SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarter ended March 31, 1996 Commission file number 09426
NATIONAL CITY BANCORPORATION
(Exact name of registrant as specified in its charter)
Iowa 42-0316731
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
651 Nicollet Mall
Minneapolis, Minnesota 55402-1611
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code 612-904-8500
Indicate by check mark whether the registrant (1) has filed all reports
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___
As of March 31, 1996, 6,705,196 shares of $1.25 par value common stock
of the registrant were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
(1)National City Bancorporation's Quarterly Report to Stockholders for
the quarter ended March 31, 1996, is incorporated and made a part of
Part I of Form 10-Q.
NATIONAL CITY BANCORPORATION
INDEX
Part I Financial Statements
The following data is incorporated by reference from National City
Bancorporation's Quarterly Report to Stockholders filed as Exhibit 1.
Consolidated Balance Sheets - March 31, 1996 and December 31, 1995.
Consolidated Statements of Earnings - Three months March 31, 1996 and
1995.
Consolidated Statements of Cash Flows - Three months ended March 31, 1996 and
1995 are included on page 2 of this report.
Notes to Consolidated Financial Statements are included on page 3 of this
report.
Management's Discussion and Analysis of Financial Condition and Results of
Operations is included on pages 4 and 5 of this report.
Part II. Other Information
Part II items requiring a response are included on page 6 of this report.
<TABLE>
<CAPTION>
NATIONAL CITY BANCORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three months ended
(in thousands) March 31,
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 2,839 $ 2,410
Adjustments to reconcile net earnings to net cash from
operating activities:
Depreciation and amortization 533 374
Amortization of securities premiums and discounts 128 85
Provision for loan losses 435 75
Deferred income taxes 300 101
Loss on sale of securities -- 122
(Increase) decrease in accrued income receivable (97) 209
Decrease in other assets (1,726) 2,713
Increase (decrease) in other liabilities 851 144
-------- --------
Total operating adjustments 424 3,823
-------- --------
NET CASH FROM OPERATING ACTIVITIES 3,263 6,233
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) in loans (2,660) (16,412)
Net (increase) decrease in federal funds sold 24,340 (20,625)
Available-for-sale securities:
Proceeds from maturities and principal repayments 25,734 1,952
Proceeds from sale of securities -- 7,848
Purchases of securities (32,605) (9,012)
Held-to-maturity securities:
Proceeds from maturities and principal repayments 3,313 2,262
Proceeds from sale of securities -- 45
Purchases of securities -- (14,649)
Purchase of premises and equipment (4,881) (222)
-------- --------
NET CASH (USED IN) INVESTING ACTIVITIES 13,241 (48,813)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in non-interest bearing
and savings deposits (17,542) (13,773)
Net increase in time deposits (8,262 20,843
Net increase (decrease) in federal funds purchased and
repurchase agreements (10,553) 28,826
Net increase (decrease) in commercial paper 18,720 4,843
Net increase (decrease) in other borrowed funds 1,455 (12,518)
Purchase of treasury stock (1) --
-------- --------
NET CASH FROM (USED IN) FINANCING ACTIVITIES (16,183) 28,221
Net increase (decrease) in cash and due from banks 321 (14,359)
Cash and due from banks at beginning of year 42,006 47,133
-------- --------
CASH AND DUE FROM BANKS AT END OF PERIOD $ 42,327 $ 32,774
======== ========
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for:
Interest $ 8,648 $ 6,517
Income taxes 565 1,702
Unrealized securities gains (losses) net of tax (1,134) (1,401)
</TABLE>
NATIONAL CITY BANCORPORATION
Notes to the Consolidated Financial Statements
The consolidated balance sheet as of March 31, 1996, the consolidated
statement of earnings for the three-month periods ended March 31, 1996 and 1995
and the consolidated statements of cash flows for the three-month periods then
ended have been prepared by the Company, without audit. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
cash flows at and for the periods ended March 31, 1996 and 1995, respectively,
have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these consolidated financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's December 31, 1995 annual report to
shareholders. The results of operations for the period ended March 31, 1996 are
not necessarily indicative of the operating results for the full year.
NATIONAL CITY BANCORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPERATIONS:
Net earnings for the first quarter ended March 31, 1996 were
$2,839,000, $0.42 per share compared with $2,410,000, $0.36 per share for the
same period in 1995. Net earnings for the first quarter were up $429,000 or 18
percent over the first quarter of 1995. Net interest income for the first
quarter was $9,700,000 up $1,003,000 or 12 percent over the first quarter of
1995. The change in net interest income reflects an increase in earning assets,
primarily loans and securities, partially offset by a decrease in the tax
equivalent net interest margin. The tax equivalent net interest margin for the
quarter was 5.44 percent, down from 5.73 percent for the same period last year.
Competition for middle-market loans continues to place pressure on our ability
to expand loans and maintain yields. Our lending groups emphasize our service
and relationship style of banking to increase loan volume while still
maintaining high credit standards.
Noninterest income for the first quarter was up $499,000 or 27 percent. Deposit
service charges, mortgage origination fees, fees from the sale of investment
products and trust fees were all up from 1995. Noninterest expense was up
$316,000 or 5 percent reflecting budgeted higher occupancy and relocation
expense. The Company relocated its offices from 75 South Fifth Street to 651
Nicollet Mall, in Gaviidae Common, during the first quarter of 1996. The actual
relocation expenses are at or below what was planned.
Net loan charge-offs during the first quarter were $37,000 compared
with $34,000 for the same period last year. The loan loss provision was $435,000
up from $75,000 in the first quarter of last year. The provision is based on
management's continuing evaluation of the loan portfolio, including estimates
and appraisals of collateral values, and current economic conditions. At March
31, 1996 the allowance for loan losses was $9,000,000, 1.62 percent of loans
compared to 1.56 percent at December 31, 1995. Activity regarding the reserve is
summarized below:
(in thousands)
1996 1995
--------- ---------
Balance January 1 $8,602 $7,946
Provision charged to operating expense 435 75
Less net loan charge-offs (recoveries) 37 34
========= ---------
Balance March 31 $9,000 $7,987
========= ---------
LIQUIDITY AND CAPITAL RESOURCES:
Non-accrual loans were $4.1 million, .74 percent of loans at March 31,
1996, compared with $3.7 million, .67 percent of loans at December 31, 1995. The
allowance for loan losses as a percent of nonaccrual loans was 219 percent at
March 31, 1996 compared with 231 percent at December 31, 1995.
The Company's total assets were $786.8 million at March 31, 1996, down
from $800.6 million at December 31, 1995. Federal funds sold and resale
agreements were down $24.3 million. Total securities and loans were up slightly
from December 31, 1995. Deposits were at $414.1 million at March 31, 1996 down
from $440 million at December 31, 1995. Most of the decrease was from
noninterest bearing deposits by corporations. Short-term borrowings were up $9.6
million. Federal funds purchased and repurchase agreements were down $10.6
million and commercial paper was up $18.7 million. The following table compares
the major components of assets and liabilities:
(In thousands) March 31 December 31 March 31
1996 1995 1995
------------- ------------- --------------
Loans $555,240 $552,581 $483,465
Securities 159,438 158,169 153,185
Total Assets 786,768 800,637 706,555
Deposits 414,130 439,985 374,798
Short-term borrowings 206,830 197,208 177,217
Long-term debt 48,120 48,120 53,120
Total Liabilities 679,030 694,603 611,549
Stockholders' equity was $107.7 milion or 13.7 percent of total assets
at March 31, 1996. The Company continues to maintain a capital position that
exceeds regulatory risk based and leverage ratio capital requirements. The
required risk based ratio is 8 percent and the required leverage ratio is 3 to 5
percent. The following table shows the Company's capital ratios:
March 31,
1996 1995
---- ----
RISK CAPITAL RATIOS
Tier I Capital 15.9% 17.1%
Total Capital 17.2% 18.5%
LEVERAGE RATIO 13.7% 13.6%
The Board of Directors declared a 10% stock dividend on April 15, 1996
to stockholders of record April 29, 1996, payable May 29, 1996.
Part II Other Information
Item 4. Submission of matters to a vote of security holders.
Election of Directors:
At the annual stockholders' meeting held on April 15, 1996, the
shareholders re-elected Wendell R. Anderson, John H. Daniels, Jr.,
David C. Malmberg and Walter E. Meadley, Jr.
Affirmative Negative
Votes Votes Abstensions
Wendell R. Anderson 6,107,509 24,346 573,343
John H. Daniels, Jr. 6,125,267 6,588 573,343
David C. Malmberg 6,123,354 8,501 573,343
Walter E. Meadley, Jr. 6,125,135 6,720 573,343
Item 6. Exhibits and reports of Form 8-K.
There were no reports on Form 8-K filed for the three months ended
March 31, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL CITY BANCORPORATION
Dated: May 6, 1996 By: /S/ David L. Andreas
Chairman & Chief Executive Officer
Dated: May 6, 1996 By: /S/ Thomas J. Freed
Controller
(Principal Financial Officer)
[LOGO FOR NATIONAL CITY BANCORPORATION]
1996
FIRST QUARTER
REPORT
THREE MONTHS
ENDED
MARCH 31, 1996
TO OUR STOCKHOLDERS:
Net earnings for the first quarter ended March 31, 1996 were $2,839,000 or $0.42
per share, up 18 percent from $2,410,000 and $0.36 per share for the first
quarter of 1995.
Net interest income for the first quarter was $9,700,000, up $1,003,000 from the
first quarter of 1995. The increased net interest income reflects a volume
growth in loans and securities partially offset by a decrease in the net
interest margin. The tax-equivalent net interest margin was 5.44 percent for the
first quarter compared with 5.73 percent for the same period last year.
Noninterest income was up $499,000. Deposit service charges, trust income,
mortgage origination fees and fees from the sale of investment products were all
up from 1995. Noninterest expense was up $316,000 reflecting increased occupancy
and relocation expense. The Company relocated its offices from 75 South Fifth
Street to 651 Nicollet Mall, in Gaviidae Common, during the first quarter of
1996 and the increased occupancy and relocation expenses were planned. The
actual expenses are at or below what was planned.
Net loan charge-offs for the first quarter were $37,000 compared with the net
loan charge-offs of $34,000 in the same period last year. The Company's reserve
for loan losses at quarter-end was $9,000,000 or 1.62 percent of loans
outstanding compared to $8,602,000 and 1.49 percent at December 31, 1995.
Nonaccrual loans totaled $4.1 million or .74 percent of total loans at March 31,
1996 compared with $3.7 million or .67 percent of total loans at December 31,
1995. The allowance for loan losses as a percent of nonaccrual loans was 219
percent at March 31, 1996 compared with 231 percent at December 31, 1995.
At the Annual Stockholders' meeting held on April 15, 1996, Wendell R. Anderson,
John H. Daniels, Jr., David C. Malmberg and Walter E. Meadley, Jr. were
re-elected to the Board of Directors. The Directors also declared a 10 percent
stock dividend to stockholders of record April 29, 1996, payable May 29, 1996.
/s/ David L. Andreas
David L. Andreas
Chairman of the Board and
Chief Executive Officer
NATIONAL CITY BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
- - ------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 42,327 $ 42,006
Federal funds sold and resale agreements 660 25,000
Available-for-sale securities:
U.S. Treasury 21,770 21,963
U.S. Government agencies 11,989 12,017
Mortgage-backed 88,192 83,192
Other securities 4,955 4,871
--------- ---------
Total available-for-sale securities 126,906 122,043
Held-to-maturity securities:
Mortgage-backed 31,858 35,109
Obligations of states and political subdivisions 330 642
Other securities 344 375
--------- ---------
Total held-to-maturity securities 32,532 36,126
(approximate market value: 1996-$32,561; 1995-$36,487)
Loans 555,240 552,581
Less allowance for loan losses (9,000) (8,602)
--------- ---------
Net loans 546,240 543,979
Bank premises and equipment 8,660 4,312
Accrued interest receivable 6,432 6,335
Customer acceptance liability 925 478
Other assets 22,086 20,358
--------- ---------
Total assets $ 786,768 $ 800,637
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing $ 117,386 $ 137,766
Interest bearing 296,744 302,219
--------- ---------
Total deposits 414,130 439,985
Federal funds purchased and repurchase agreements 99,982 110,535
Commercial paper 98,706 79,986
Other short-term borrowed funds 8,142 6,687
Acceptances outstanding 925 478
Other liabilities 9,025 8,812
Long-term debt 48,120 48,120
--------- ---------
Total liabilities 679,030 694,603
Stockholders' equity:
Common stock, par value $1.25
Authorized shares: 20,000,000
Issued shares: 1996 - 6,705,808; 1995 - 6,705,808 8,382 8,382
Additional paid-in capital 65,484 65,484
Unrealized gains (losses) net of tax effect (859) 275
Retained earnings 34,742 31,903
--------- ---------
Subtotal 107,749 106,044
Less common stock in treasury at cost:
1996 - 612 shares; 1995 - 562 shares (11) (10)
--------- ---------
Total stockholders' equity 107,738 106,034
--------- ---------
Total Liabilities and Stockholders' Equity $ 786,768 $ 800,637
========= =========
</TABLE>
NATIONAL CITY BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands except per share)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
- - ------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 14,106 $ 12,447
Interest on federal funds sold & resale agreements 212 88
Interest and dividends on securities:
Taxable 2,555 2,227
Exempt from federal income taxes 9 86
----------- -----------
2,564 2,313
----------- -----------
Total interest income 16,882 14,848
INTEREST EXPENSE
Interest on deposits 3,593 2,721
Interest on short-term borrowed funds 2,768 2,496
Interest on long-term debt 821 934
----------- -----------
Total interest expense 7,182 6,151
----------- -----------
Net interest income 9,700 8,697
Provision for loan losses 435 75
----------- -----------
Net interest income after provision for loan losses 9,265 8,622
NONINTEREST INCOME
Service charges on deposit accounts 488 428
Fees for other customer services 473 359
Trust department income 1,149 1,058
Gains on sale of securities (122)
Other 252 140
----------- -----------
Total noninterest income 2,362 1,863
NONINTEREST EXPENSES
Salaries and employee benefits 3,901 3,766
Net occupancy expense of bank premises 675 589
Equipment rentals, depreciation & maintenance 679 557
Other 1,658 1,685
----------- -----------
Total noninterest expense 6,913 6,597
----------- -----------
Earnings before taxes 4,714 3,888
Applicable income taxes 1,875 1,478
----------- -----------
Net earnings $ 2,839 $ 2,410
=========== ===========
Net earnings per common share $ 0.42 $ 0.36
Average common and common equivalent shares outstanding 6,705,214 6,705,786
</TABLE>
NATIONAL CITY BANCORPORATION
CHANGE OF ADDRESS FOR SHAREHOLDER
National City Bank of Minneapolis
Stock Transfer Department
P.O. Box E1919
Minneapolis, Minnesota 55480-1919
PLEASE CHANGE MY ADDRESS TO:
Name _____________________________________________________________________
(PRINT NAME EXACTLY AS IT APPEARS ON STOCK CERTIFICATE)
STREET ____________________________________________________________________
CITY ____________________________________________________________________
STATE _____________________________ ZIP CODE ____________________________
DATE ____________________________________________________________________
OLD ADDRESS
STREET ____________________________________________________________________
CITY ____________________________________________________________________
STATE _____________________________ ZIP CODE ____________________________
SIGNATURE ________________________________________________________________
DIRECTORS OF NATIONAL CITY
BANCORPORATION
David L. Andreas
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
National City Bancorporation
Wendell R. Anderson*
PARTNER
Larkin, Hoffman, Daly and
Lindgren Ltd.
L.W. Andreas
RETIRED CHAIRMAN OF
THE BOARD and
CHIEF EXECUTIVE OFFICER
National City Bancorporation
Terry L. Andreas
CHAIRMAN OF THE BOARD
School for Field Studies
Beverly, Massachusetts
Marvin Borman*
PARTNER
Maslon, Edelman, Borman
and Brand
Kenneth H. Dahlberg
CHAIRMAN OF THE BOARD
Dahlberg, Inc.
John H. Daniels, Jr.*
PARTNER
Willeke and Daniels
Thomas E. Holloran*
PROFESSOR, GRADUATE PROGRAMS
IN MANAGEMENT
University of St. Thomas
C. Bernard Jacobs
RETIRED PRESIDENT AND
CHIEF EXECUTIVE OFFICER
National City Bancorporation
RETIRED CHAIRMAN OF THE BOARD
National City Bank
David C. Malmberg
NON-EXECUTIVE CHAIRMAN
OF THE BOARD
National City Bank
Walter E. Meadley, Jr.
RETIRED VICE CHAIRMAN
OF THE BOARD
National City Bank
Roger H. Scherer*
CHAIRMAN OF THE BOARD
Scherer Bros. Lumber Company
* Members of the Audit Committee
OFFICERS OF NATIONAL CITY
BANCORPORATION
David L. Andreas
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Thomas J. Freed
SECRETARY AND COMPTROLLER
David H. North
ACCOUNTING OFFICER
PRINCIPAL OFFICERS OF
SUBSIDIARIES
DIVERSIFIED BUSINESS
CREDIT INC.
David L. Andreas
CHAIRMAN OF THE BOARD
Robert L. Olson
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
NATIONAL CITY BANK
OF MINNEAPOLIS
David C. Malmberg
NON-EXECUTIVE CHAIRMAN
OF THE BOARD
David L. Andreas
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
William J. Klein
EXECUTIVE VICE PRESIDENT
CLIENT SERVICES
Steven C. Bloom
SENIOR VICE PRESIDENT
HUMAN RESOURCES
Jean J. Chaput
SENIOR VICE PRESIDENT
TRUST
Thomas J. Freed
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Donald W. Kjonaas
SENIOR VICE PRESIDENT
OPERATIONS
FINANCIAL HIGHLIGHTS
(in thousands except per share)
First Quarter Ended
March 31,
------------------------ Percent
1996 1995 Change
-------- --------- ------
EARNINGS:
Net interest income $ 9,700 $ 8,697 12%
Net earnings 2,839 2,410 18%
EARNINGS PER COMMON SHARE:
Net earnings $ 0.42 $ 0.36
March 31, December 31,
1996 1995
--------- ----------
BALANCE SHEET ITEMS
Total assets $786,768 $800,637 -2%
Loans 555,240 552,581
Deposits 414,130 439,985 -6%
Stockholders equity 107,738 106,034 2%
Book value per share 16.07 15.81
(adjusted for stock dividends)
NATIONAL CITY BANCORPORATION BULK RATE
651 Nicollet Mall U.S. POSTAGE
Minneapolis, Minnesota 55402-1611 PAID
Telephone 612-904-8503 MINNEAPOLIS, MN
PERMIT NO. 2816
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 42,327
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 660
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 126,906
<INVESTMENTS-CARRYING> 32,532
<INVESTMENTS-MARKET> 32,561
<LOANS> 555,240
<ALLOWANCE> 9,000
<TOTAL-ASSETS> 786,768
<DEPOSITS> 414,130
<SHORT-TERM> 206,830
<LIABILITIES-OTHER> 9,950
<LONG-TERM> 48,120
8,382
0
<COMMON> 0
<OTHER-SE> 99,367
<TOTAL-LIABILITIES-AND-EQUITY> 786,768
<INTEREST-LOAN> 14,106
<INTEREST-INVEST> 2,564
<INTEREST-OTHER> 212
<INTEREST-TOTAL> 16,882
<INTEREST-DEPOSIT> 3,593
<INTEREST-EXPENSE> 7,182
<INTEREST-INCOME-NET> 9,700
<LOAN-LOSSES> 435
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 6,913
<INCOME-PRETAX> 4,714
<INCOME-PRE-EXTRAORDINARY> 2,839
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,839
<EPS-PRIMARY> 0.42
<EPS-DILUTED> 0.42
<YIELD-ACTUAL> 5.42
<LOANS-NON> 4,108
<LOANS-PAST> 495
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 28,121
<ALLOWANCE-OPEN> 8,602
<CHARGE-OFFS> 82
<RECOVERIES> 45
<ALLOWANCE-CLOSE> 9,000
<ALLOWANCE-DOMESTIC> 1,550
<ALLOWANCE-FOREIGN> 340
<ALLOWANCE-UNALLOCATED> 7,110
</TABLE>
