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 September 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 September 30, 1998, 8,861,923 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 September 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 - September 30, 1998 and December 31, 1997.
Consolidated Statements of Earnings - Three months and nine months ended
September 30, 1998 and 1997.
Consolidated Statements of Cash Flows - Nine months ended September 30, 1998 and
1997 are included on page 2 of this report.
Consolidated Statements of Earnings and Comprehensive Income - Three months and
nine months ended September 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, 8, and 9 of this report.
Part II. Other Information
Part II items requiring a response are included on page 10 of this report.
1
<PAGE>
NATIONAL CITY BANCORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30,
(IN THOUSANDS) 1998 1997
- ---------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $ 12,234 $ 11,075
Adjustments to reconcile net earnings to
net cash from operating activities:
Depreciation and amortization 2,177 2,351
Amortization of securities premiums and discounts 432 328
Provision for loan losses 1,390 1,859
Decrease (increase) in accrued income receivable 81 (546)
Decrease in other assets 2,839 213
Increase (decrease) in other liabilities 113 (931)
--------------------------
Total operating adjustments 7,032 3,274
--------------------------
NET CASH FROM OPERATING ACTIVITIES 19,266 14,349
--------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) in loans (96,562) (76,642)
Net (increase) decrease in federal funds sold (26,385) 38,370
Available-for-sale securities:
Proceeds from maturities and principal repayments 48,501 22,191
Purchases of securities (52,114) (15,147)
Held-to-maturity securities:
Proceeds from maturities and principal repayments 14,157 6,521
Purchases of securities (21,743) (15,139)
Purchase of premises and equipment (1,381) (2,041)
--------------------------
NET CASH (USED IN) INVESTING ACTIVITIES (135,527) (41,887)
--------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) in non-interest bearing and savings
deposits (2,845) (30,041)
Net increase (decrease) in time deposits 21,874 (22,413)
Net increase in federal funds purchased and repurchase
agreements 53,081 33,837
Net (decrease) increase in commercial paper (23,283) 39,607
Net increase in other borrowed funds 4,170 13,812
Net increase in long-term debt 72,000 9,080
Purchase of treasury stock (598) (852)
Payment for fractional shares on stock dividends (40) (22)
--------------------------
NET CASH FROM (USED IN) FINANCING ACTIVITIES 124,359 43,008
--------------------------
Net increase in cash and due from banks 8,098 15,470
Cash and due from banks at beginning of year 52,847 47,934
--------------------------
Cash and due from banks at end of period $ 60,945 $ 63,404
==========================
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for:
Interest $ 24,926 $ 26,686
Income taxes 8,537 7,101
Unrealized securities gains net of tax 765 577
</TABLE>
2
<PAGE>
NATIONAL CITY BANCORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(IN THOUSANDS) 1998 1997 1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total interest income $ 22,600 $ 20,563 $ 64,010 $ 58,478
Total interest expense 9,959 9,320 27,961 26,124
-------------------------------------------------
Net interest income 12,641 11,243 36,049 32,354
Provision for loan losses 650 502 1,390 1,859
-------------------------------------------------
Net interest income after provision for loan losses 11,991 10,741 34,659 30,495
Total noninterest income 2,177 3,489 7,264 8,949
Total noninterest expense 7,146 7,149 21,715 21,175
-------------------------------------------------
Earnings from operations before taxes 7,022 7,081 20,208 18,269
Applicable income taxes 2,759 2,770 7,974 7,194
-------------------------------------------------
Net Earnings 4,263 4,311 12,234 11,075
Other comprehensive income, before tax:
Unrealized gain on investments in securities 1,165 798 1,286 970
Applicable income tax 472 323 521 393
-------------------------------------------------
Other comprehensive income, net of tax 693 475 765 577
-------------------------------------------------
Comprehensive Income $ 4,956 $ 4,786 $ 12,999 $ 11,652
=================================================
</TABLE>
3
<PAGE>
NATIONAL CITY BANCORPORATION
Notes to the Consolidated Financial Statements
The Consolidated Balance Sheet as of September 30, 1998, the Consolidated
Statements of Earnings for the three-month and nine-month periods ended
September 30, 1998 and 1997, the Consolidated Statements of Cash Flows for the
nine-month periods then ended September 30, 1998 and 1997 and the Consolidated
Statements of Earnings and Comprehensive Income for the three-month and
nine-month periods then ended September 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 September 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 September 30, 1998 are not necessarily
indicative of the operating results for the full year.
4
<PAGE>
NATIONAL CITY BANCORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EARNINGS:
Net earnings for the third quarter ended September 30, 1998 were
$4,263,000, compared with 1997 earnings of $4,311,000. Earnings per share were $
.48 for the third quarter of 1998, compared with earnings per share of $ .49 in
the third quarter of 1997. Net earnings for the first nine months of 1998 were
$12,234,000, up 11 percent over 1997 earnings of $11,075,000, and earnings per
share increased to $1.38 compared with $1.24 for the same period. The third
quarter and nine months earnings for 1997 include a state income tax refund of
$1,369,000 with an after tax effect of approximately $850,000. On a comparable
basis, excluding the tax refund, 1998 net earnings were up 18.6 percent and 19.6
percent for the third quarter and nine months, respectively. Earnings
information is summarized below:
- --------------------------------------------------------------------------------
Third Quarter Nine Months
1998 1997 1998 1997
---- ---- ---- ----
Net income $4,263 $4,311 $12,234 $11,075
Earnings per share $ .48 $ .49 $1.38 $1.24
Return on average equity 11.96% 11.58% 11.92% 11.92%
Return on average assets 1.67% 1.56% 1.69% 1.61%
- -------------------------------------------------------------------------------
Net interest income for the third quarter was $12,641,000, up $1,398,000 or
12 percent over the third quarter of 1997. Net interest income for the first
nine months of 1998 was $36,049,000, an increase of $3,695,000 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:
5
<PAGE>
- --------------------------------------------------------------------------------
NET INTEREST INCOME* CHANGE FROM THIRD QUARTER 1997
Resulting from:
Interest On: Total Rates Volumes
----- ----- -------
Total Earning Assets $ 2,065 $ 44 $ 2,021
Total Interest Bearing Liabilities 639 (163) 802
---------------------------------
Change in Net Interest Income $ 1,426 $ 207 $ 1,219
=================================
NET INTEREST INCOME* CHANGE FROM FIRST NINE MONTHS 1997
Resulting from:
Interest On: Total Rates Volumes
----- ----- -------
Total Earning Assets $ 5,549 $ 617 $ 4,932
Total Interest Bearing Liabilities 1,837 238 1,599
---------------------------------
Change in Net Interest Income $ 3,712 $ 379 $ 3,333
=================================
*on a fully taxable equivalent basis
- --------------------------------------------------------------------------------
The tax equivalent net interest margin for the quarter was 5.33 percent
compared with 5.14 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. Average loans increased by 11 percent over the
third quarter of 1997. The greater portion of the increase was in loans
originated by Diversified Business Credit, Inc. (DBCI) where yields are higher,
contributing to the increase in the net interest margin.
Noninterest income for the third quarter was $2,177,000 up $57,000 compared
with adjusted noninterest income of $2,120,000 for the same period of 1997.
Noninterest income for the first nine months was $7,264,000 compared with
adjusted noninterest income of $7,580,000 for the same period in 1997. The third
quarter and nine months earnings for 1997 include a state income tax refund of
$1,369,000.
Noninterest expense for the third quarter was $7,146,000 essentially
unchanged from $7,149,000 for the third quarter of 1997. Noninterest expense for
the first nine months was $21,715,000, an increase of $540,000 or 3 percent over
the same period of 1997. The Company's noninterest expense includes charges
incurred in connection with making its systems Year 2000 compliant.
The efficiency ratio improved to 49.47 percent for the third quarter of
1998, compared to 52.15 percent for the same period last year. The improvement
was due to the $1.4 million increase in net interest income, the decrease in
noninterest expense and offset by a decrease in noninterest income.
6
<PAGE>
YEAR 2000 COMPLIANCE:
The Company has begun the testing of remediated systems related to Year
2000 problems. The Company anticipates that substantially all of the work
related to critical systems will be concluded by the end of 1998. The Company
estimates that the cost of its Year 2000 compliance program will approximate
$1.1 million of which the Company has incurred approximately $800,000 to date.
Costs incurred to modify internal use software will be expensed. A significant
amount of the total estimated cost represents enhancements and improvements,
which will be amortized over the estimated useful life of the enhancement or
improvement.
The potential impact of the Year 2000 issue will depend not only on the
corrective measures the Company undertakes, but also on the way in which the
Year 2000 issue is addressed by governmental agencies, businesses, and other
entities who provide data to, or receive data from the Company, or whose
financial condition or operational capability is important to the Company. The
Company continues to monitor the actions of these third parties to appropriately
address their own Year 2000 issues and to evaluate any likely effect on the
Company. There is no guarantee that the systems of other companies or entities
on which the Company relies will be remediated on a timely basis, or that a
remediation or conversion will be compatible with the Company's systems. If
these issues are not adequately resolved, the Company's future business
operations and, in turn, its financial position and results of operations, could
be negatively impacted. In addition, the Company's credit risk associated with
its borrowers may increase as a result of their individual Year 2000 issues.
However, at this time, it is not possible to quantify the potential effect of
such situations.
Individual contingency plans have been established for mission critical
business systems to mitigate potential delays or other problems associated with
either new system replacements or established vendor delivery dates. The plans
were developed using a standard methodology that includes trigger dates, steps
to follow, expected life of the plan and resources required.
LOAN LOSS RESERVE:
Net loan charge-offs during the third quarter were $701,000, compared with
net loan recoveries of $61,000 for the same period last year. The loan loss
provision was $650,000 for the third quarter, compared with $502,000 in the
third 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 September 30, 1998, the
allowance for
7
<PAGE>
loan losses was $10,625,000, or 1.39 percent of loans, compared to 1.51 percent
at December 31, 1997. Nonperforming assets increased to $18,642,000 or 2.2
percent of loans at quarter end compared with $2,656,000 on June 30, 1998. The
increase occurred at the Company's commercial finance subsidiary, DBCI, and
related to two loans in the process of liquidation. The Company expects the
liquidation to be substantially complete by year-end. Activity regarding the
allowance is summarized below:
- --------------------------------------------------------------------------------
(in thousands)
Third Quarter Nine Months
1998 1997 1998 1997
---- ---- ---- ----
Balance beginning of period $ 10,676 $ 9,242 $ 10,071 $ 8,511
Provision charge to operating expense 650 502 1,390 1,859
Less net loan charge-offs or
recoveries (701) 61 (836) (565)
-------------------------------------------
Balance September 30 $ 10,625 $ 9,805 $ 10,625 $ 9,805
===========================================
- --------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES:
The Company's average total assets were $ 1,014.2 million for the
three-months ended September 30, 1998, up from $ 933.4 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 of $ 139
million at September 30, 1998, primarily in the form of senior notes guaranteed
by the Company, which were also used to fund the loans of DBCI. During the third
quarter, 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:
- --------------------------------------------------------------------------------
September 30,
1998 1997
---- ----
RISK-BASED CAPITAL RATIOS
Tier I Capital 16.03% 16.01%
Tier II Capital 17.21% 17.23%
LEVERAGE RATIO 13.43% 13.45%
- --------------------------------------------------------------------------------
8
<PAGE>
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.
9
<PAGE>
NATIONAL CITY BANCORPORATION
Part II Other Information
Item 4. Submission of matters to a vote of security holders.
None
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
September 30, 1998.
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: November 9, 1998 By: /S/ David L. Andreas
------------------ -------------------------------------
President & Chief Executive Officer
Dated: November 9, 1998 By: /S/ Thomas J. Freed
------------------ -------------------------------------
Secretary and Chief Financial Officer
10
EXHIBIT 19
NATIONAL CITY
BANCORPORATION
1998
THIRD QUARTER
REPORT
NINE MONTHS
ENDED
SEPTEMBER 30, 1998
<PAGE>
TO OUR STOCKHOLDERS:
Net earnings were $4,263,000 for the third quarter of 1998, compared with
$4,311,000 in the third quarter of 1997. Earnings per share were $0.48 compared
with $0.49 in the third quarter of 1997. The third quarter earnings for 1997
include a state income tax refund of $1,369,000 with an after tax effect of
approximately $850,000. Excluding the effect of last year's tax refund, net
earnings were up 18.6 percent over 1997.
Third quarter net interest income was $12,641,000, which was higher by
$1,398,000, or 12 percent, than in the third quarter of 1997. The improvement
was primarily attributable to an increase in average loans, which were up $76
million, or 11 percent from the third 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
5.33 percent for the third quarter compared with 5.14 percent for the same
period last year. Noninterest income for the third quarter was $2,177,000
compared with $3,489,000 in the same period of 1997. The tax refund of
$1,369,000 is included in last year's noninterest income. Noninterest expense
was essentially unchanged for the third quarter at $7,146,000 compared with
$7,149,000 for the third quarter of 1997.
Net loan charge-offs for the third quarter were $701,000. Additional loss
provisions of $650,000 were added to the reserve during the quarter. As a
result, the Company's reserve for loan losses at September 30 was $10,625,000 or
1.39 percent of loans outstanding compared to $10,071,000 and 1.51 percent at
December 31, 1997. Nonperforming assets were $18.6 million or 2.4 percent of
total loans at September 30, 1998 compared with $1.2 million or .18 percent of
total loans at December 31, 1997. The increase in nonperforming assets occurred
at the Company's commercial finance subsidiary, Diversified Business Credit,
Inc. The increase related to two loans in the process of liquidation. We expect
the liquidation to be substantially complete by year-end.
Current news and other information about your Company can now be found on the
internet at
http://www.moneynet.com
The site includes our current stock price, press releases, and other information
under our trading symbol, NCBM.
/s/ David L. Andreas
David L. Andreas
President and
Chief Executive Officer
<PAGE>
NATIONAL CITY BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash & due from banks ............................................ $ 60,945 $ 52,847
Federal funds sold and resale agreements ......................... 30,125 3,740
Available-for-sale securities:
U.S. Treasury ................................................. 10,109 23,997
U.S. Government agencies ...................................... 12,046 9,844
Mortgage-backed ............................................... 119,498 102,529
Other securities .............................................. 2,801 4,955
----------- -----------
Total available-for-sale securities ....................... 144,454 141,325
Held-to-maturity securities:
Mortgage-backed ............................................... 44,969 37,402
----------- -----------
Total held-to-maturity securities ......................... 44,969 37,402
(approximate market value: 1998 - $45,943; 1997 - $37,861)
Loans ............................................................ 762,944 666,382
Less allowance for loan losses ................................ (10,625) (10,071)
----------- -----------
Net loans ................................................... 752,319 656,311
Bank premises and equipment ...................................... 10,618 11,413
Accrued interest receivable ...................................... 7,179 7,260
Customer acceptance liability .................................... 393 811
Other assets ..................................................... 21,224 24,063
----------- -----------
Total assets .............................................. $ 1,072,226 $ 935,172
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing ........................................... $ 148,515 $ 149,624
Interest bearing .............................................. 349,165 329,026
----------- -----------
Total deposits ............................................ 497,680 478,650
Federal funds purchased and repurchase agreements ................ 157,480 104,399
Commercial paper ................................................. 95,798 119,081
Other short-term borrowed funds .................................. 27,388 23,218
Acceptances outstanding .......................................... 393 811
Other liabilities ................................................ 9,199 9,086
Long-term debt ................................................... 139,000 67,000
----------- -----------
Total liabilities ......................................... 926,938 802,245
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 ............................ 1,190 424
Retained earnings ............................................. 11,040 28,464
----------- -----------
Subtotal .................................................. 145,289 133,783
Less common stock in treasury at cost:
1998 - 21 shares; 1997 - 33,553 shares ........................ (1) (856)
----------- -----------
Total stockholders' equity ................................ 145,288 132,927
----------- -----------
Total liabilities and stockholders' equity ................ $ 1,072,226 $ 935,172
=========== ===========
</TABLE>
<PAGE>
NATIONAL CITY BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands except per share)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans ............................. $ 19,353 $ 17,199 $ 54,807 $ 48,892
Interest on federal funds sold & resale agreements ..... 296 491 591 1,087
Interest and dividends on securities ................... 2,951 2,873 8,612 8,499
---------- ---------- ---------- ----------
Total interest income ........................... 22,600 20,563 64,010 58,478
INTEREST EXPENSE
Interest on deposits ................................... 4,295 4,401 12,184 12,147
Interest on short-term borrowed funds .................. 3,862 3,922 11,694 11,156
Interest on long-term debt ............................. 1,802 997 4,083 2,821
---------- ---------- ---------- ----------
Total interest expense .......................... 9,959 9,320 27,961 26,124
---------- ---------- ---------- ----------
Net interest income ............................. 12,641 11,243 36,049 32,354
Provision for loan losses .............................. 650 502 1,390 1,859
---------- ---------- ---------- ----------
Net interest income after provision for loan losses .... 11,991 10,741 34,659 30,495
NONINTEREST INCOME
Service charges on deposit accounts .................... 498 496 1,591 1,678
Fees for other customer services ....................... 433 420 1,249 1,258
Trust fees ............................................. 1,139 1,031 3,745 3,544
State tax refund ....................................... 1,369 1,369
Other .................................................. 107 173 679 1,100
---------- ---------- ---------- ----------
Total noninterest income ........................ 2,177 3,489 7,264 8,949
NONINTEREST EXPENSES
Salaries and employee benefits ......................... 3,913 4,013 11,878 11,651
Net occupancy expense .................................. 809 788 2,338 2,332
Equipment rentals, depreciation & maintenance .......... 964 890 2,667 2,662
Other .................................................. 1,460 1,458 4,832 4,530
---------- ---------- ---------- ----------
Total noninterest expense ....................... 7,146 7,149 21,715 21,175
---------- ---------- ---------- ----------
Earnings before taxes .................................. 7,022 7,081 20,208 18,269
Applicable income taxes ................................ 2,759 2,770 7,974 7,194
---------- ---------- ---------- ----------
Net earnings .................................... $ 4,263 $ 4,311 $ 12,234 $ 11,075
========== ========== ========== ==========
Basic earnings per share .................................... $ 0.48 $ 0.49 $ 1.38 $ 1.24
Average common and common equivalent shares outstanding ..... 8,861,933 8,893,272 8,864,012 8,907,961
</TABLE>
<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>
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.
PRINCIPAL OFFICERS OF
David L. Andreas SUBSIDIARIES
PRESIDENT AND
CHIEF EXECUTIVE OFFICER DIVERSIFIED BUSINESS
National City Bancorporation CREDIT, INC.
PRESIDENT AND
CHIEF EXECUTIVE OFFICER Robert L. Olson
National City Bank of PRESIDENT AND
Minneapolis CHIEF EXECUTIVE OFFICER
Terry L. Andreas Janet L. Pomeroy
CHAIRMAN OF THE BOARD SENIOR VICE PRESIDENT
School for Field Studies
Beverly, Massachusetts NATIONAL CITY BANK
OF MINNEAPOLIS
Michael J. Boris*
PRIVATE INVESTOR AND David L. Andreas
CONSULTANT PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Marvin Borman*
PARTNER William J. Klein
Maslon, Edelman, Borman EXECUTIVE VICE PRESIDENT
and Brand CLIENT SERVICES
Sharon Bredeson Thomas J. Freed
PRESIDENT AND SENIOR VICE PRESIDENT AND
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER
Staff-Plus, Inc.
Donald W. Kjonaas
Kenneth H. Dahlberg SENIOR VICE PRESIDENT
CHAIRMAN OF THE BOARD OPERATIONS
Dahlberg, Inc.
John H. Daniels, Jr.*
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>
FINANCIAL HIGHLIGHTS
(in thousands except per share)
THIRD QUARTER ENDED
SEPTEMBER 30,
------------------------- PERCENT
1998 1997 CHANGE
--------- -------- ------
EARNINGS:
Net interest income .......... $ 12,641 $ 11,243 12%
Net earnings ................. 4,263 4,311 (1)%
BASIC EARNINGS PER SHARE:
Net earnings* ................ $ 0.48 $ 0.49
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
1998 1997
--------- --------
EARNINGS:
Net interest income .......... $ 36,049 $ 32,354 11%
Net earnings ................. 12,234 11,075 11%
BASIC EARNINGS PER SHARE:
Net earnings* ................ $ 1.38 $ 1.24
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
BALANCE SHEET ITEMS
Total assets ................. $1,072,226 $935,172 15%
Loans ........................ 762,944 666,382 15%
Deposits ..................... 497,680 478,650 4%
Stockholders' equity ......... 145,288 132,927 9%
Book value per share* ........ 16.39 14.97
- --------------------------------
* (adjusted for stock dividends)
[LOGO] PRINTED WITH [LOGO]
SOY INK RECYCLED PAPER
<PAGE>
NATIONAL CITY BANCORPORATION
651 Nicollet Mall
Minneapolis, Minnesota 55402-1611
Telephone 612-904-8503
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