<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. 2
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 June 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
JUNE 30 (DECREASE)
(IN THOUSANDS, EXCEPT PER SHARE) 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Interest-bearing deposits with banks $ 1,220 $ 2,093 $ (873)
Federal funds sold and resale agreements 2,707 3,806 (1,099)
Money market investments 50 80 (30)
Investment securities 24,081 32,726 (8,645)
Trading securities 1,514 2,175 (661)
Loans and lease financing, including related fees 142,225 144,824 (2,599)
Income from covered assets 3,700 (3,700)
FDIC assistance 991 (991)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL GUARANTEED YIELD ON COVERED ASSETS 4,691 (4,691)
Note receivable-FDIC 5,794 9,576 (3,782)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 177,591 199,971 (22,380)
INTEREST EXPENSE
Money market accounts 14,806 19,077 (4,271)
Savings deposits 7,517 7,979 (462)
Time deposits < $100,000 41,131 51,988 (10,857)
Time deposits > $100,000 8,096 13,696 (5,600)
Short-term borrowings 3,907 8,114 (4,207)
Long-term debt 1,629 1,812 (183)
FDIC assistance (3,404) (3,408) 4
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 73,682 99,258 (25,576)
NET INTEREST INCOME 103,909 100,713 3,196
PROVISION FOR POSSIBLE CREDIT LOSSES 12,494 18,418 (5,924)
- -------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE CREDIT LOSSES 91,415 82,295 9,120
- -------------------------------------------------------------------------------------------------------------------------------
NON-INTEREST INCOME
Service charges 34,026 32,454 1,572
Trust and investment services income 4,837 4,303 534
Gains (losses) from sale of mortgage servicing rights 53 3,449 (3,396)
Securities gains (losses) 160 (250) 410
Other income 16,598 11,506 5,092
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME 55,674 51,462 4,212
NON-INTEREST EXPENSE
Salaries and wages 44,586 42,163 2,423
Other employee benefits 13,257 11,466 1,791
Net occupancy expense 7,529 7,542 (13)
Equipment expense 10,600 9,827 773
Outside services 8,052 6,255 1,797
Defaulted loan expense, net 2,819 2,863 (44)
Amortization of purchased mortgage servicing rights (Note B) 21,654 6,877 14,777
Other expenses 29,690 25,298 4,392
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST EXPENSE 138,187 112,291 25,896
- --------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES 8,902 21,466 (12,564)
Income tax provision (Note L) 2,247 (2,247)
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 8,902 $ 19,219 $ (10,317)
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</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 (UNAUDITED) continued form 10Q-A dated January 10, 1994
- -------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED INCREASE
JUNE 30 (DECREASE)
(IN THOUSANDS, EXCEPT PER SHARE) 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PRIMARY AND FULLY DILUTED NET INCOME (LOSS) PER COMMON SHARE $0.58 $1.28 $(0.70)
- -------------------------------------------------------------------------------------------------------------------------------
AVERAGE COMMON SHARES OUTSTANDING 15,225 15,049 176
- -------------------------------------------------------------------------------------------------------------------------------
CASH DIVIDENDS DECLARED PER COMMON SHARE $0.50 $0.50
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Certain prior period amounts have been reclassified to conform to current year
presentation.
Previously reported amounts for income tax provision and net income for the
Three months ended June 30,1992 have been restated for the effects of a change
in accounting principle. Effective January 1, 1992, the Corporation adopted
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes.
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
- -------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED INCREASE
JUNE 30 (DECREASE)
(IN THOUSANDS, EXCEPT PER SHARE) 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Interest-bearing deposits with banks $ 2,194 $ 3,285 $ (1,091)
Federal funds sold and resale agreements 6,796 7,727 (931)
Money market investments 94 139 (45)
Investment securities 48,603 66,065 (17,462)
Trading securities 3,279 3,746 (467)
Loans and lease financing, including related fees 275,834 288,998 (13,164)
Income from covered assets 8,680 (8,680)
FDIC assistance 2,876 (2,876)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL GUARANTEED YIELD ON COVERED ASSETS 11,556 (11,556)
Note receivable-FDIC 11,935 19,991 (8,056)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 348,735 401,507 (52,772)
INTEREST EXPENSE
Money market accounts 30,519 38,519 (8,000)
Savings deposits 14,732 16,957 (2,225)
Time deposits < $100,000 84,948 105,107 (20,159)
Time deposits > $100,000 17,541 29,660 (12,119)
Short-term borrowings 8,289 16,936 (8,647)
Long-term debt 3,265 3,704 (439)
FDIC assistance (6,933) (6,580) (353)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 152,361 204,303 (51,942)
NET INTEREST INCOME 196,374 197,204 (830)
PROVISION FOR POSSIBLE CREDIT LOSSES 25,000 36,782 (11,782)
- -------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE CREDIT LOSSES 171,374 160,422 10,952
- -------------------------------------------------------------------------------------------------------------------------------
NON-INTEREST INCOME
Service charges 63,043 65,132 (2,089)
Trust and investment services income 9,980 9,199 781
Gains (losses) from sale of mortgage servicing rights 53 3,437 (3,384)
Securities gains (losses) 6,128 1,665 4,463
Other income 27,897 25,675 2,222
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME 107,101 105,108 1,993
NON-INTEREST EXPENSE
Salaries and wages 89,146 81,403 7,743
Other employee benefits 26,247 23,399 2,848
Net occupancy expense 14,866 15,218 (352)
Equipment expense 21,314 18,992 2,322
Outside services 15,787 13,190 2,597
Defaulted loan expense, net 6,300 7,159 (859)
Amortization of purchased mortgage servicing rights (Note B) 80,994 13,500 67,494
Other expenses 59,717 52,054 7,663
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST EXPENSE 314,371 224,915 89,456
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES (35,896) 40,615 (76,511)
Income tax provision (Note L) 4,252 (4,252)
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE (35,896) 36,363 (72,259)
Cumulative Effect of a Change in Accounting Principle 6,265 (6,265)
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $(35,896) $ 42,628 $ (78,524)
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</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 (UNAUDITED) continued form 10Q-A dated January 10, 1994
- -------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED INCREASE
JUNE 30 (DECREASE)
(IN THOUSANDS, EXCEPT PER SHARE) 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PRIMARY AND FULLY DILUTED NET INCOME (LOSS) PER COMMON SHARE
Income (Loss) before cumulative effect of accounting change $(2.39) $2.42 $(4.81)
Cumulative effect of accounting change $0.42 $(0.42)
Net income (Loss) $(2.39) $2.84 $(5.23)
- -------------------------------------------------------------------------------------------------------------------------------
AVERAGE COMMON SHARES OUTSTANDING 15,018 15,029 (11)
- -------------------------------------------------------------------------------------------------------------------------------
CASH DIVIDENDS DECLARED PER COMMON SHARE $1.00 $1.00
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Certain prior period amounts have been reclassified to conform to current year
presentation.
Previously reported amounts for income tax provision and net income for the
Three months ended June 30,1992 have been restated for the effects of a change
in accounting principle. Effective January 1, 1992, the Corporation adopted
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes.
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)
- -------------------------------------------------------------------------------------------------------------
JUNE 30, DECEMBER 31,
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1993 1992
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 513,483 $ 547,697
Federal funds sold and resale agreements 300,250 466,298
- -------------------------------------------------------------------------------------------------------------
Total Cash and Cash Equivalents 813,733 1,013,995
Interest-bearing deposits with banks 34,045 136,565
Money market investments 8,403 6,469
Trading securities 181,559 79,668
Investments available for sale (Note F) 55,719 189,880
Investment securities, (market value of $1,462,052 and $1,348,098
at 06/30/93 and 12/31/92, respectively) (Note F)
Mortgage-backed securities 1,148,808 1,049,303
Government and other securities 267,556 256,371
Covered assets and FDIC assistance (Note G) 18,524
Residential mortgages held for sale (Note H) 609,094 670,800
Loans and lease financing (Note H) 6,337,225 6,057,593
- -------------------------------------------------------------------------------------------------------------
Total Loans and Lease Financing 6,946,319 6,746,917
Less: Unearned income (17,450) (15,869)
Less: Allowance for possible credit losses (185,399) (175,471)
- -------------------------------------------------------------------------------------------------------------
Net Loans and Lease Financing 6,743,470 6,555,577
Note receivable-FDIC 462,535 624,828
Premises and equipment, net 205,409 202,056
Due from customers on acceptances 926 183
Accrued income receivable 72,836 69,111
Purchased mortgage servicing rights, net (Note B) 81,968 155,083
Capitalized excess service fees, net (Note B) 13,334 22,277
Property from defaulted loans, net 129,678 151,561
Other assets 297,182 150,397
- -------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $10,517,161 $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
- -------------------------------------------------------------------------------------------------------------
JUNE 30, DECEMBER 31,
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1993 1992
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES
Non-interest bearing demand deposits $ 1,914,325 $ 1,787,771
Interest-bearing deposits:
Money market accounts 2,088,843 2,168,453
Savings deposits 1,124,006 1,026,132
Time deposits < $100,000 2,765,156 2,996,756
Time deposits > $100,000 720,334 996,181
- -------------------------------------------------------------------------------------------------------------
Total Deposits 8,612,664 8,975,293
Short-term borrowings (Note I) 654,351 528,094
Customer acceptances outstanding 926 183
Accrued liabilities 409,060 271,328
Long-term debt 81,312 82,651
- -------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 9,758,313 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 June 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 151,197 149,079
Surplus 193,742 185,759
Retained earnings 431,921 482,949
Note receivable-ESOP (18,012) (18,012)
- -------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 758,848 805,775
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $10,517,161 $10,663,324
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Preferred stock outstanding 166,667
Common stock outstanding 15,119,658 14,907,895
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
Certian prior period amounts were reclassified in order to
conform to current year presentation.
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 42,628 (1) 42,628
Common stock issued, net 1,199 1,542 (1) 2,741
Cash dividends
Common stock (14,717) (14,717)
Convertible preferred stock (180) (180)
- -----------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1992 6,000 147,571 183,069 474,542 (20,812) $790,370
- -----------------------------------------------------------------------------------------------------------------------
BALANCE, JANUARY 1, 1993 $ 6,000 $149,079 $185,759 $482,949 $(18,012) 805,775
Net income / (loss) (35,896) (35,896)
Unrealized loss on marketable
equity securities 12 12
Common stock issued, net 918 3,183 4,101
Conversion of preferred stock (6,000) 1,200 4,800
Cash dividends
Common stock (15,054) (15,054)
Convertible preferred stock (Note L) (90) (90)
- -----------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1993 151,197 193,742 431,921 (18,012) $758,848
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Previously reported amounts for the first six months of 1992 have been
restated for the effect of a change in accounting principle. Effective
January 1, 1992, the Corporation adopted Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes.
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)
- ---------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30 (IN THOUSANDS) 1993 1992
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ (35,896) $ 42,628
Adjustments to reconcile net income to net cash
(used) provided by operating activities:
Provision for possible credit losses 25,000 36,782
Depreciation and amortization expense 111,983 32,586
Net amortization (accretion) associated with investment securities (24) 869
Write-downs of property from defaulted loans 4,403 6,847
Net Deferred Income Taxes (28,694) (13,355)
Gain from sale of securities (6,127) (1,665)
Gain from sale of mortgage servicing rights (53) (3,437)
(Gain) Loss from sale of property from defaulted loans (1,887) (1,532)
(Increase) decrease in operating assets:
Trading account securities (101,891) (125,790)
Accrued interest receivable (3,725) 5,597
Residential mortgages held for sale 61,706 (127,086)
Pending investment and trading securities sales (57,598) 47,018
Capitalized excess service fees (3,469) (5,603)
Other assets (115,401) 16,832
Increase (decrease) in operating liabilities:
Accrued interest payable (2,705) (891)
Pending investment and trading securities purchases 32,955 (28,196)
Accrued liabilities 161,232 (16,084)
Other, net 1,126 1,517
- ---------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ 40,935 $(132,963)
- ---------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Payments for:
Purchase of investment securities $(373,978) $(268,692)
Purchase of premises and equipment (16,238) (17,737)
Purchase of mortgage servicing rights (7,879) (12,242)
Capital expenditures on property from defaulted loans (2,251) (1,335)
Purchase of subsidiary, net of cash and cash equivalents acquired 3,373 (194,079)
Proceeds from:
Sale of investment securities 202,091 79,212
Principal collection of investment securities 215,967 252,329
Sale of premises and equipment 75 469
Sale of mortgage servicing rights 8
Sales and principal collection of property
from defaulted loans 25,357 22,049
Net decrease (increase) in:
Interest-bearing deposits with banks 102,520 (38,064)
Money market investments (1,934) 712
Loans and lease financing (216,618) 79,794
Covered assets and FDIC assistance 18,410 147,372
Note receivable-FDIC 162,293 105,491
- ---------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY INVESTING ACTIVITIES $ 111,188 $ 155,287
- ---------------------------------------------------------------------------------------------------------------------
The Consolidated Statement of Cash Flows is continued on the next page.
</TABLE>
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)
- ---------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30 (IN THOUSANDS) 1993 1992
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Financing Activities
Payments for:
Long-term debt $ (899) $ (5,572)
Common stock dividends (15,054) (14,717)
Preferred stock dividends (90) (180)
Repurchase of common stock 3,183 1,542
Proceeds from issuance of:
Common stock 918 1,199
Long-term debt 6,443
Net (decrease) increase in:
Deposits (466,700) (16,920)
Short-term borrowings 126,257 19,014
- ---------------------------------------------------------------------------------------------------------------------
NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES $ (352,385) $ (9,191)
- ---------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ (200,262) $ 13,133
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,013,995 811,161
- ---------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT JUNE 30 $ 813,733 $ 824,294
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash flow information:
a.) Cash transactions:
Interest paid $ 155,066 $ 205,194
Federal income taxes paid (1) 900 1,015
State taxes paid (net of refunds) 368 373
b.) Non-cash transactions in property from defaulted loan accounts:
Transfer from loans to property from defaulted loans 8,902 32,434
Loans originated to finance sales of property from defaulted loans 4,900 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
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) No taxes paid in three months ended 1993 or 1992.
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
1993 1993 1992 1992 1992
- ------------------------------------------------------------------------------------------------------------------------------------
Second First Fourth Third Second
TABLE 1 SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Quarter Quarter Quarter Quarter Quarter
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS (IN THOUSANDS)
Interest income $177,591 $171,142 $187,187 $190,379 $199,971
Interest expense 73,682 78,678 84,274 89,385 99,258
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income 103,909 92,464 102,913 100,994 100,713
Provision for possible credit losses 12,494 12,506 15,317 18,571 18,418
Non-interest income 55,674 51,427 66,826 52,859 51,462
Non-interest expense 138,187 176,183 141,210 122,651 112,291
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income tax expense 8,902 (44,798) 13,212 12,631 21,466
Income tax provision (benefit) (1) 1,322 1,078 2,247
- ------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) (1) $ 8,902 $(44,798) $ 11,890 $ 11,553 $ 19,219
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE
Net income (loss) - primary and fully diluted (1) $ 0.58 $(3.00) $ 0.78 $ 0.76 $ 1.28
Cash dividends declared $ 0.50 $ 0.50 $ 0.50 $ 0.50 $ 0.50
Book value end-of-period (1) $50.19 $50.11 $53.65 $53.51 $53.15
Market value end-of-period $56.50 $60.00 $51.25 $44.00 $46.25
Closing market value: high $61.63 $64.25 $52.25 $50.38 $51.00
Closing market value: low $52.00 $50.00 $44.00 $43.50 $44.00
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SELECTED PERIOD-END BALANCES (IN MILLIONS)
Total assets $10,517 $ 10,442 $ 10,663 $ 10,705 $ 10,656
Earning assets 9,388 9,291 9,540 9,507 9,633
Total loans and lease financing, net of unearned income 6,929 6,534 6,731 6,788 6,620
Non-performing assets 293 296 306 316 326
Deposits 8,613 8,582 8,975 8,699 8,639
Long-term debt 81 82 83 83 93
Shareholders' equity (1) 759 757 806 798 790
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SELECTED AVERAGE BALANCES (IN MILLIONS)
Total assets $10,372 $ 10,184 $ 10,658 $ 10,471 $ 10,808
Earning assets 9,255 9,117 9,529 9,405 9,768
Total loans and lease financing, net of unearned income 6,742 6,477 6,737 6,560 6,786
Deposits 8,718 8,550 8,867 8,687 8,852
Long-term debt 82 82 83 88 94
Shareholders' equity (1) 766 810 806 801 784
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SELECTED FINANCIAL RATIOS
Return on average shareholders' equity (1) 4.65% (22.13)% 5.90% 5.77% 9.80%
Return on average total assets (1) 0.34 (1.76) 0.45 0.44 0.71
Average equity to average total assets (1) 7.38 7.95 7.56 7.65 7.25
Allowance to period-end loans 2.68 2.79 2.61 2.56 2.50
Non-performing assets to total loans (net of unearned
income) plus property from defaulted loans 4.15 4.44 4.44 4.54 4.82
Net interest spread 3.95 3.67 3.92 3.87 3.73
Net interest margin 4.74 4.38 4.67 4.62 4.49
Equity to asset ratio (period end) (1) 7.22 7.25 7.56 7.45 7.41
Leverage ratio 6.90 7.13 7.25 7.27 7.02
Tier 1 risk based capital ratio 8.79 9.13 9.70 9.54 9.80
Total risk based capital ratio 10.99 11.36 11.93 11.76 12.08
Dividend payout ratio (1) 86.21 N/M 64.10 65.79 39.06
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Previously reported amounts for the second quarter, 1992 have been restated
for the effects of a change in accounting principle.
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 second quarter 1993 were $8.9 million, or $0.58 per share,
compared to $19.2 million, or $1.28 per share, in last year's second quarter.
For the six months ended June 30, 1993 the Corporation reported a loss of $35.9
million, or $2.39 per share. Net income for the same period last year,
excluding a $6.3 million effect of an accounting change, was $36.4 million, or
$2.42 per share.
Earnings continue to be pressured by unprecedented mortgage refinancing
activity and the resulting accelerated prepayments in the Corporation's
mortgage servicing portfolio. The Corporation continues to aggressively
address the effect of these prepayment trends through accelerated amortization
of its PMSR and ESF assets. PMSR amortization in the second quarter 1993 was
$21.7 million, $14.8 million greater than last year's second quarter. ESF
amortization expense was $4.3 million, $2.2 million greater than last year.
For the six months end June 30, 1993 PMSR and ESF amortization increased $67.5
million and $9.3 million over the same period in 1992.
During the second quarter, the Corporation recognized a $4.6 million one-time
write-down of the assets of its Dallas, Texas software subsidiary, BancA, due
to a longer than expected sales cycle for bank software products.
Other than in the mortgage banking business, various performance indicators in
the Corporation's core businesses improved over last year's second quarter.
The Net Interest Margin improved 25 basis points in the second quarter of 1993
over the same period last year. The provision for possible credit losses
decreased due to continued improvements in credit quality. Net charge-offs,
Non-performing Assets and Watch Credits decreased from last year's levels. The
allowance for possible credit losses as a percentage of Non-performing Loans
and the allowance as a percentage of loans increased. The allowance as a
percentage of Non-performing Loans of 114% at June 30, 1993, dropped from 122%
at March 31, 1993, due to an increase in Non-performing Loans. However, total
Non-performing Assets of $292 million at June 30, 1993, were slightly lower
than the March 31, 1993, level of $296 million.
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
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.
21a
<PAGE> 14
<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 2 SUMMARY OF CONSOLIDATED NET INTEREST INCOME (FULLY TAXABLE EQUIVALENT)
(UNAUDITED)
THREE MONTHS ENDED JUNE 30, 1993 MARCH 31, 1993 DECEMBER 31, 1992
- ------------------------------------------------------------------------------------------------------------------------------------
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 $ 1,343,584 $ 23,373 6.98% $ 1,226,335 $ 22,041 7.29% $ 1,528,074 $ 28,081 7.31%
Investment securities-tax-exempt 40,447 868 8.61% 41,833 919 8.91% 43,286 995 9.14%
Investments available for sale 3,088 92 11.95% 89,703 1,816 8.21% 33,281 690 8.25%
Trading securities 136,627 1,628 4.78% 147,484 1,942 5.34% 123,856 1,571 5.05%
- ------------------------------------------------------------------------------------------------------------------------------------
Total securities 1,523,746 25,961 6.83% 1,505,355 26,718 7.20% 1,728,497 31,337 7.21%
Federal funds sold and resale agreements 367,004 2,707 2.96% 541,073 4,089 3.06% 395,632 3,030 3.05%
Interest-bearing deposits with banks 152,005 1,220 3.22% 116,390 974 3.39% 37,275 337 3.60%
Money market funds 7,817 50 2.57% 7,397 44 2.41% 6,093 43 2.81%
Loans and lease financing 6,742,123 142,701 8.49% 6,474,169 134,135 8.40% 6,669,862 143,946 8.59%
Covered assets and FDIC assistance 0 0 0.00% 2,540 0 0.00% 66,823 2,785 16.58%
Note receivable-FDIC 462,535 8,778 7.61% 469,748 9,302 8.03% 624,828 12,703 8.09%
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 9,255,230 181,417 7.86% 9,116,672 175,262 7.80% 9,529,010 194,181 8.11%
Allowance for possible credit losses (184,655) (179,584) (179,872)
Cash and due from banks 543,738 493,074 517,150
Other assets 758,048 753,535 791,622
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $10,372,361 $10,183,697 $10,657,910
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Money market accounts 2,110,664 $ 14,807 2.81% 2,109,653 $ 15,713 3.02% $ 2,116,024 $ 16,534 3.11%
Savings deposits 1,099,960 7,517 2.74% 1,024,817 7,215 2.86% 995,921 7,171 2.86%
Time deposits < $100,000 2,827,961 35,982 5.10% 2,936,855 38,477 5.31% 3,022,163 40,968 5.39%
Time deposits > $100,000 780,401 8,088 4.16% 903,338 9,438 4.24% 955,474 10,690 4.45%
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 6,818,986 66,394 3.91% 6,974,663 70,843 4.12% 7,089,582 75,363 4.23%
Federal funds purchased &
repurchase agreements 333,313 2,592 3.12% 242,503 1,853 3.10% 331,714 2,597 3.11%
Dollar repurchase agreements 29,117 310 4.27% 128,055 1,451 4.60% 177,084 1,593 3.58%
Other short-term borrowings 116,182 1,006 3.47% 128,623 1,077 3.40% 121,200 1,056 3.47%
Subordinated notes 58,682 1,222 8.35% 59,067 1,228 8.43% 59,228 1,233 8.28%
Long-term debt 18,187 273 6.02% 18,187 270 6.02% 18,187 276 6.04%
Capital lease obligations 4,931 134 10.90% 5,107 138 10.96% 5,322 142 10.61%
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 7,379,398 71,931 3.91% 7,556,205 76,860 4.13% 7,802,317 82,260 4.19%
Demand deposits 1,899,393 1,575,036 1,777,449
Other liabilities 328,004 242,598 272,441
- ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 9,606,795 9,373,839 9,852,207
Shareholders' equity 765,566 809,858 805,703
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $10,372,361 $10,183,697 $10,657,910
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income (fully taxable
equivalent basis) $109,486 $ 98,402 $111,921
Tax equivalent adjustment 5,578 5,938 9,005
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income $103,908 $ 92,464 $102,916
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest rate spread 3.95% 3.67% 3.92%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest margin 4.74% 4.38% 4.67%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Certain prior period amounts have been reclassified to conform to current
period presentation.
27
<PAGE> 15
<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 3 CHANGE IN NET INTEREST INCOME (FULLY TAXABLE EQUIVALENT)
Change in Change in Change in
Quarter-to-Date Average Balance Interest Average Rate
6/30/93 vs 6/30/93 vs 6/30/93 vs
(IN THOUSANDS) 3/31/93 3/31/93 3/31/93
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment securities-taxable $ 117,249 $ 1,332 -0.31%
Investment securities-tax-exempt (1,386) (51) -0.30%
Investments available for sale (86,615) (1,724) 3.74%
Trading securities (10,857) (314) -0.56%
- -----------------------------------------------------------------------------------------------------------------------
Total securities $ 18,391 $ (757) -0.37%
Federal funds sold and resale agreements $(174,069) $(1,382) -0.10%
Interest-bearing deposits with banks 35,615 246 -0.17%
Money market funds 420 6 0.16%
Loans and lease financing 267,954 8,566 0.09%
Covered assets and FDIC assistance (2,540) 0 0.00%
Note receivable-FDIC (7,213) (524) -0.42%
- -----------------------------------------------------------------------------------------------------------------------
Total interest-earning assets $ 138,558 $ 6,155 0.06%
Allowance for possible credit losses $ (5,071)
Cash and due from banks 50,664
Other assets 4,513
- -----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 188,664
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES
Money market accounts $ 1,011 $ (906) -0.21%
Savings deposits 75,143 302 -0.12%
Time deposits < $100,000 (108,894) (2,495) -0.21%
Time deposits > $100,000 (122,937) (1,350) -0.08%
- -----------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits $(155,677) $(4,449) -0.21%
Federal funds purchased & repurchase agreements $ 90,810 $ 739 0.02%
Dollar repurchase agreements (98,938) (1,141) -0.33%
Other short-term borrowings (12,441) (71) 0.07%
Subordinated notes (385) (6) -0.08%
Long-term debt 0 3 0.00%
Capital lease obligations (176) (4) -0.06%
- -----------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities $(176,807) $(4,929) -0.22%
Demand deposits $ 324,357
Other liabilities 85,406
- -----------------------------------------------------------------------------------------------------------------------
Total Liabilities $ 232,956
Shareholders' equity $ (44,292)
- -----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 188,664
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Net interest income (fully taxable equivalent basis) $11,084
Tax equivalent adjustment (360)
- -----------------------------------------------------------------------------------------------------------------------
Net interest income $11,444
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Net interest rate spread 0.28%
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Net interest margin 0.36%
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Certain prior period amounts have been reclassified to conform to current
period presentation.
29
<PAGE> 16
<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 3 CHANGE IN NET INTEREST INCOME (FULLY TAXABLE EQUIVALENT)
Change in Change in Change in
Quarter-to-Date Average Balance Interest Average Rate
6/30/93 vs 6/30/93 vs 6/30/93 vs
(in thousands) 6/30/92 6/30/92 6/30/92
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment securities-taxable $(206,708) $ (8,645) -1.33%
Investment securities-tax-exempt (5,309) (91) 0.18%
Investments available for sale 3,088 92 11.95%
Trading securities (34,378) (747) -0.81%
- -----------------------------------------------------------------------------------------------------------------------
Total securities $(243,307) $ (9,391) -1.22%
Federal funds sold and resale agreements $ (34,149) $ (1,099) -0.86%
Interest-bearing deposits with banks (27,977) (874) -1.46%
Money market funds (1,526) (30) -0.87%
Loans and lease financing 230,485 (2,698) -0.49%
Covered assets and FDIC assistance (274,056) (5,189) -7.62%
Note receivable-FDIC (162,293) (5,731) -1.73%
- -----------------------------------------------------------------------------------------------------------------------
Total interest-earning assets $(512,823) $(25,012) -0.64%
Allowance for possible credit losses $ (18,416)
Cash and due from banks 77,390
Other assets 18,347
- -----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $(435,502)
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES
Money market accounts $ 65,173 $ (4,269) -0.94%
Savings deposits 128,532 (464) -0.56%
Time deposits < $100,000 (343,262) (10,880) -0.84%
Time deposits > $100,000 (314,092) (5,603) -0.87%
- -----------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits $(463,649) $(21,216) -0.93%
Federal funds purchased & repurchase agreements $ 54,004 $ (53) -0.69%
Dollar repurchase agreements (413,543) (3,890) 0.45%
Other short-term borrowings (3,997) (263) -0.78%
Subordinated notes (1,021) (19) -0.01%
Long-term debt (10,761) (109) 0.71%
Capital lease obligations (635) (17) -0.01%
- -----------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities $(839,602) $(25,567) -0.86%
Demand deposits $ 330,058
Other liabilities 92,528
- -----------------------------------------------------------------------------------------------------------------------
Total Liabilities $(417,016)
Shareholders' equity $ (18,486)
- -----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $(435,502)
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Net interest income (fully taxable equivalent basis) $ 555
Tax equivalent adjustment (2,640)
- -----------------------------------------------------------------------------------------------------------------------
Net interest income $ 3,195
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Net interest rate spread 0.22%
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Net interest margin 0.25%
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Certain prior period amounts have been reclassified to conform to current
period presentation.
30
<PAGE> 17
<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 5 SUMMARY OF CONSOLIDATED NET INTEREST INCOME (FULLY TAXABLE EQUIVALENT)
SIX MONTHS ENDED JUNE 30, 1993 JUNE 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 $ 1,285,284 $ 45,413 7.13% $ 1,537,829 $ 64,567 8.44%
Investment securities-tax-exempt 41,136 1,787 8.76% 46,976 2,055 8.80%
Investments available for sale 46,156 1,908 8.34% 0 0 0.00%
Trading securities 142,025 3,569 5.07% 152,528 4,012 5.29%
- ---------------------------------------------------------------------------------------------------------------------------------
Total securities $ 1,514,601 $ 52,677 7.01% $ 1,737,333 $ 70,634 8.18%
Federal funds sold and resale agreements $ 453,558 $ 6,796 3.02% $ 398,847 $ 7,727 3.90%
Interest-bearing deposits with banks 134,296 2,194 3.29% 137,176 3,285 4.82%
Money market funds 7,608 94 2.49% 7,583 139 3.69%
Loans and lease financing 6,608,038 276,838 8.45% 6,422,095 290,279 9.09%
Covered assets and FDIC assistance 1,262 0 0.00% 328,775 13,037 7.97%
Note receivable-FDIC 466,122 18,081 7.82% 625,408 30,287 9.74%
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets $ 9,185,485 $356,680 7.83% $ 9,657,217 $415,388 8.65%
Allowance for possible credit losses $ (182,135) $ (163,768)
Cash and due from banks 518,546 468,957
Other assets 756,717 744,840
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $10,278,613 $10,707,246
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Money market accounts $ 2,110,150 $ 30,519 2.92% $ 2,023,683 $ 38,519 3.83%
Savings deposits 1,062,613 14,732 2.80% 964,020 16,957 3.54%
Time deposits < $100,000 2,882,090 74,460 5.21% 3,120,426 95,308 6.14%
Time deposits > $100,000 841,547 17,525 4.20% 1,150,786 29,624 5.18%
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits $ 6,896,400 $137,236 4.01% $ 7,258,915 $180,408 5.00%
Federal funds purchased & repurchase agreements $ 288,159 $ 4,446 3.11% $ 286,690 $ 5,564 3.90%
Dollar repurchase agreements 78,313 1,761 4.53% 403,450 8,323 4.15%
Other short-term borrowings 122,368 2,082 3.43% 139,094 3,049 4.41%
Subordinated notes 58,874 2,451 8.40% 59,697 2,481 8.36%
Long-term debt 18,187 543 6.02% 27,287 780 5.75%
Capital lease obligations 5,018 271 10.89% 5,627 304 10.86%
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities $ 7,467,319 $148,790 4.02% $ 8,180,760 $200,909 4.94%
Demand deposits $ 1,738,167 $ 1,505,526
Other liabilities 285,472 242,239
- ---------------------------------------------------------------------------------------------------------------------------------
Total Liabilities $ 9,490,958 $ 9,928,525
Shareholders' equity 787,655 778,721
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $10,278,613 $10,707,246
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Net interest income (fully taxable
equivalent basis) $207,890 $214,479
Tax equivalent adjustment 11,516 17,275
- ---------------------------------------------------------------------------------------------------------------------------------
Net interest income $196,374 $197,204
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Net interest rate spread 3.81% 3.71%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Net interest margin 4.56% 4.47%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Certain prior period amounts have been reclassified to conform to current
period presentation.
33
<PAGE> 18
<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 6 CHANGE IN NET INTEREST INCOME (FULLY TAXABLE EQUIVALENT)
Change in Change in Change in
Year-to-Date Average Balance Interest Average Rate
6/30/93 vs 6/30/93 vs 6/30/93 vs
(IN THOUSANDS) 6/30/92 6/30/92 6/30/92
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment securities-taxable $(252,545) $(19,154) -1.32%
Investment securities-tax-exempt (5,840) (268) -0.04%
Investments available for sale 46,156 1,908 8.34%
Trading securities (10,503) (443) -0.22%
- ---------------------------------------------------------------------------------------------------------------------
Total securities $(222,732) $(17,957) -1.16%
Federal funds sold and resale agreements $ 54,711 ($931) -0.87%
Interest-bearing deposits with banks (2,880) (1,091) -1.52%
Money market funds 25 (45) -1.19%
Loans and lease financing 185,943 (13,441) -0.64%
Covered assets and FDIC assistance (327,513) (13,037) -7.97%
Note receivable-FDIC (159,286) (12,206) -1.92%
- ---------------------------------------------------------------------------------------------------------------------
Total interest-earning assets $(471,732) $(58,708) -0.82%
Allowance for possible credit losses $ (18,367)
Cash and due from banks 49,589
Other assets 11,877
- ---------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $(428,633)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
LIABILITIES
Money market accounts $ 86,467 $ (8,000) -0.91%
Savings deposits 98,593 (2,225) -0.74%
Time deposits < $100,000 (238,336) (20,848) -0.93%
Time deposits > $100,000 (309,239) (12,099) -0.98%
- ---------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits $(362,515) $(43,172) -0.99%
Federal funds purchased & repurchase agreements $ 1,469 $ (1,118) -0.79%
Dollar repurchase agreements (325,137) (6,562) 0.39%
Other short-term borrowings (16,726) (967) -0.98%
Subordinated notes (823) (30) 0.04%
Long-term debt (9,100) (237) 0.27%
Capital lease obligations (609) (33) 0.03%
- ---------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities $(713,441) $(52,119) -0.92%
Demand deposits $ 232,641
Other liabilities 43,233
- ---------------------------------------------------------------------------------------------------------------------
Total Liabilities $(437,567)
Shareholders' equity 8,934
- ---------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $(428,633)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Net interest income (fully taxable equivalent basis) $ (6,589)
Tax equivalent adjustment (5,759)
- ---------------------------------------------------------------------------------------------------------------------
Net interest income $ (830)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Net interest rate spread 0.10%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Net interest margin 0.09%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</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 EXPENSES
Non-interest income for the second quarter and first six months of 1993
increased $4.2 million and $2.0 million, respectively over the same periods in
1992. Non-interest expenses for the second quarter and first six months of
1993 increased $25.9 million and $89.5 million over the same periods in 1992.
Activity at the Corporation's mortgage banking subsidiary was a significant
contributor to these results. In addition, during the second quarter, the
Corporation recognized a $4.6 million one-time write-down of the assets of the
Corporation's Dallas, Texas software subsidiary, BancA, due to a longer than
expected sales cycle for bank software products.
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.
The recognition of these increasing prepayment trends resulted in increases in
PMSR and ESF amortization expense for the both the second quarter and first six
months of 1993.
The extraordinary high volume of refinancing activity at IOMC has also resulted
in increases in a variety of other indirect origination and servicing related
administrative expenses.
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.
43
<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
The June 30, 1993, carrying value of the PMSR assets associated with these
servicing rights to be sold was approximately $19 million, which will continue
to be amortized to operating expense until the sale is recognized, for
accounting purposes, in the fourth quarter. In addition, the Corporation will
continue to accrue normal servicing income on these servicing rights until the
sale is recognized, at an estimated monthly rate of $0.9 million.
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 six 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.
44
<PAGE> 21
<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 11 NON-INTEREST INCOME (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------------
Three Months Ended (in thousands) 6/30/93 3/31/93 12/31/92 9/30/92 6/30/92
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Service charges on deposit accounts $15,362 $13,888 $13,494 $13,558 $12,892
Merchant card processing fees 4,319 3,465 4,363 4,147 3,555
Mortgage Servicing Fees 16,656 16,512 17,051 16,653 16,381
Amortization of capitalized excess service fees (4,266) (8,200) (2,378) (3,964) (2,112)
Loan service charges 1,955 3,352 2,226 2,618 1,738
- ---------------------------------------------------------------------------------------------------------------------------
Service charges 34,026 29,017 34,756 33,012 32,454
Trust and investment services income 4,837 5,143 4,514 4,164 4,303
Gains (losses) from sale of mortgage servicing rights 53 2,289 73 3,449
Investment securities gains, net 7,754 (170) (250)
Investments available for sale gains 160 5,968
Other Income:
Trading profits 818 950 936 1,486 3,472
Mortgage banking gains (losses) 4,681 998 6,516 4,193 (1,652)
Other 11,099 9,351 10,061 10,101 9,686
- ---------------------------------------------------------------------------------------------------------------------------
Other income 16,598 11,299 17,513 15,780 11,506
- ---------------------------------------------------------------------------------------------------------------------------
Total Non-Interest Income $55,674 $51,427 $66,826 $52,859 $51,462
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Certain prior period amounts were reclassified to conform to current
period presentation.
- -------------------------------------------------------------------------------
Table 11a. NON-INTEREST INCOME-NEW BUSINESSES (BancA Corporation,
acquired 7/29/92 and Peoples National Bank - Pasadena Peoples Bank - Houston,
Community National Bank of Houston, acquired 4/1/93. (UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Three Months Ended (in thousands) 6/30/93 3/31/93 12/31/92 9/30/92 6/30/92
- ---------------------------------------------------------------------------------------------------------------------------
Service charges on deposit accounts $416
Merchant card processing fees
Loan service charges 41
- ---------------------------------------------------------------------------------------------------------------------------
Service charges 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 416 $308 $665 $74
- ---------------------------------------------------------------------------------------------------------------------------
Other Income 416 308 665 74
- ---------------------------------------------------------------------------------------------------------------------------
Total Non-Interest Income $873 $308 $665 $74
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE> 22
<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 12 NON-INTEREST EXPENSE (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------------
Three Months Ended (in thousands) 6/30/93 3/31/93 12/31/92 9/30/92 6/30/92
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Salaries and wages $ 44,586 $ 44,560 $ 40,356 $ 43,788 $ 42,163
Other employee benefits 13,257 12,990 10,301 11,170 11,466
Net occupancy 7,529 7,337 6,273 7,632 7,542
Equipment 10,600 10,714 10,157 9,147 9,827
Outside services 8,052 7,735 7,819 7,698 6,255
Defaulted loan expense, net 2,819 3,480 10,073 4,997 2,863
Amortization of purchased mortgage servicing rights 21,654 59,340 25,207 14,293 6,877
Other Expenses:
FDIC Insurance 5,526 5,474 5,003 4,957 4,886
Assets held for sale, net (income)loss (92) (129) 6 (387) (1)
Communications 2,322 2,441 2,389 2,365 2,367
Stationery and supplies 2,382 2,466 2,393 2,201 2,291
Advertising 2,060 1,906 939 850 1,093
Michigan single business tax 2,062 2,209 319 1,820 1,649
Postage 1,589 1,631 1,433 1,378 1,491
Amortization of goodwill 300 223 265 203 200
Uncollected interest on early payoffs of loans serviced 2,827 1,901 3,015 1,439 1,920
Provision for foreclosure costs on loans serviced 837 1,985 4,606 2,192 2,097
Other 9,877 9,920 10,656 6,908 7,305
- ---------------------------------------------------------------------------------------------------------------------------
Other expenses 29,690 30,027 31,024 23,926 25,298
- ---------------------------------------------------------------------------------------------------------------------------
Total non-interest expense $138,187 $176,183 $141,210 $122,651 $112,291
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Net overhead ratio (1) 3.57% 5.47% 3.12% 2.97% 2.49%
Efficiency ratio (2) 83.67% 117.59% 79.00% 75.72% 70.01%
- ---------------------------------------------------------------------------------------------------------------------------
</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 (BancA Corporation, acquired 7/29/92 and Peoples National Bank - Pasadena
Peoples Bank - Houston, Community National Bank of Houston, acquired 4/1/93. (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------------
Three Months Ended (in thousands) 6/30/93 3/31/93 12/31/92 9/30/92 6/30/92
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Salaries and wages $1,447 $484 $376 $278
Other employee benefits 195 97 31 38
Net occupancy 311 26 45 21
Equipment 94 34 35 20
Outside services 328 51 141 54
Defaulted loan expense, net 22
Amortization of purchased mortgage servicing rights
Other Expenses:
FDIC Insurance 52
Assets held for sale, net (income)loss
Communications 21 11 8 8
Stationery and supplies 22 7 7 2
Advertising 21 30 6 2
Michigan single business tax
Postage 21 2 1
Amortization of goodwill 76
Uncollected interest on early payoffs of loans serviced
Provision for foreclosure costs on loans serviced
Other 3,614 10 (167) 33
- ---------------------------------------------------------------------------------------------------------------------------
Other expenses 3,827 60 (146) 46
- ---------------------------------------------------------------------------------------------------------------------------
Total non-interest expense $6,224 $752 $482 $457
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE> 23
<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 13 NON-INTEREST INCOME (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED (IN THOUSANDS) 6/30/93 6/30/92
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Service charges on deposit accounts $ 29,250 $ 25,550
Merchant card processing fees 7,784 6,677
Mortgage servicing fees 33,168 32,632
Amortization of capitalized excess service fees (12,466) (3,143)
Loan service charges 5,307 3,416
- --------------------------------------------------------------------------------------------------------------------
Service charges 63,043 65,132
Trust and investment services income 9,980 9,199
Gains (losses) from sale of mortgage servicing rights 53 3,437
Investment securities gains, net 1,665
Investments available for sale gains 6,128
Other income:
Trading profits 1,768 5,285
Mortgage banking gains (losses) 5,679 767
Other 20,450 19,623
- --------------------------------------------------------------------------------------------------------------------
Other income 27,897 25,675
- --------------------------------------------------------------------------------------------------------------------
Total non-interest income $107,101 $105,108
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</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; and Peoples National
Bank-Pasadena, Peoples Bank-Houston, Community National Bank of Houston, acquired 4/1/93. (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED (IN THOUSANDS) 6/30/93
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
Service charges on deposit accounts $ 416
Merchant card processing fees
Mortgage servicing fees
Loan service charges 404
- --------------------------------------------------------------------------------------------------------------------
Service charges 820
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 725
- --------------------------------------------------------------------------------------------------------------------
Other income 725
- --------------------------------------------------------------------------------------------------------------------
Total non-interest income $1,545
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE> 24
<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 14 NON-INTEREST EXPENSE (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED (IN THOUSANDS) 6/30/93 6/30/92
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Salaries and wages $ 89,146 $ 81,403
Other employee benefits 26,247 23,399
Net occupancy 14,866 15,218
Equipment 21,314 18,992
Outside services 15,787 13,190
Defaulted loan expense, net 6,300 7,159
Amortization of purchased mortgage servicing rights 80,994 13,500
Other Expenses:
FDIC Insurance 11,000 9,772
Assets held for sale, net (income) expense (221) (1)
Communications 4,763 4,845
Stationery and supplies 4,848 4,496
Advertising 3,966 2,332
Michigan single business tax 4,271 3,156
Postage 3,220 3,087
Amortization of goodwill 523 405
Uncollected interest on early payoffs of loans serviced 4,728 3,090
Provision for foreclosure costs on loans serviced 2,822 5,855
Other 19,797 15,017
- --------------------------------------------------------------------------------------------------------------------
Other expenses 59,717 52,054
- --------------------------------------------------------------------------------------------------------------------
Total non-interest expense $314,371 $224,915
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Net overhead ratio (1) 4.51% 2.48%
Efficiency ratio (2) 99.80% 70.38%
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</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; and Peoples National
Bank-Pasadena, Peoples Bank-Houston, Community National Bank of Houston, acquired 4/1/93. (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED (IN THOUSANDS) 6/30/93
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
Salaries and wages $2,567
Other employee benefits 471
Net occupancy 418
Equipment 202
Outside services 564
Defaulted loan expense, net 22
Amortization of purchased mortgage servicing rights
Other Expenses:
FDIC Insurance 52
Assets held for sale, net (income) expense
Communications 54
Stationery and supplies 58
Advertising 52
Michigan single business tax
Postage 25
Amortization of goodwill 97
Uncollected interest on early payoffs of loans serviced
Provision for foreclosure costs on loans serviced
Other 3,751
- --------------------------------------------------------------------------------------------------------------------
Other expenses 4,089
- --------------------------------------------------------------------------------------------------------------------
Total non-interest expense $8,333
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
48
<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 June 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 $ 73,263 $ 65,427 $ 5,886 $ 7,305 $ 6,362 $ 4,956
Non-interest income 32,016 29,931 22,053 15,584 711 323
Gains from sale of mortgage servicing rights 53 3,449
Amortization of capitalized excess service fees (4,266) (2,112)
Amortization of purchased mortgage servicing rights (21,654) (6,877)
Other non-interest expense (79,599) (77,317) (19,378) (19,043) (4,744) (3,717)
-------- -------- -------- -------- -------- --------
Income before taxes $ 25,680 $ 18,041 $(17,306) $ (1,694) $ 2,329 $ 1,562
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
At June 30
Total assets $9,052,354 $9,160,337 $1,276,089 $1,130,156 $981,129 $1,103,105
Total Liabilities $8,431,762 $8,525,329 $1,254,002 $1,092,116 $854,705 $ 985,544
Total Equity $ 620,592 $ 635,008 $ 22,087 $ 38,040 $126,424 $ 117,561
Mortgage Servicing Portfolio (2):
Originated Servicing $ 3,908 $ 2,945
Purchased Servicing $ 7,317 $11,515
-------- --------
Total $11,225 $14,460
-------- --------
-------- --------
</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 June 30, 1993, excludes the loans associated with this
transaction.
Certain prior period amounts have been reclassified to conform to current
period presentation.
49
<PAGE> 26
<TABLE>
<CAPTION>
Michigan National Corporation and Subsidiaries
This is a revised schedule. Revised per
Form 10Q-A dated January 10, 1993
MANAGEMENT'S DISCUSSION AND ANALYSIS
- -----------------------------------------------------------------------------------------------------------------------------------
TABLE 15 BUSINESS REVIEW (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
Texas Bank Holding Company and Consolidated
Subsidiaries other operations (1) MNC
Three Months Ended June 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 $ 6,064 $ 4,535 $ (160) $ 72 $ 91,415 $ 82,295
Non-interest income 1,560 949 3,547 3,338 59,887 50,125
Gains from sale of mortgage servicing rights 53 3,449
Amortization of capitalized excess service fees (4,266) (2,112)
Amortization of purchased mortgage servicing rights (21,654) (6,877)
Other non-interest expense (4,899) (3,402) (7,913) (1,935) (116,533) (105,414)
-------- -------- -------- -------- -------- --------
Income before taxes $ 2,725 $ 2,082 $ (4,526) $ 1,475 $ 8,902 $ 21,466
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
At March 31
Total assets $599,423 $478,752 $(1,391,834) $(1,216,123) $10,517,161 $10,656,227
Total Liabilities $553,612 $443,894 $(1,335,768) $(1,181,026) $ 9,758,313 $ 9,865,857
Total Equity $ 45,811 $ 34,858 $ (56,066) $ (35,097) $ 758,848 $ 790,370
</TABLE>
(1) Amounts include intercompany eliminations
Certain prior period amounts have been reclassified to conform to current
period presentation.
50
<PAGE> 27
<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 (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------------------
MNB
(excluding IOMC) IOMC IOBOC
Six Months Ended June 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 $ 139,535 $ 130,455 $ 9,475 $ 10,583 $12,148 $10,544
Non-interest income 68,250 60,863 40,125 34,964 1,268 433
Gains from sale of mortgage servicing rights 53 3,437
Amortization of capitalized excess service fees (12,466) (3,143)
Amortization of purchased mortgage servicing rights (80,994) (13,500)
Other non-interest expense (159,257) (156,186) (40,769) (35,722) (9,238) (6,867)
-------- -------- -------- -------- -------- --------
Income before taxes $ 48,528 $ 35,132 $(84,576) $ (3,381) $ 4,178 $ 4,110
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
</TABLE>
51
<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
Six Months Ended June 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 $10,485 $8,800 $ (269) $ 40 $ 171,374 $160,422
Non-interest income 3,529 1,916 6,342 6,638 119,514 104,814
Gains from sale of mortgage servicing rights 53 3,437
Amortization of capitalized excess service fees (12,466) (3,143)
Amortization of purchased mortgage servicing rights (80,994) (13,500)
Other non-interest expense (8,643) (6,743) (15,470) (5,897) (233,377) (211,415)
-------- -------- -------- -------- -------- --------
Income before taxes $ 5,371 $3,973 $ (9,397) $ 781 $ (35,896) $ 40,615
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
</TABLE>
(1) Amounts include intercompany eliminations.
52
<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) 6/30/93 3/31/93 12/31/92 9/30/92 6/30/92
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Tier 1:
Common shareholders' equity $ 733,564 $ 731,879 $ 779,819 $ 771,853 $ 767,350
Convertible preferred stock 0 6,000 6,000 6,000 6,000
Intangible assets (14,702) (10,550) (10,936) (11,366) (11,715)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Tier 1 capital $ 718,862 $ 727,329 $ 774,883 $ 766,487 $ 761,635
- ----------------------------------------------------------------------------------------------------------------------------------
Tier 2:
Allowance for possible credit losses (1) $ 103,208 $ 100,584 $ 100,768 $ 101,476 $ 98,578
Equity commitment note 18,012 18,012 18,012 18,012 20,812
Equity contract note 58,184 58,504 58,735 58,722 58,710
Qualified subordinated debt 0 0 100
- ----------------------------------------------------------------------------------------------------------------------------------
Total Tier 2 capital $ 179,404 $ 177,100 $ 177,515 $ 178,210 $ 178,200
- ----------------------------------------------------------------------------------------------------------------------------------
Total qualifying capital $ 898,266 $ 904,429 $ 952,398 $ 944,697 $ 939,835
- ----------------------------------------------------------------------------------------------------------------------------------
Risk-weighted assets 7,540,523 7,320,372 7,380,392 7,427,746 $7,221,540
Risk-weighted off-balance sheet exposure 730,814 736,930 691,957 690,305 664,706
- ----------------------------------------------------------------------------------------------------------------------------------
Less: disallowance for loan loss & intangibles 97,333 92,532 86,057 83,705 79,128
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Total risk-weighted assets and off-balance sheet exposure $8,174,004 $7,964,770 $7,986,292 $8,034,346 $7,807,118
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Tier 1 capital ratio 8.79% 9.13% 9.70% 9.54% 9.76%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Total capital ratio 10.99% 11.36% 11.93% 11.76% 12.04%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Leverage ratio 6.90% 7.13% 7.25% 7.27% 7.02%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The allowance for possible credit losses is limited to 1.25% of the total
risk-weighted assets and off-balance sheet exposure.
54
<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) 6/30/93 3/31/93 12/31/92 9/30/92 6/30/92
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Parent Company:
Subsidiaries' retained earnings available for dividends (1) $31,426 $40,817 $51,315 $50,096 $44,906
Subsidiary Companies:
Core deposits as a percent of total assets 75.78% 73.56% 75.03% 72.95% 72.43%
Short-term borrowings as a percent of total assets 6.28% 5.09% 4.97% 6.65% 8.14%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</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.
55
<PAGE> 31
<TABLE>
<CAPTION>
MICHIGAN NATIONAL CORPORATION This is a revised schedule. Revised per
AND SUBSIDIARIES form 10Q-A dated January 10, 1994
PART 1 EXHIBIT
EXHIBIT (11) COMPUTATION OF EARNINGS PER COMMON SHARE (UNAUDITED)
- -------------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
- -------------------------------------------------------------------------------------
1993 1992 1993 1992
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(in thousands, except per share)
PRIMARY
Net Income $ 8,902 $19,219 $(35,896) $42,628
-------------------------------------------
Average common shares outstanding 15,093 14,697 15,018 14,684
Common stock equivalents 132 352 345
-------------------------------------------
AVERAGE PRIMARY SHARES OUTSTANDING 15,225 15,049 15,018 15,029
-------------------------------------------
-------------------------------------------
PRIMARY EARNINGS PER SHARE $ 0.58 $ 1.28 $ (2.39) $ 2.84
-------------------------------------------
-------------------------------------------
FULLY DILUTED
Net Income $ 8,902 $19,219 $(35,896) $42,628
-------------------------------------------
Average common shares outstanding 15,093 14,697 15,018 14,684
Common stock equivalents 137 352 352
-------------------------------------------
AVERAGE FULLY DILUTED SHARES 15,230 15,049 15,018 15,036
OUTSTANDING
-------------------------------------------
-------------------------------------------
FULLY DILUTED EARNINGS PER SHARE $0.58 $1.28 $(2.39) $2.84
-------------------------------------------
-------------------------------------------
</TABLE>
56
<PAGE> 32
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 second quarter 1993 were $8.9 million, or $0.58 per share,
compared to $19.2 million, or $1.28 per share, in last year's second quarter.
For the six months ended June 30, 1993 the Corporation reported a loss of $35.9
million, or $2.39 per share. Net income for the same period last year,
excluding a $6.3 million effect of an accounting change, was $36.4 million, or
$2.42 per share.
Earnings continue to be pressured by unprecedented mortgage refinancing
activity and the resulting accelerated prepayments in the Corporation's
mortgage servicing portfolio. The Corporation continues to aggressively
address the effect of these prepayment trends through accelerated amortization
of its PMSR and ESF assets. PMSR amortization in the second quarter 1993 was
$21.7 million, $14.8 million greater than last year's second quarter. ESF
amortization expense was $4.3 million, $2.2 million greater than last year.
For the six months end June 30, 1993 PMSR and ESF amortization increased $67.5
million and $9.3 million over the same period in 1992.
During the second quarter, the Corporation recognized a $4.6 million one-time
write-down of the assets of its Dallas, Texas software subsidiary, Banc A, due
to a longer than expected sales cycle for bank software products.
Other than in the mortgage banking business, various performance indicators in
the Corporation's core businesses improved over last year's second quarter.
The Net Interest Margin improved 25 basis points in the second quarter of 1993
over the same period last year. The provision for possible credit losses
decreased due to continued improvements in credit quality. Net charge-offs,
Non-performing Assets and Watch Credits decreased from last year's levels. The
allowance for possible credit losses as a percentage of Non-performing Loans
and the allowance as a percentage of loans increased. The allowance as a
percentage of Non-performing Loans of 114% at June 30, 1993, dropped from 122%
at March 31, 1993, due to an increase in Non-performing Loans. However, total
Non-performing Assets of $292 million at June 30, 1993, were slightly lower
than the March 31, 1993, level of $296 million.
<PAGE> 33
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 $7.7
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.
