period amounts have been reclassified to conform to current
period presentation.
20
<PAGE> 12
Michigan National Corporation (This is revised text.
and Subsidiaries Revised per Form 10-QA
dated January 10,1994)
MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL REVIEW
Earnings for the third quarter 1993 were $27.0 million, or $1.77 per share,
which includes a one-time pre-tax gain of $10.1 million. Net income for the
same period last year was $11.6 million, or $0.76 per share.
A major contributor to the increase in earnings is a sustained trend of
improvement in credit quality over the past fifteen months. This was a
significant factor in a $10.6 million decrease in the provision for possible
credit losses to $8.0 million in the third quarter 1993 from $18.6 million in
the third quarter 1992. At September 30, 1993, Watch Credits were $450
million, down $244 million, or 35%, from a high of $694 million at June 30,
1992; and total Non-performing Assets were $276 million, down $48 million, or
15%, from $324 million at June 30, 1992. Net charge-offs for the nine months
ended September 30, 1993, were $20.3 million, down $18.2 million, or 47%, from
the same period last year. In addition, the allowance for possible credit
losses as a percentage of total loans increased to 2.82% at September 30, 1993,
from 2.50% at June 30, 1992, and the allowance as a percentage of
Non-performing Loans increased to 123% from 93% over the same period.
The one-time $10.1 million gain came from the sale of approximately $300
million of prime-rate-based residential mortgage loans originated and held for
investment by IOMC. The loans were sold principally to prevent possible future
economic loss associated with the prepayment risk inherent in this portfolio.
IOMC continues to experience unprecedented mortgage refinancing activity
resulting in accelerated prepayments in its mortgage servicing portfolio. The
runoff rates attributable to loan prepayments in the servicing portfolios
associated with PMSR and ESF for the first nine months of 1993 were slightly
higher than 40%. Since the third quarter 1992, the Corporation has
aggressively addressed the effect of these prepayment trends through
accelerated amortization of its PMSR and ESF assets. This accelerated
amortization has resulted in dramatic declines in these
21
<PAGE> 13
Michigan National Corporation (This is revised text.
and Subsidiaries Revised per Form 10-QA
dated January 10,1994)
MANAGEMENT'S DISCUSSION AND ANALYSIS
asset balances. Therefore, although the amortization rate for these assets
remained high in the third quarter 1993, actual amortization expense of $18.9
million was $7.1 million lower than in the second quarter 1993. The total PMSR
and ESF asset balance declined 59% to $81 million at September 30, 1993, from
$198 million at September 30, 1992.
Recent tax law changes resulted in an increase in the value of the
Corporation's September 30, 1993, deferred tax assets contributing to an income
tax benefit of $1.5 million in the third quarter of 1993.
<PAGE> 14
<TABLE>
<CAPTION>
Michigan National Corporation This is a revised schedule. Revised per
and Subsidiaries form 10Q-A dated January 10, 1994
MANAGEMENT'S DISCUSSION AND ANALYSIS
- -----------------------------------------------------------------------------------------------------------------------------------
TABLE 2 SUMMARY OF CONSOLIDATED NET INTEREST INCOME (FULLY TAXABLE EQUIVALENT) (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, 1993 JUNE 30, 1993 MARCH 31, 1993
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
(IN THOUSANDS) BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investment securities-taxable $ 1,334,885 $ 22,012 6.54% $ 1,343,584 $ 23,373 6.98% $ 1,226,335 $ 22,041 7.29%
Investment securities-tax-exempt 39,405 848 8.54% 40,447 868 8.61% 41,833 919 8.91%
Investments available for sale 8 3,088 92 11.95% 89,703 1,816 8.21%
Trading securities 168,314 1,881 4.43% 136,627 1,628 4.78% 147,484 1,942 5.34%
- ------------------------------------------------------------------------------------------------------------------------------------
Total securities 1,542,612 24,741 6.36% 1,523,746 25,961 6.83% 1,505,355 26,718 7.20%
Federal funds sold and resale agreements 365,674 2,823 3.06% 367,004 2,707 2.96% 541,073 4,089 3.06%
Interest-bearing deposits with banks 31,809 282 3.52% 152,005 1,220 3.22% 116,390 974 3.39%
Money market funds 9,201 62 2.67% 7,817 50 2.57% 7,397 44 2.41%
Loans and lease financing 6,879,707 143,368 8.27% 6,742,123 142,702 8.49% 6,474,169 134,135 8.40%
Covered assets and FDIC assistance 2,540
Note receivable-FDIC 462,535 8,519 7.31% 462,535 8,778 7.61% 469,748 9,302 8.03%
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 9,291,538 179,795 7.68% 9,255,230 181,418 7.86% 9,116,672 175,262 7.80%
Allowance for possible credit losses (188,908) (184,655) (179,584)
Cash and due from banks 543,804 543,738 493,074
Other assets 743,659 758,048 753,535
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $10,390,093 $10,372,361 $10,183,697
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Money market accounts 2,117,822 $ 15,462 2.90% 2,110,664 $ 14,807 2.81% 2,109,653 $ 15,713 3.02%
Savings deposits 1,134,487 7,675 2.68% 1,099,960 7,517 2.74% 1,024,817 7,215 2.86%
Time deposits < $100,000 2,698,401 34,090 5.01% 2,827,961 35,982 5.10% 2,936,855 38,477 5.31%
Time deposits > $100,000 754,192 7,721 4.06% 780,401 8,088 4.16% 903,338 9,438 4.24%
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 6,704,902 64,948 3.84% 6,818,986 66,394 3.91% 6,974,663 70,843 4.12%
Federal funds purchased &
repurchase agreements 410,691 3,282 3.17% 333,313 2,592 3.12% 242,503 1,853 3.10%
Dollar repurchase agreements 29,117 310 4.27% 128,055 1,451 4.60%
Other short-term borrowings 145,466 1,178 3.21% 116,182 1,006 3.47% 128,623 1,077 3.40%
Subordinated notes 58,446 1,220 8.28% 58,682 1,222 8.35% 59,067 1,228 8.43%
Long-term debt 15,808 240 6.02% 18,187 273 6.02% 18,187 270 6.02%
Capital lease obligations 4,356 114 10.38% 4,931 134 10.90% 5,107 138 10.96%
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 7,339,669 70,982 3.84% 7,379,398 71,931 3.91% 7,556,205 76,860 4.13%
Demand deposits 1,905,196 1,899,393 1,575,036
Other liabilities 375,257 328,004 242,598
- -----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 9,620,122 9,606,795 9,373,839
Shareholders' equity 769,971 765,566 809,858
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $10,390,093 $10,372,361 $10,183,697
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income (fully taxable
equivalent basis) $108,813 $109,487 $ 98,402
Tax equivalent adjustment 5,406 5,578 5,938
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income $103,407 $103,909 $ 92,464
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest rate spread 3.84% 3.95% 3.67%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest margin 4.65% 4.74% 4.38%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Certain prior period amounts have been reclassified to conform to current
period presentation.
27
<PAGE> 15
<TABLE>
<CAPTION>
Michigan National Corporation This is a revised schedule. Revised per
and Subsidiaries form 10Q-A dated January 10, 1994
MANAGEMENT'S DISCUSSION AND ANALYSIS
- -----------------------------------------------------------------------------------------------------------------------
TABLE 3 CHANGE IN NET INTEREST INCOME (FULLY TAXABLE EQUIVALENT)
- -----------------------------------------------------------------------------------------------------------------------
Change in Change in Change in
Quarter-to-Date Average Balance Interest Average Rate
9/30/93 vs 9/30/93 vs 9/30/93 vs
(IN THOUSANDS) 6/30/93 6/30/93 6/30/93
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment securities-taxable $ (8,699) $(1,361) -0.44%
Investment securities-tax-exempt (1,042) (20) -0.07%
Investments available for sale (3,080) (92) -11.95%
Trading securities 31,687 253 -0.35%
- -----------------------------------------------------------------------------------------------------------------------
Total securities $ 18,866 $(1,220) -0.47%
Federal funds sold and resale agreements $ (1,330) $ 116 0.10%
Interest-bearing deposits with banks (120,196) (938) 0.30%
Money market funds 1,384 12 0.10%
Loans and lease financing 137,584 666 -0.22%
Covered assets and FDIC assistance
Note receivable-FDIC (259) -0.30%
- -----------------------------------------------------------------------------------------------------------------------
Total interest-earning assets $ 36,308 $(1,623) -0.18%
Allowance for possible credit losses $ (4,253)
Cash and due from banks 66
Other assets (14,389)
- -----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 17,732
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES
Money market accounts $ 7,158 $ 655 0.09%
Savings deposits 34,527 158 -0.06%
Time deposits < $100,000 (129,560) (1,892) -0.09%
Time deposits > $100,000 (26,209) (367) -0.10%
- -----------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits $(114,084) $(1,446) -0.07%
Federal funds purchased & repurchase agreements $ 77,378 $ 690 0.05%
Dollar repurchase agreements (29,117) (310) -4.27%
Other short-term borrowings 29,284 172 -0.26%
Subordinated notes (236) (2) -0.07%
Long-term debt (2,379) (33)
Capital lease obligations (575) (20) -0.52%
- -----------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities $ (39,729) $ (949) -0.07%
Demand deposits $ 5,803
Other liabilities 47,253
- -----------------------------------------------------------------------------------------------------------------------
Total Liabilities $ 13,327
Shareholders' equity $ 4,405
- -----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 17,732
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Net interest income (fully taxable equivalent basis) $ (674)
Tax equivalent adjustment (172)
- -----------------------------------------------------------------------------------------------------------------------
Net interest income $ (502)
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Net interest rate spread -0.11%
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Net interest margin -0.09%
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Certain prior period amounts have been reclassified to conform to current
period presentation.
29
<PAGE> 16
<TABLE>
<CAPTION>
Michigan National Corporation This is a revised schedule. Revised per
and Subsidiaries form 10Q-A dated January 10, 1994
MANAGEMENT'S DISCUSSION AND ANALYSIS
- -------------------------------------------------------------------------------------------------------------
TABLE 3 CHANGE IN NET INTEREST INCOME (FULLY TAXABLE EQUIVALENT)
- -------------------------------------------------------------------------------------------------------------
Change in Change in Change in
Quarter-to-Date Average Balance Interest Average Rate
9/30/93 vs 9/30/93 vs 9/30/93 vs
( in thousands) 9/30/92 9/30/92 9/30/92
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment securities-taxable $(184,329) $ (8,826) -1.54%
Investment securities-tax-exempt (5,577) (157) -0.35%
Investments available for sale 8
Trading securities 18,531 (36) -0.66%
- -------------------------------------------------------------------------------------------------------------
Total securities $(171,367) $ (9,019) -1.48%
Federal funds sold and resale agreements $ (21,363) $ (332) -0.18%
Interest-bearing deposits with banks (83,227) (1,009) -0.94%
Money market funds 4,865 22 -1.00%
Loans and lease financing 536,573 2,687 -0.55%
Covered assets and FDIC assistance (216,646) (3,880) -7.12%
Note receivable-FDIC (162,293) (5,328) -1.51%
- -------------------------------------------------------------------------------------------------------------
Total interest-earning assets $(113,458) $(16,859) -0.64%
Allowance for possible credit losses $ (14,342)
Cash and due from banks 82,635
Other assets (35,812)
- -------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ (80,977)
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
LIABILITIES
Money market accounts $ 40,579 $ (1,784) -0.40%
Savings deposits 155,827 260 -0.33%
Time deposits < $100,000 (388,498) (9,794) -0.65%
Time deposits > $100,000 (196,059) (3,638) -0.70%
- -------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits $(388,151) $(14,956) -0.64%
Federal funds purchased & repurchase agreements $ 160,965 $ 1,241 -0.08%
Dollar repurchase agreements (265,642) (2,799) -4.19%
Other short-term borrowings 20,573 55 -0.37%
Subordinated notes (1,269) (27) -0.03%
Long-term debt (7,492) (33) 1.36%
Capital lease obligations (1,100) (31) -0.19%
- -------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities $(482,116) $(16,550) -0.61%
Demand deposits $ 311,525
Other liabilities 120,185
- -------------------------------------------------------------------------------------------------------------
Total Liabilities $ (50,406)
Shareholders' equity $ (30,571)
- -------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ (80,977)
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Net interest income (fully taxable equivalent basis) $ (309)
Tax equivalent adjustment (2,722)
- -------------------------------------------------------------------------------------------------------------
Net interest income $ 2,413
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Net interest rate spread -0.03%
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Net interest margin 0.03%
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Certain prior period amounts have been reclassified to conform to current
period presentation.
30
<PAGE> 17
<TABLE>
<CAPTION>
Michigan National Corporation This is a revised schedule. Revised per
and Subsidiaries form 10Q-A dated January 10, 1994
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 5 SUMMARY OF CONSOLIDATED NET INTEREST INCOME (FULLY TAXABLE EQUIVALENT)
NINE MONTHS ENDED SEPTEMBER 30, 1993 SEPTEMBER 30, 1992
AVERAGE AVERAGE AVERAGE AVERAGE
(in thousands) BALANCE INTEREST RATE BALANCE INTEREST RATE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investment securities-taxable $ 1,301,999 $ 67,424 6.92% $ 1,531,579 $ 95,404 8.32%
Investment securities-tax-exempt 40,553 2,635 8.69% 46,307 3,061 8.83%
Investments available for sale 30,605 1,908 8.34%
Trading securities 150,885 5,451 4.83% 151,606 5,929 5.22%
- --------------------------------------------------------------------------------------------------------------------------------
Total securities $ 1,524,042 $ 77,418 6.79% $ 1,729,492 $104,394 8.06%
Federal funds sold and resale agreements $ 423,941 $ 9,618 3.03% $ 394,882 $ 10,882 3.68%
Interest-bearing deposits with banks 99,758 2,477 3.32% 129,742 4,576 4.71%
Money market funds 8,145 156 2.56% 6,493 179 3.68%
Loans and lease financing 6,699,588 420,205 8.39% 6,395,582 430,960 9.00%
Covered assets and FDIC assistance 837 291,126 16,917 7.76%
Note receivable-FDIC 464,913 26,600 7.65% 625,213 44,133 9.43%
- --------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets $ 9,221,224 $ 536,474 7.78% $ 9,572,530 $612,041 8.54%
Allowance for possible credit losses $ (184,417) $ (167,394)
Cash and due from banks 516,849 466,190
Other assets 752,312 761,972
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $10,305,968 $10,633,298
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Money market accounts $ 2,112,736 $ 45,982 2.91% $ 2,041,667 $ 55,765 3.65%
Savings deposits 1,086,834 22,408 2.76% 968,935 24,372 3.36%
Time deposits < $100,000 2,820,188 108,550 5.15% 3,109,169 139,191 5.98%
Time deposits > $100,000 812,109 25,246 4.16% 1,083,453 40,984 5.05%
- --------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits $ 6,831,867 $ 202,186 3.96% $ 7,203,224 $260,312 4.83%
Federal funds purchased & repurchase agreements $ 329,451 $ 7,727 3.14% $ 273,744 $ 7,604 3.71%
Dollar repurchase agreements 51,922 1,761 4.53% 357,179 11,122 4.16%
Other short-term borrowings 130,152 3,259 3.35% 134,860 4,173 4.13%
Subordinated notes 58,729 3,671 8.36% 59,703 3,725 8.33%
Long-term debt 17,385 783 6.02% 25,949 1,054 5.43%
Capital lease obligations 4,795 385 10.74% 5,570 450 10.79%
- --------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities $ 7,424,301 $ 219,772 3.96% $ 8,060,229 $288,440 4.78%
Demand deposits $ 1,784,250 $ 1,534,970
Other liabilities 315,723 252,052
- --------------------------------------------------------------------------------------------------------------------------------
Total Liabilities $ 9,524,274 $ 9,847,251
Shareholders' equity 781,694 786,047
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $10,305,968 $10,633,298
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Net interest income (fully taxable equivalent basis) $ 316,702 $323,601
Tax equivalent adjustment 16,922 25,403
- --------------------------------------------------------------------------------------------------------------------------------
Net interest income $ 299,780 $298,198
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Net interest rate spread 3.82% 3.76%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Net interest margin 4.59% 4.52%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Certain prior period amounts have been reclassified to conform to current
period presentation.
33
<PAGE> 18
<TABLE>
<CAPTION>
Michigan National Corporation This is a revised schedule. Revised per
and Subsidiaries form 10Q-A dated January 10, 1994
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ---------------------------------------------------------------------------------------------------------------------
TABLE 6 CHANGE IN NET INTEREST INCOME (FULLY TAXABLE EQUIVALENT)
Change in Change in Change in
Year-to-Date Average Balance Interest Average Rate
9/30/93 vs 9/30/93 vs 9/30/93 vs
(IN THOUSANDS) 9/30/92 9/30/92 9/30/92
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment securities-taxable $(229,580) $(27,980) -1.40%
Investment securities-tax-exempt (5,754) (426) -0.14%
Investments available for sale 30,605 1,908 8.34%
Trading securities (721) (478) -0.39%
- ---------------------------------------------------------------------------------------------------------------------
Total securities $(205,450) $(26,976) -1.27%
Federal funds sold and resale agreements $ 29,059 $ (1,264) -0.65%
Interest-bearing deposits with banks (29,984) (2,099) -1.39%
Money market funds 1,652 (23) -1.12%
Loans and lease financing 304,006 (10,755) -0.61%
Covered assets and FDIC assistance (290,289) (16,917) -7.76%
Note receivable-FDIC (160,300) (17,533) -1.78%
- ---------------------------------------------------------------------------------------------------------------------
Total interest-earning assets $(351,306) $(75,567) -0.76%
Allowance for possible credit losses $ (17,023)
Cash and due from banks 50,659
Other assets (9,660)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $(327,330)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
LIABILITIES
Money market accounts $ 71,069 $ (9,783) -0.74%
Savings deposits 117,899 (1,964) -0.60%
Time deposits < $100,000 (288,981) (30,641) -0.83%
Time deposits > $100,000 (271,344) (15,738) -0.89%
- ---------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits $(371,357) $(58,126) -0.87%
Federal funds purchased & repurchase agreements $ 55,707 $ 123 -0.57%
Dollar repurchase agreements (305,257) (9,361) 0.37%
Other short-term borrowings (4,708) (914) -0.78%
Subordinated notes (974) (54) 0.03%
Long-term debt (8,564) (271) 0.59%
Capital lease obligations (775) (65) -0.05%
- ---------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities $(635,928) $(68,668) -0.82%
Demand deposits $ 249,280
Other liabilities 63,671
- ---------------------------------------------------------------------------------------------------------------------
Total Liabilities $(322,977)
Shareholders' equity (4,353)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $(327,330)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Net interest income (fully taxable equivalent basis) $ (6,899)
Tax equivalent adjustment (8,481)
- ---------------------------------------------------------------------------------------------------------------------
Net interest income $ 1,582
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Net interest rate spread 0.06%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Net interest margin 0.07%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Certain prior period amounts have been reclassified to conform to current
period presentation.
34
<PAGE> 19
Michigan National Corporation (This is revised text.
and Subsidiaries Revised per Form 10-QA
dated January 10,1994)
MANAGEMENT'S DISCUSSION AND ANALYSIS
NON-INTEREST INCOME AND NON-INTEREST EXPENSE
Non-interest income for the third quarter and first nine months of 1993
increased $13.1 million and $15.1 million, respectively over the same periods
in 1992. Non-interest expenses for the third quarter and first nine months of
1993 increased $13.2 million and $102.7 million over the same periods in 1992.
Activity at the Corporation's mortgage banking subsidiary was the significant
contributor to these results.
Non-interest income for the three months ended September 30, 1993, included a
$10.1 million gain from the sale of prime plus residential mortgage loans,
reflected in the mortgage banking gains category. This sale is discussed in
the Net Interest Margin section. Partially offsetting this one-time gain was a
decrease in mortgage servicing fee income due to a lower balance in the
Corporation's mortgage servicing portfolios. Accelerated prepayments in the
Corporation's servicing portfolios contributed to the lower level of mortgage
servicing fees in the third quarter compared to prior quarters.
During the second quarter 1993, the Corporation recognized a $4.6 Million
one-time write-down of the assets of the Corporation's Dallas, Texas
software subsidiary, BancA Corporation, due to a longer than expected sales
cycle for bank software products. Virtually all the assets of BancA
Corporation were sold effective October 1, 1993. The sale transaction did not
result in any further loss to the Corporation.
Other employee benefits for the third quarter and first nine months of 1993
reflects $1.7 million and $5.2 million, respectively, of expense related to
SFAS No. 106 which was adopted January 1, 1993. See Note C. Postretirement
Benefits for further discussion.
Falling interest rates since the beginning of the year have resulted in another
mortgage refinancing boom and, therefore, continued increases in prepayment
trends in the Corporation's mortgage servicing portfolios. In keeping with its
commitment to balance sheet integrity, the Corporation continues to
aggressively acknowledge the effect of these trends on the carrying value of
its mortgage servicing assets through accelerated amortization of those assets.
PMSR and ESF amortization expense for the third quarter and first nine months
of 1993 remained high, but actual amortization expense in the third quarter was
$7.1 million lower than in this year's second quarter due to a lower balance in
the Corporation's servicing portfolios.
The extraordinarily high volume of refinancing activity at IOMC has also
resulted in increases in a variety of other indirect origination and servicing
related administrative expenses.
44
<PAGE> 20
Michigan National Corporation (This is revised text.
and Subsidiaries Revised per Form 10-QA
dated January 10,1994)
MANAGEMENT'S DISCUSSION AND ANALYSIS
On June 30, 1993, the Corporation executed an agreement to sell approximately
$2.2 billion of mortgage servicing rights for an aggregate sale price of
approximately $29 million. The servicing rights were being sold as part of the
Corporation's strategy to reposition its mortgage banking business and reduce
the earnings volatility resulting from acquired servicing.
Because the terms of the sale provide the purchaser with protection against
certain contingencies through the date of physical delivery of the underlying
mortgages, the sale will be recognized for accounting purposes in the fourth
quarter of this year. The fourth quarter gain on sale is approximately $7.8
million. In addition, approximately $1.5 million of gain associated with the
sale will be deferred until certain other contingencies are eliminated on June
30, 1996.
The June 30, 1993, carrying value of the PMSR assets associated with
these servicing rights to be sold was approximately $19 million, which continues
to be amortized to operating expense until the sale is recognized in the fourth
quarter. The amortization expense on these PMSR assets recognized during the
third quarter was $4.2 million and the September 30, 1993, carrying value was
approximately $15 million. In addition, the Corporation continues to accrue
normal servicing income on these servicing rights until the sale is recognized
in the fourth quarter. Servicing fee income associated with these servicing
rights of approximately $2.8 million was accrued during the third quarter.
The major components of the Corporation's non-interest income and non-interest
expense are presented in Table 11 and Table 12, respectively, for the five most
recent quarters. The non-interest income and expense components of the new
businesses are presented in Tables 11a and 12a. For the comparable nine month
periods of 1993 and 1992, the Corporation's non-interest income and expense
components are presented in Tables 13 and 14, respectively. Similar
information for the new businesses is presented in Tables 13a and 14a. Also,
refer to Table 15 Business Review for summary financial information regarding
the Corporations principal subsidiaries.
45
<PAGE> 21
<TABLE>
<CAPTION>
Michigan National Corporation This is a revised schedule. Revised per
and Subsidiaries form 10Q-A dated January 10, 1994
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ----------------------------------------------------------------------------------------------------------------------------
Table 11 NON-INTEREST INCOME (UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------
Three Months Ended (in thousands) 9/30/93 6/30/93 3/31/93 12/31/92 9/30/92
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Service charges on deposit accounts $15,176 $15,362 $13,888 $13,494 $13,558
Merchant card processing fees 4,578 4,319 3,465 4,363 4,147
Mortgage servicing fees 15,482 16,656 16,512 17,051 16,653
Amortization of capitalized excess service fees (4,711) (4,266) (8,200) (2,378) (3,964)
Loan service charges 2,918 1,955 3,352 2,226 2,618
- ----------------------------------------------------------------------------------------------------------------------------
Service charges 33,443 34,026 29,017 34,756 33,012
Trust and investment services income 4,619 4,837 5,143 4,514 4,164
Gains (losses) from sale of mortgage servicing rights 53 2,289 73
Investment securities gains, net 7,754 (170)
Investments available for sale gains 12 160 5,968
Other Income:
Trading profits 195 818 950 936 1,486
Mortgage banking gains (losses) 16,984 4,681 998 6,516 4,193
Other 10,713 11,099 9,351 10,061 10,101
- ----------------------------------------------------------------------------------------------------------------------------
Other income 27,892 16,598 11,299 17,513 15,780
- ----------------------------------------------------------------------------------------------------------------------------
Total Non-Interest Income $65,966 $55,674 $51,427 $66,826 $52,859
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Certain prior period amounts were reclassified to conform to current period
presentation.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Table 11a. NON-INTEREST INCOME-NEW BUSINESSES (Peoples National Bank - Pasadena, Peoples Bank - Houston,
Community National Bank of Houston, acquired 4/1/93. (UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------
Three Months Ended (in thousands) 9/30/93 6/30/93
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Service charges on deposit accounts $455 $416
Merchant card processing fees
Loan service charges 39 41
- ----------------------------------------------------------------------------------------------------------------------------
Service charges 494 457
Trust and investment services income
Gains (losses) from sale of mortgage servicing rights
Investment securities gains, net
Investments available for sale gains
Other Income:
Trading profits
Mortgage banking gains (losses)
Other 31 73
- ----------------------------------------------------------------------------------------------------------------------------
Other Income 31 73
- ----------------------------------------------------------------------------------------------------------------------------
Total Non-Interest Income $525 $530
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE> 22
<TABLE>
<CAPTION>
Michigan National Corporation This is a revised schedule. Revised per
and Subsidiaries form 10Q-A dated January 10, 1994
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ----------------------------------------------------------------------------------------------------------------------------
Table 12 NON-INTEREST EXPENSE (UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------
Three Months Ended (in thousands) 9/30/93 6/30/93 3/31/93 12/31/92 9/30/92
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Salaries and wages $ 47,489 $ 44,586 $ 44,560 $ 40,356 $ 43,788
Other employee benefits 12,198 13,257 12,990 10,301 11,170
Net occupancy 7,460 7,529 7,337 6,273 7,632
Equipment 9,748 10,600 10,714 10,157 9,147
Outside services 8,795 8,052 7,735 7,819 7,698
Defaulted loan expense, net 6,026 2,819 3,480 10,073 4,997
Amortization of purchased mortgage servicing rights 14,154 21,654 59,340 25,207 14,293
Other Expenses:
FDIC Insurance 5,406 5,526 5,474 5,003 4,957
Assets held for sale, net (income) loss 8 (92) (129) 6 (387)
Communications 2,434 2,322 2,441 2,389 2,365
Stationery and supplies 2,264 2,382 2,466 2,393 2,201
Advertising 1,971 2,060 1,906 939 850
Michigan single business tax 1,827 2,062 2,209 319 1,820
Postage 1,470 1,589 1,631 1,433 1,378
Amortization of goodwill 300 300 223 265 203
Uncollected interest on early payoffs of loans serviced 3,648 2,827 1,901 3,015 1,439
Provision for foreclosure costs on loans serviced 873 837 1,985 4,606 2,192
Other 9,781 9,877 9,920 10,656 6,908
- ----------------------------------------------------------------------------------------------------------------------------
Other expenses 29,982 29,690 30,027 31,024 23,926
- ----------------------------------------------------------------------------------------------------------------------------
Total non-interest expense $135,852 $138,187 $176,183 $141,210 $122,651
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Net overhead ratio (1) 3.01% 3.25% 5.47% 3.12% 2.97%
Efficiency ratio (2) 77.73% 83.67% 117.59% 79.00% 75.72%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Non-interest expense less non-interest income divided by average earning
assets.
(2) Non-interest expense divided by the sum of net interest income on a fully
taxable basis and non-interest income. Certain prior period amounts were
reclassified to conform to current period presentation.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Table 12 a. NON-INTEREST EXPENSE-NEW BUSINESSES (Peoples National Bank - Pasadena, Peoples Bank - Houston,
Community National Bank of Houston, acquired 4/1/93. (UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------
Three Months Ended (in thousands) 9/30/93 6/30/93
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Salaries and wages $ 487 $ 493
Other employee benefits 82 113
Net occupancy 41 71
Equipment 82 64
Outside services 196 121
Defaulted loan expense, net 10 22
Amortization of purchased mortgage servicing rights
Other Expenses:
FDIC Insurance 19 52
Assets held for sale, net (income) loss
Communications 14 11
Stationery and supplies 80 20
Advertising 5 7
Michigan single business tax
Postage 21 20
Amortization of goodwill 77 76
Uncollected interest on early payoffs of loans serviced
Provision for foreclosure costs on loans serviced
Other 39 115
- ----------------------------------------------------------------------------------------------------------------------------
Other expenses 255 301
- ----------------------------------------------------------------------------------------------------------------------------
Total non-interest expense $1,153 $1,185
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE> 23
<TABLE>
<CAPTION>
Michigan National Corporation This is a revised schedule. Revised per
and Subsidiaries form 10Q-A dated January 10, 1994
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------------------------------------------
Table 13 NON-INTEREST INCOME (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED (IN THOUSANDS) 9/30/93 9/30/92
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Service charges on deposit accounts $ 44,426 $ 39,108
Merchant card processing fees 12,362 10,824
Mortgage servicing fees 48,650 49,286
Amortization of capitalized excess service fees (17,176) (7,107)
Loan service charges 8,225 6,033
- --------------------------------------------------------------------------------------------------------------------
Service charges 96,487 98,144
Trust and investment services income 14,600 13,363
Gains (losses) from sale of mortgage servicing rights 51 3,510
Investment securities gains, net 1,495
Investments available for sale gains 6,139
Other income:
Trading profits 1,962 6,771
Mortgage banking gains (losses) 22,663 4,960
Other 31,165 29,724
- --------------------------------------------------------------------------------------------------------------------
Other income 55,790 41,455
- --------------------------------------------------------------------------------------------------------------------
Total non-interest income $173,067 $157,967
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Certain prior year amounts were reclassified to conform to current year
presentation.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Table 13a. NON-INTEREST INCOME-NEW BUSINESSES (First Collateral Services, Inc, acquired 4/14/92, results for the
period January 1, 1993 to March 31, 1993 only; BancA Corporation, aquired 7/29/92, results for the period January
1, 1993 to July 31, 1993; and Peoples National Bank-Pasadena, Peoples Bank-Houston, Community National Bank of
Houston, acquired 4/1/93. (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED (IN THOUSANDS) 9/30/93
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
Service charges on deposit accounts $ 872
Merchant card processing fees
Mortgage servicing fees
Loan service charges 443
- --------------------------------------------------------------------------------------------------------------------
Service charges 1,315
Trust and investment services income
Gains (losses) from sale of mortgage servicing rights
Investment securities gains, net
Investments available for sale gains
Other income:
Trading profits
Mortgage banking gains (losses)
Other 804
- --------------------------------------------------------------------------------------------------------------------
Other income 804
- --------------------------------------------------------------------------------------------------------------------
Total non-interest income $2,119
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
48
<PAGE> 24
<TABLE>
<CAPTION>
Michigan National Corporation This is a revised schedule. Revised per
and Subsidiaries form 10Q-A dated January 10, 1994
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------------------------------------------
Table 14 NON-INTEREST EXPENSE (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED (IN THOUSANDS) 9/30/93 9/30/92
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Salaries and wages $136,635 $125,191
Other employee benefits 38,445 34,569
Net occupancy 22,326 22,850
Equipment 31,062 28,139
Outside services 24,567 20,888
Defaulted loan expense, net 12,326 12,156
Amortization of purchased mortgage servicing rights 95,148 27,793
Other Expenses:
FDIC Insurance 16,406 14,729
Assets held for sale, net (income) expense (213) (388)
Communications 7,197 7,211
Stationery and supplies 7,112 6,697
Advertising 5,937 3,182
Michigan single business tax 6,098 4,976
Postage 4,690 4,466
Amortization of goodwill 823 608
Uncollected interest on early payoffs of loans serviced 8,377 4,529
Provision for foreclosure costs on loans serviced 3,695 8,047
Other 29,591 21,923
- --------------------------------------------------------------------------------------------------------------------
Other expenses 89,713 75,980
- --------------------------------------------------------------------------------------------------------------------
Total non-interest expense $450,222 $347,566
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Net overhead ratio (1) 4.01% 2.64%
Efficiency ratio (2) 91.93% 72.17%
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Non-interest expense less non-interest income, annualized, divided by
average earning assets.
(2) Non-interest expense divided by the sum of net interest income on a fully
taxable basis and non-interest income.
Certain prior year amounts were reclassified to conform to current year
presentation.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Table 14a. NON-INTEREST EXPENSE-NEW BUSINESSES (First Collateral Services, Inc, acquired 4/14/92, results for the
period January 1, 1993 to March 31, 1993 only; BancA Corporation, aquired 7/29/92, results for the period January 1,
1993 to July 31, 1993; and Peoples National Bank-Pasadena, Peoples Bank-Houston, Community National Bank of Houston,
acquired 4/1/93. (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED (IN THOUSANDS) 9/30/93
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
Salaries and wages $ 3,155
Other employee benefits 587
Net occupancy 482
Equipment 295
Outside services 762
Defaulted loan expense, net 32
Amortization of purchased mortgage servicing rights
Other Expenses:
FDIC Insurance 71
Assets held for sale, net (income) expense
Communications 74
Stationery and supplies 140
Advertising 57
Michigan single business tax
Postage 46
Amortization of goodwill 174
Uncollected interest on early payoffs of loans serviced
Provision for foreclosure costs on loans serviced
Other 4,788
- --------------------------------------------------------------------------------------------------------------------
Other expenses 5,350
- --------------------------------------------------------------------------------------------------------------------
Total non-interest expense $10,663
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
49
<PAGE> 25
<TABLE>
<CAPTION>
Michigan National Corporation and Subsidiaries This is a revised schedule. Revised per
Form 10Q-A dated January 10, 1994.
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 15 BUSINESS REVIEW (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------------------
MNB
(excluding IOMC) IOMC IOBOC
Three Months Ended September 30 (in thousands) 1993 1992 1993 1992 1993 1992
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net interest income after
provision for possible credit losses $ 74,138 $ 65,852 $ 8,247 $ 6,104 $ 7,004 $ 5,840
Non-interest income 33,262 30,283 33,153 21,740 1,011 421
Gains from sale of mortgage servicing rights 73
Amortization of capitalized excess service fees (4,711) (3,964)
Amortization of purchased mortgage servicing rights (14,154) (14,293)
Other non-interest expense (83,578) (78,850) (20,980) (19,263) (4,778) (3,423)
---------- ---------- ---------- ---------- ---------- ----------
Income before taxes $ 23,822 $ 17,285 $ 1,555 $ (9,603) $ 3,237 $ 2,838
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
At September 30
Total assets $8,908,801 $9,223,478 $1,274,126 $1,239,845 $1,001,480 $1,111,847
Total Liabilities $8,270,987 $8,581,750 $1,251,265 $1,208,147 $ 871,969 $ 991,586
Total Equity $ 637,814 $ 641,728 $ 22,861 $ 31,698 $ 129,511 $ 120,261
Mortgage Servicing Portfolio (2):
Originated Servicing $ 4,223 $ 3,557
Purchased Servicing $ 6,567 $10,981
---------- ----------
Total $10,790 $14,538
---------- ----------
---------- ----------
</TABLE>
(1) Amounts include intercompany eliminations
(2) A sale of approximately $2.2 billion of servicing will be recognized, for
accounting purposes, in the fourth quarter, 1993. The mortgage servicing
portfolio at September 30, 1993, excludes the loans associated with this
transaction.
Certain prior period amounts have been reclassified to conform to current
period presentation.
50
<PAGE> 26
<TABLE>
<CAPTION>
Michigan National Corporation and Subsidiaries This is a revised schedule. Revised per
MANAGEMENT'S DISCUSSION AND ANALYSIS Form 10Q-A dated January 10, 1994.
- -----------------------------------------------------------------------------------------------------------------------------------
TABLE 15 BUSINESS REVIEW (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
Texas Bank Holding Company and Consolidated
Subsidiaries other operations (1) MNC
Three Months Ended September 30 (in thousands) 1993 1992 1993 1992 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net interest income after
provision for possible credit losses $ 6,193 $ 4,589 $ (175) $ 38 $ 95,407 $ 82,423
Non-interest income 1,486 944 1,765 3,362 70,677 56,750
Gains from sale of mortgage servicing rights 73
Amortization of capitalized excess service fees (4,711) (3,964)
Amortization of purchased mortgage servicing rights (14,154) (14,293)
Other non-interest expense (5,001) (3,462) (7,361) (3,360) (121,698) (108,358)
------- ------- ------- ------- --------- ---------
Income before taxes $ 2,678 $ 2,071 $(5,771) $ 40 $ 25,521 $ 12,631
------- ------- ------- ------- --------- ---------
------- ------- ------- ------- --------- ---------
At September 30
Total assets $576,526 $469,394 $(1,365,523) $(1,339,967) $10,395,410 $10,704,597
Total Liabilities $529,066 $433,130 $(1,309,274) $(1,308,290) $ 9,614,013 $ 9,906,323
Total Equity $ 47,460 $ 36,264 $ (56,249) $ (31,677) $ 781,397 $ 798,274
</TABLE>
(1) Amounts include intercompany eliminations
Certain prior period amounts have been reclassified to conform to current
period presentation.
51
<PAGE> 27
<TABLE>
<CAPTION>
Michigan National Corporation and Subsidiaries This is a revised schedule. Revised per
MANAGEMENT'S DISCUSSION AND ANALYSIS Form 10Q-A dated January 10, 1994.
- --------------------------------------------------------------------------------------------------------------------------------
TABLE 16 BUSINESS REVIEW (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------------------
MNB
(excluding IOMC) IOMC IOBOC
Nine Months Ended September 30 (in thousands) 1993 1992 1993 1992 1993 1992
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net interest income after
provision for possible credit losses $ 213,672 $ 196,307 $ 17,723 $ 16,687 $ 19,152 $ 16,381
Non-interest income 101,512 91,146 73,279 56,704 2,278 855
Gains from sale of mortgage servicing rights 51 3,510
Amortization of capitalized excess service fees (17,176) (7,107)
Amortization of purchased mortgage servicing rights (95,148) (27,793)
Other non-interest expense (242,834) (235,036) (61,750) (54,985) (14,014) (10,288)
-------- -------- -------- -------- -------- --------
Income before taxes $ 72,350 $ 52,417 $(83,021) $(12,984) $ 7,416 $ 6,948
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
</TABLE>
52
<PAGE> 28
<TABLE>
<CAPTION>
Michigan National Corporation and Subsidiaries This is a revised schedule. Revised per
Form 10Q-A dated January 10, 1994.
MANAGEMENT'S DISCUSSION AND ANALYSIS
- -----------------------------------------------------------------------------------------------------------------------------------
TABLE 16 BUSINESS REVIEW (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
Texas Bank Holding Company and Consolidated
Subsidiaries other operations (1) MNC
Nine Months Ended September 30 (in thousands) 1993 1992 1993 1992 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net interest income after
provision for possible credit losses $ 16,677 $ 13,389 $ (444) $ 81 $ 266,780 $ 242,845
Non-interest income 5,015 2,860 8,108 9,999 190,192 161,564
Gains from sale of mortgage servicing rights 51 3,510
Amortization of capitalized excess service fees (17,176) (7,107)
Amortization of purchased mortgage servicing rights (95,148) (27,793)
Other non-interest expense (13,642) (10,204) (22,834) (9,260) (355,074) (319,773)
-------- -------- -------- -------- -------- --------
Income before taxes $ 8,050 $ 6,045 $(15,170) $ 820 $ (10,375) $ 53,246
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
</TABLE>
(1) Amounts include intercompany eliminations.
53
<PAGE> 29
<TABLE>
<CAPTION>
This is a revised schedule. Revised per
form 10Q-A dated January 10, 1994
- -----------------------------------------------------------------------------------------------------------------------------------
TABLE 17 CAPITAL RATIOS (UNAUDITED)
Quarter Ended (in thousands) 9/30/93 6/30/93 3/31/93 12/31/92 9/30/92
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Tier 1:
Common shareholders' equity $ 753,822 $ 733,564 $ 730,884 $ 779,093 $ 771,853
Convertible preferred stock 6,000 6,000 6,000
Intangible assets (14,239) (14,702) (10,550) (10,936) (11,366)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Tier 1 capital $ 739,583 $ 718,862 $ 726,334 $ 774,157 $ 766,487
- -----------------------------------------------------------------------------------------------------------------------------------
Tier 2:
Allowance for possible credit losses (1) $ 103,718 $ 103,208 $ 100,609 $ 100,798 $ 101,476
Equity commitment note 15,212 18,012 18,012 18,012 18,012
Equity contract note 57,944 58,184 58,504 58,735 58,722
Qualified subordinated debt
- -----------------------------------------------------------------------------------------------------------------------------------
Total Tier 2 capital $ 176,874 $ 179,404 $ 177,125 $ 177,545 $ 178,210
- -----------------------------------------------------------------------------------------------------------------------------------
Total qualifying capital $ 916,457 $ 898,266 $ 903,459 $ 951,702 $ 944,697
- -----------------------------------------------------------------------------------------------------------------------------------
Risk-weighted assets 7,389,159 7,540,523 7,319,376 7,379,667 7,427,746
Risk-weighted off-balance sheet exposure 922,510 730,814 739,858 695,090 690,305
- -----------------------------------------------------------------------------------------------------------------------------------
Less: disallowance for loan loss & intangibles 101,496 97,333 92,507 86,027 83,705
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Total risk-weighted assets and off-balance sheet exposure $8,210,173 $8,174,004 $7,966,727 $7,988,730 $8,034,346
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Tier 1 risk based capital ratio 9.01% 8.79% 9.12% 9.69% 9.54%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Total risk based capital ratio 11.16% 10.99% 11.34% 11.91% 11.76%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Leverage ratio 7.09% 6.90% 7.12% 7.24% 7.27%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The allowance for possible credit losses is limited to 1.25% of the total
risk-weighted assets and off-balance sheet exposure.
56
<PAGE> 30
<TABLE>
<CAPTION>
This is a revised schedule. Revised per
form 10Q-A dated January 10, 1994
- ----------------------------------------------------------------------------------------------------------------------------------
TABLE 18 LIQUIDITY (UNAUDITED)
Quarter Ended (in thousands) 9/30/93 6/30/93 3/31/93 12/31/92 9/30/92
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Parent Company:
Subsidiaries' retained earnings available for dividends (1) $52,029 $31,426 $40,817 $51,315 $50,096
Subsidiary Companies (2):
Core deposits as a percent of total assets 75.28% 75.78% 74.41% 75.19% 72.45%
Short-term borrowings as a percent of total assets 5.41% 6.28% 5.14% 4.98% 6.61%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Retained earnings available for dividends is calculated based on current
year-to-date net income plus two years' prior income less certain
adjustments.
(2) Certain prior period amounts have been reclassified to conform to current
period presentation.
57
<PAGE> 31
<TABLE>
<CAPTION>
MICHIGAN NATIONAL CORPORATION This is a revised schedule. Revised per
AND SUBSIDIARIES Form 10-QA dated January 10, 1994.
PART 1 EXHIBIT
EXHIBIT (11) COMPUTATION OF EARNINGS PER COMMON SHARE (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
- -----------------------------------------------------------------------------------------------------------
1993 1992 1993 1992
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(in thousands, except per share)
PRIMARY
Net Income $27,027 $11,553 $(8,869) $54,181
---------------------------------------------------
Average common shares outstanding 15,135 14,797 15,057 14,718
Common stock equivalents 154 (1) 351 346
---------------------------------------------------
AVERAGE PRIMARY SHARES OUTSTANDING 15,289 15,148 15,057 15,064
---------------------------------------------------
---------------------------------------------------
PRIMARY EARNINGS PER SHARE $ 1.77 $ 0.76 $ (0.59) $ 3.60
---------------------------------------------------
---------------------------------------------------
FULLY DILUTED
Net Income $27,027 $11,553 $(8,869) $54,181
---------------------------------------------------
Average common shares outstanding 15,135 14,797 15,057 14,718
Common stock equivalents 189 (1) 351 346
---------------------------------------------------
AVERAGE FULLY DILUTED SHARES
OUTSTANDING 15,324 15,148 15,057 15,064
---------------------------------------------------
---------------------------------------------------
FULLY DILUTED EARNINGS PER SHARE $ 1.76 $ 0.76 $ (0.59) $ 3.60
---------------------------------------------------
---------------------------------------------------
</TABLE>
(1) The Corporation has changed from the "if converted" method to the
"treasury stock" method to calculate the dilutive effect of its
Cancelable Mandatory Stock Purchase Contracts (Equity Contracts).
58
