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 June 30, 1998 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 June 30, 1998, 8,861,942 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 June 30, 1998, is incorporated and made a part of
Part I of Form 10-Q.
<PAGE>
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 19.
Consolidated Balance Sheets - June 30, 1998 and December 31, 1997.
Consolidated Statements of Earnings - Three months and six months ended
June 30, 1998 and 1997.
Consolidated Statements of Cash Flows - Six months ended June 30, 1998 and 1997
are included on page 2 of this report.
Consolidated Statements of Earnings and Comprehensive Income - Three months and
six months ended June 30, 1998 and 1997 are included on page 3 of this report.
Notes to Consolidated Financial Statements are included on page 4 of this
report.
Management's Discussion and Analysis of Financial Condition and Results of
Operations is included on pages 5, 6, 7, and 8 of this report.
Part II. Other Information
Part II items requiring a response are included on page 9 of this report.
<PAGE>
NATIONAL CITY BANCORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30,
(IN THOUSANDS) 1998 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 7,971 $ 6,764
Adjustments to reconcile net earnings to net cash from operating
activities:
Depreciation and amortization 1,441 1,575
Amortization of securities premiums and discounts 237 264
Provision for loan losses 740 1,357
(Increase) in accrued income receivable (230) (917)
(Increase) decrease in other assets 2,286 (1,808)
(Decrease) in other liabilities (817) (606)
------------------------
Total operating adjustments 3,657 (135)
------------------------
NET CASH FROM OPERATING ACTIVITIES 11,628 6,629
------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) in loans (58,716) (62,568)
Net (increase) decrease in federal funds sold (16,520) 21,820
Available-for-sale securities:
Proceeds from maturities and principal repayments 41,703 18,739
Purchases of securities (31,669) (15,147)
Held-to-maturity securities:
Proceeds from maturities and principal repayments 10,559 4,122
Purchases of securities (17,854) (15,139)
Purchase of premises and equipment (1,109) (1,539)
------------------------
NET CASH (USED IN) INVESTING ACTIVITIES (73,606) (49,712)
------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in non-interest bearing and savings deposits 9,864 (24,891)
Net increase (decrease) in time deposits 12,341 (11,806)
Net increase in federal funds purchased and repurchase agreements 25,987 25,556
Net increase in commercial paper 19,242 32,170
Net increase in other borrowed funds 2,539 12,712
Net increase in long-term debt 9,800
Purchase of treasury stock (598) (1)
Payment for fractional shares on stock dividends (40) (22)
------------------------
NET CASH FROM (USED IN) FINANCING ACTIVITIES 69,335 43,518
------------------------
Net increase in cash and due from banks 7,357 435
Cash and due from banks at beginning of year 52,847 47,934
------------------------
Cash and due from banks at end of period $ 60,204 $ 48,369
=========================
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for:
Interest $ 18,432 $ 16,897
Income taxes 5,211 4,586
Unrealized securities gains net of tax 72 103
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
(IN THOUSANDS) 1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total interest income 21,084 19,508 41,410 37,915
Total interest expense 9,127 8,776 18,002 16,804
------------ --------------------------------------
Net interest income 11,957 10,732 23,408 21,111
Provision for loan losses 260 567 740 1,357
------------ --------------------------------------
Net interest income after provision for loan losses 11,697 10,165 22,668 19,754
Total noninterest income 2,678 2,480 5,087 5,460
Total noninterest expense 7,219 6,900 14,569 14,026
---------------------------------------------------
Earnings from operations before taxes 7,156 5,745 13,186 11,188
Applicable income taxes 2,836 2,274 5,215 4,424
---------------------------------------------------
Net Earnings 4,320 3,471 7,971 6,764
Other comprehensive income, before tax:
Unrealized gain on investments in securities 142 1,562 121 172
Applicable income tax 57 632 49 70
---------------------------------------------------
Other comprehensive income, net of tax 85 930 72 102
---------------------------------------------------
Comprehensive Income $4,405 $4,401 $8,043 $6,866
===================================================
</TABLE>
<PAGE>
NATIONAL CITY BANCORPORATION
Notes to the Consolidated Financial Statements
The Consolidated Balance Sheet as of June 30, 1998, the Consolidated
Statements of Earnings for the three-month and six-month periods ended June 30,
1998 and 1997, the Consolidated Statements of Cash Flows for the six-month
periods then ended June 30, 1998 and 1997 and the Consolidated Statements of
Earnings and Comprehensive Income for the three-month and six-month periods then
ended June 30, 1998 and 1997 have been prepared by the Company without audit. In
the opinion of management, all adjustments necessary to present fairly the
financial position, results of operations, cash flows and comprehensive income
at and for the periods ended June 30, 1998 and 1997, 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. These consolidated financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's December 31, 1997 annual report to stockholders. The results of
operations for the period ended June 30, 1998 are not necessarily indicative of
the operating results for the full year.
<PAGE>
NATIONAL CITY BANCORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EARNINGS:
Net earnings for the second quarter ended June 30, 1998 increased to
$4,320,000, up 24 percent over 1997 earnings of $3,471,000. Earnings per share
increased to $ .49 for the second quarter of 1998, an increase of 29 percent
over earnings per share of $ .38 in the second quarter of 1997. Net earnings for
the first six months of 1998 were $7,971,000, up 18 percent over 1997 earnings
of $6,764,000, and earnings per share increased to $.90 compared with $.75 for
the same period. Earnings information is summarized below:
- --------------------------------------------------------------------------------
Second Quarter Six Months
1998 1997 1998 1997
---- ---- ---- ----
Net income $4,320 $3,471 $7,971 $6,764
Earnings per share $ .49 $ .38 $ .90 $ .75
Return on average equity 12.66% 11.32% 11.89% 11.25%
Return on average assets 1.81% 1.54% 1.70% 1.53%
- --------------------------------------------------------------------------------
Net interest income for the second quarter was $11,957,000, up
$1,225,000 or 11 percent over the second quarter of 1997. Net interest income
for the first six months of 1998 was $23,408,000, an increase of $2,297,000 or
11 percent over the same period of 1997. Fluctuations in net interest income can
result from changes in the volume of assets and liabilities as well as changes
in interest rates. The following table summarizes variances in net interest
income attributed to changes in balance sheet volumes and interest rates:
- --------------------------------------------------------------------------------
NET INTEREST INCOME* CHANGE FROM SECOND QUARTER 1997
Resulting from:
Interest On: Total Rates Volumes
----- ----- -------
Total Earning Assets $ 1,567 $ 55 $ 1,512
Total Interest Bearing Liabilities 351 9 342
---------------------------------------
Change in Net Interest Income $ 1,216 $ 46 $ 1,170
=======================================
NET INTEREST INCOME* CHANGE FROM FIRST SIX MONTHS 1997
Resulting from:
Interest On: Total Rates Volumes
----- ----- -------
Total Earning Assets $ 3,485 $ 568 $ 2,917
Total Interest Bearing Liabilities 1,198 395 803
---------------------------------------
Change in Net Interest Income $ 2,287 $ 173 $ 2,114
=======================================
*on a fully taxable equivalent basis
-------------------------------------------------------------------------------
<PAGE>
The tax equivalent net interest margin for the quarter was 5.40 percent
compared with 5.18 percent for the same period last year. The net interest
margin is the product of many factors, including the yields on interest bearing
assets, the rates paid on interest bearing liabilities, and the mix of interest
bearing assets and liabilities. We continue to face strong competition for loans
in our market niche. Notwithstanding the competitive environment, average loans
increased by 9 percent over the second quarter of 1997. The greater portion of
the increase was in loans made by Diversified Business Credit, Inc. (DBCI) where
yields are higher, contributing to the increase in the net interest margin.
Noninterest income for the second quarter was up $198,000, or 8 percent
when compared with 1997. Noninterest income for the first six months was
$5,087,000 compared with $5,460,000 for the same period in 1997. The second
quarter included a one-time loan contract cancellation fee that contributed to
the increase. A similar fee was received in the first quarter of 1997.
Noninterest expense increased $319,000, or 5 percent for the second
quarter and $543,000, or 4 percent for the first six months. The Company's
noninterest expense includes charges incurred in connection with making its
computer systems Year 2000 compliant. The highest increase was in Personnel
expenses related to increased compensation costs and recruiting costs.
The efficiency ratio improved to 49.33 percent for the second quarter
of 1998, compared to 52.23 percent for the same period last year. The
improvement was due to the $2.3 million increase in net interest income and the
relatively modest increase in noninterest expense, but offset by a decrease in
noninterest income.
YEAR 2000 COMPLIANCE:
The Company has established and begun implementation of a plan to
address systems-related Year 2000 issues. The plan calls for either modification
to, or replacement of, date sensitive business system applications or
interfaces. The Company currently anticipates that substantially all of the work
related to critical systems, including testing, will be completed by the end of
1998. The Company estimates that the cost of its Year 2000 compliance program
will approximate $800,000 in 1998. Additional costs may be incurred in 1999.
Those costs incurred to modify internal use software will be expensed. A
significant amount of the total cost represents enhancements and improvements,
which will be amortized over the estimated useful life of the
<PAGE>
enhancement. Portions of the costs are not expected to be incremental to the
Company but instead will constitute a reassignment of existing internal systems
technology resources.
Contingency plans have been established for critical business system
applications to mitigate potential delays or other problems associated with
either new system replacements or established vendor delivery dates.
The Company continues to monitor the actions of third parties, e.g.,
vendors or customers, to appropriately address their own Year 2000 compliance
issues.
LOAN LOSS RESERVE:
Net loan charge-offs during the second quarter were $150,000, compared
with $156,000 for the same period last year. The loan loss provision was
$260,000 for the second quarter, compared with $567,000 in the second quarter of
1997. 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 June 30, 1998, the allowance for loan losses was
$10,676,000, or 1.47 percent of loans, compared to 1.51 percent at December 31,
1997. Credit quality remains strong with non-performing assets at .4 percent of
loans outstanding. At quarter end the reserve coverage of non-performing assets
was 402 percent. Activity regarding the allowance is summarized below:
- --------------------------------------------------------------------------------
(in thousands)
Second Quarter Six Months
1998 1997 1998 1997
------- ------ ------- ------
Balance beginning of period $10,566 $8,831 $10,071 $8,511
Provision charge to operating expense 260 567 740 1,357
Less net loan charge-offs (150) (156) (135) (626)
-----------------------------------------
Balance June 30 $10,676 $9,242 $10,676 $9,242
=========================================
- --------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES:
The Company's average total assets were $ 959.9 million for the
three-months ended June 30, 1998, up from $ 900.4 million for the same period in
1997. The majority of the increase is attributable to loans to businesses. The
Company continues to fund asset growth from various liability sources, including
interest bearing deposits, short-term borrowings, retention of earnings, and
noninterest bearing deposits. Short-term borrowings include commercial paper
which is used to fund the loans of the Company's commercial finance subsidiary,
Diversified Business Credit, Inc. (DBCI). In addition to deposits and short-term
borrowings, the Company had long-term debt
<PAGE>
of $ 67 million at June 30, 1998, in the form of senior notes guaranteed by the
Company, which were also used to fund the loans of DBCI. Subsequent to June 30,
DBCI issued and the Company guaranteed an additional $62 million in senior notes
with maturities of five to seven years.
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:
- --------------------------------------------------------------------------------
June 30,
1998 1997
------ ------
RISK-BASED CAPITAL RATIOS
Tier I Capital 16.39% 15.34%
Tier II Capital 17.64% 16.47%
LEVERAGE RATIO 13.82% 13.14%
- --------------------------------------------------------------------------------
The Company paid a 10% stock dividend on June 8, 1998, to stockholders
of record May 6, 1998.
PRIVATE SECURITIES LITIGATION REFORM ACT:
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Form 10-Q and other material filed or to be filed by the Company with the
Securities and Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the Company)
contains statements that are forward-looking, such as statements relating to
plans for future expansion and other business development activities as well as
other capital spending, financing sources and the effects of regulation and
competition. Such forward-looking information involves important risks and
uncertainties that could significantly affect actual results in the future and,
accordingly, such results may differ materially from those expressed in any
forward-looking statements made by or on behalf of the Company. These risks and
uncertainties include, but are not limited to, those relating to development and
construction activities, dependence on existing management, leverage and debt
service (including sensitivity to fluctuations in interest rates), domestic or
global economic conditions, changes in federal or state tax laws or the
administration of such laws, litigation or claims, as well as all other risks
and uncertainties described in the Company's filings.
<PAGE>
NATIONAL CITY BANCORPORATION
Part II Other Information
Item 4. Submission of matters to a vote of security holders.
Amendment of the Restated Articles of Incorporation to increase the
authorized shares:
At the annual stockholders' meeting held on April 22, 1998, the
stockholders voted to amend the Restated Articles of Incorporation to
increase the number of authorized shares of common stock to 40,000,000
from 20,000,000.
Amendment of the Restated Articles of Incorporation to increase the
number of directors:
At the annual stockholders' meeting held on April 22, 1998, the
stockholders voted to amend the Restated Articles of Incorporation to
increase the maximum number of directors to 16 from 15.
Election of Directors:
At the annual stockholders' meeting held on April 22, 1998, the
stockholders voted to elect David L. Andreas, Michael J. Boris, Sharon
N. Bredeson, James B. Goetz, Sr., Esperanza Guerrero-Anderson, C.
Bernard Jacobs, Robert L. Olson, and Roger H. Scherer as directors.
Affirmative Negative
Votes Votes Abstentions
Increase authorized shares 7,393,488 134,998 528,992
Increase number of directors 7,434,807 83,651 539,020
David L. Andreas 7,526,612 20,124 510,742
Michael J. Boris 7,522,559 24,177 510,742
Sharon N. Bredeson 7,522,217 24,639 510,742
James B. Goetz, Sr. 7,524,455 22,281 510,742
Esperanza Guerrero-Anderson 7,522,097 24,639 510,742
C. Bernard Jacobs 7,517,695 29,041 510,742
Robert L. Olson 7,527,396 19,340 510,742
Roger H. Scherer 7,527,396 19,340 510,742
Item 5. Other Matters
Discretionary Proxy Voting Authority/Stockholder Proposals
On May 21, 1998, the Securities and Exchange Commission adopted an
amendment to Rule 14a-4, as promulgated under the Securities and Exchange Act of
1934. The amendment to 14a-4(c)(1) governs the Company's use of its
discretionary proxy voting authority with respect to a stockholder proposal
which the stockholder has not sought to include in the Company's proxy
statement. The new amendment provides that if a proponent of a proposal fails to
notify the Company at least 45 days prior to the month and day of mailing of the
prior year's proxy statement, then the management proxies will be allowed to use
their discretionary voting authority when the proposal is raised at the meeting,
without any discussion of the matter in the proxy statement.
With respect to the Company's 1999 Annual Meeting of Stockholders, if
the Company is not provided notice of a stockholder proposal which the
stockholder has not previously sought to include in the Company's proxy
statement by January 22, 1999, the management proxies will be allowed to use
their discretionary authority as outlined above.
Item 6. Exhibits and reports of Form 8-K.
Exhibit index:
Number Description
------ -----------
19 Quarterly Report to Stockholders
27 Financial Data Schedule
There were no reports on Form 8-K filed for the three months ended June
30, 1998.
<PAGE>
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: August 11, 1998 By: /S/David L. Andreas
------------------ -------------------------------------
President & Chief Executive Officer
Dated: August 11, 1998 By: /S/Thomas J. Freed
------------------ -------------------------------------
Secretary and Chief Financial Officer
EXHIBIT 19
NATIONAL CITY
BANCORPORATION
1998
SECOND QUARTER
REPORT
SIX MONTHS
ENDED
JUNE 30, 1998
<PAGE>
TO OUR STOCKHOLDERS:
Net earnings were $4,320,000 for the second quarter of 1998, up 24 percent,
compared with $3,471,000 in the second quarter of 1997. Earnings per share
increased to $0.49 compared with $0.38 in the second quarter of 1997.
Second quarter net interest income was $11,957,000, which was higher by
$1,225,000, or 11 percent, than in the second quarter of 1997. The improvement
was primarily attributable to an increase in average loans, which were up $60.7
million, or 9 percent from the second quarter of 1997. The growth in loans
occurred mainly in commercial lending at both subsidiaries, National City Bank
of Minneapolis and Diversified Business Credit, Inc. The net interest margin was
5.40 percent for the second quarter compared with 5.18 percent for the same
period last year. Noninterest income for the second quarter was $2,678,000
compared with $2,480,000 in the same period of 1997. Noninterest expense for the
second quarter was $7,219,000 an increase of $319,000 or 5 percent compared with
the second quarter of 1997.
Net loan charge-offs for the second quarter were $150,000. Additional loss
provisions of $260,000 were added to the reserve during the quarter. As a
result, the Company's reserve for loan losses at June 30 was $10,676,000 or 1.47
percent of loans outstanding compared to $10,071,000 and 1.51 percent at
December 31, 1997. Nonperforming assets, those loans which were 90 days past due
or on which interest is no longer expected to be earned, were $2.7 million or
.37 percent of total loans at June 30, 1998 compared with $1.2 million or .18
percent of total loans at December 31, 1997. The reserve coverage of
nonperforming assets was 402 percent at June 30.
Current news and other information about your Company can now be found on the
internet at
http://www.shareholdernews.com/NCBM
The site includes our current stock price, press releases, and a link to
Securities and Exchange Commission filings.
/s/ David L. Andreas
David L. Andreas
President and
Chief Executive Officer
<PAGE>
NATIONAL CITY BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(in thousands) June 30, December 31,
1998 1997
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash & due from banks ........................................ $ 60,204 $ 52,847
Federal funds sold and resale agreements ..................... 20,260 3,740
Available-for-sale securities:
U.S. Treasury ............................................. 9,980 23,997
U.S. Government agencies .................................. 12,137 9,844
Mortgage-backed ........................................... 106,075 102,529
Other securities .......................................... 2,801 4,955
----------- -----------
Total available-for-sale securities .................. 130,993 141,325
Held-to-maturity securities:
Mortgage-backed ........................................... 44,695 37,402
----------- -----------
Total held-to-maturity securities .................... 44,695 37,402
(approximate market value: 1998$44,923; 1997$37,861)
Loans ........................................................ 725,098 666,382
Less allowance for loan losses ............................ (10,676) (10,071)
----------- -----------
Net loans .............................................. 714,422 656,311
Premises and equipment ....................................... 11,081 11,413
Accrued interest receivable .................................. 7,490 7,260
Customer acceptance liability ................................ 141 811
Other assets ................................................. 21,777 24,063
----------- -----------
Total assets ......................................... $ 1,011,063 $ 935,172
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing ....................................... $ 150,323 $ 149,624
Interest bearing .......................................... 350,532 329,026
----------- -----------
Total deposits ....................................... 500,855 478,650
Federal funds purchased and repurchase agreements ............ 130,386 104,399
Commercial paper ............................................. 138,323 119,081
Other short-term borrowed funds .............................. 25,757 23,218
Acceptances outstanding ...................................... 141 811
Other liabilities ............................................ 8,269 9,086
Long-term debt ............................................... 67,000 67,000
----------- -----------
Total liabilities .................................... 870,731 802,245
Stockholders' equity:
Common stock, par value $1.25
Authorized shares: 1998 - 40,000,000; 1997 - 20,000,000
Issued shares: 1998 - 8,861,944; 1997 - 8,110,836 .... 11,077 10,139
Additional paid-in capital ................................ 121,982 94,756
Unrealized gains net of tax effect ........................ 496 424
Retained earnings ......................................... 6,777 28,464
----------- -----------
Subtotal ............................................. 140,332 133,783
Less common stock in treasury at cost:
1998 - 2 shares; 1997 - 33,553 shares...................... (856)
----------- -----------
Total stockholders' equity ........................... 140,332 132,927
----------- -----------
Total liabilities and stockholders' equity ............................... $ 1,011,063 $ 935,172
=========== ===========
</TABLE>
<PAGE>
NATIONAL CITY BANCORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands except per share) Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans ........................ $ 18,152 $ 16,360 $ 35,454 $ 31,693
Interest on federal funds sold & resale agreements 177 338 295 596
Interest and dividends on securities .............. 2,755 2,810 5,661 5,626
---------- ---------- ---------- ----------
Total interest income .......................... 21,084 19,508 41,410 37,915
INTEREST EXPENSE
Interest on deposits .............................. 3,880 3,883 7,889 7,746
Interest on short-term borrowed funds ............. 4,106 3,911 7,832 7,234
Interest on long-term debt ........................ 1,141 982 2,281 1,824
---------- ---------- ---------- ----------
Total interest expense ......................... 9,127 8,776 18,002 16,804
---------- ---------- ---------- ----------
Net interest income ............................ 11,957 10,732 23,408 21,111
Provision for loan losses ......................... 260 567 740 1,357
---------- ---------- ---------- ----------
Net interest income after provision for loan losses 11,697 10,165 22,668 19,754
NONINTEREST INCOME
Service charges on deposit accounts ............... 530 527 1,093 1,182
Fees for other customer services .................. 463 466 816 838
Trust fees ........................................ 1,276 1,229 2,606 2,513
Other ............................................. 409 258 572 927
---------- ---------- ---------- ----------
Total noninterest income ....................... 2,678 2,480 5,087 5,460
NONINTEREST EXPENSES
Salaries and employee benefits .................... 3,913 3,759 7,965 7,638
Occupancy expense ................................. 770 780 1,529 1,544
Equipment rentals, depreciation & maintenance ..... 830 880 1,703 1,772
Other ............................................. 1,706 1,481 3,372 3,072
---------- ---------- ---------- ----------
Total noninterest expense ...................... 7,219 6,900 14,569 14,026
---------- ---------- ---------- ----------
Earnings before taxes ............................. 7,156 5,745 13,186 11,188
Applicable income taxes ........................... 2,836 2,274 5,215 4,424
---------- ---------- ---------- ----------
Net earnings ................................... $ 4,320 $ 3,471 $ 7,971 $ 6,764
========== ========== ========== ==========
Basic earnings per common share ............................... $ 0.49 $ 0.38 $ 0.90 $ 0.75
Average common and common equivalent shares outstanding ....... 8,861,960 8,915,414 8,865,069 8,915,427
</TABLE>
<PAGE>
DIRECTORS OF NATIONAL CITY OFFICERS OF NATIONAL CITY
BANCORPORATION BANCORPORATION
David C. Malmberg David L. Andreas
CHAIRMAN OF THE BOARD PRESIDENT AND
National City Bancorporation CHIEF EXECUTIVE OFFICER
Wendell R. Anderson* Thomas J. Freed
OF COUNSEL SECRETARY AND
Larkin, Hoffman, Daly and CHIEF FINANCIAL OFFICER
Lindgren Ltd.
David L. Andreas PRINCIPAL OFFICERS OF
PRESIDENT AND SUBSIDIARIES
CHIEF EXECUTIVE OFFICER
National City Bancorporation
PRESIDENT AND DIVERSIFIED BUSINESS
CHIEF EXECUTIVE OFFICER CREDIT, INC.
National City Bank of
Minneapolis Robert L. Olson
PRESIDENT AND
Terry L. Andreas CHIEF EXECUTIVE OFFICER
CHAIRMAN OF THE BOARD
School for Field Studies Janet L. Pomeroy
Beverly, Massachusetts SENIOR VICE PRESIDENT
Michael J. Boris*
PRIVATE INVESTOR AND NATIONAL CITY BANK
CONSULTANT OF MINNEAPOLIS
Marvin Borman* David L. Andreas
PARTNER PRESIDENT AND
Maslon, Edelman, Borman CHIEF EXECUTIVE OFFICER
and Brand
William J. Klein
Sharon Bredeson EXECUTIVE VICE PRESIDENT
PRESIDENT AND CLIENT SERVICES
CHIEF EXECUTIVE OFFICER
Staff-Plus, Inc. Thomas J. Freed
SENIOR VICE PRESIDENT AND
Kenneth H. Dahlberg CHIEF FINANCIAL OFFICER
CHAIRMAN OF THE BOARD
Dahlberg, Inc. Donald W. Kjonaas
SENIOR VICE PRESIDENT
John H. Daniels, Jr.* OPERATIONS
PARTNER
Willeke and Daniels
James B. Goetz, Sr.
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Goetz Companies
Esperanza Guerrero-Anderson*
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Milestone Growth Fund, Inc.
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
Walter E. Meadley, Jr.
RETIRED VICE CHAIRMAN
OF THE BOARD
National City Bank
Robert L. Olson
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Diversified Business Credit, Inc.
Roger H. Scherer*
CHAIRMAN OF THE BOARD
Scherer Bros. Lumber Company
*Members of the Audit Committee
<PAGE>
NATIONAL CITY BANCORPORATION
CHANGE OF ADDRESS FOR SHAREHOLDER
National City Bank of Minneapolis
Stock Transfer Department
P.O. Box 1919
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________________________________________________
<PAGE>
FINANCIAL HIGHLIGHTS
(in thousands except per share)
SECOND QUARTER ENDED
JUNE 30,
-------------------------- PERCENT
1998 1997 CHANGE
---------- ---------- --------
EARNINGS:
Net interest income ..... $ 11,957 $ 10,732 11%
Net earnings ............ 4,320 3,471 24%
BASIC EARNINGS PER SHARE:
Net earnings* ........... $ 0.49 $ 0.38
SIX MONTHS ENDED
JUNE 30,
--------------------------
1998 1997
---------- ----------
EARNINGS:
Net interest income ..... $ 23,408 $ 21,111 11%
Net earnings ............ 7,971 6,764 18%
BASIC EARNINGS PER SHARE:
Net earnings* ........... $ 0.90 $ 0.75
JUNE 30, DECEMBER 31,
1998 1997
---------- ----------
BALANCE SHEET ITEMS
Total assets ............ $1,011,063 $ 935,172 8%
Loans ................... 725,098 666,382 9%
Deposits ................ 500,855 478,650 5%
Stockholders' equity .... 140,332 132,927 6%
Book value per share* ... 15.84 14.97
- ------------------------
* (adjusted for stock dividends)
<PAGE>
NATIONAL CITY BANCORPORATION
651 Nicollet Mall
Minneapolis, Minnesota 55402-1611
Telephone 612-904-8503
BULK RATE
U.S. POSTAGE
PAID
MINNEAPOLIS, MN
PERMIT NO. 2816
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<NAME> NATIONAL CITY BANCORPORATION
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
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