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, 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 March 31, 1998, 8,057,476 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, 1998, is incorporated by reference 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 1.
Consolidated Balance Sheets - March 31, 1998 and December 31, 1997.
Consolidated Statements of Earnings - Three months ended March 31,
1998 and 1997.
Consolidated Statements of Cash Flows - Three months ended March 31, 1998 and
1997 are included on page 2 of this report.
Consolidated Statements of Earnings and Comprehensive Income - Three months
ended March 31, 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 through 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>
MARCH 31,
(IN THOUSANDS) 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 3,651 $ 3,293
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation and amortization 741 796
Amortization of securities premiums and discounts 143 143
Provision for loan losses 480 790
(Increase) decrease in accrued income receivable 105 (162)
Decrease in other assets 3,132 218
Increase in other liabilities 3,687 1,083
--------------------------
Total operating adjustments 8,288 2,868
--------------------------
NET CASH FROM OPERATING ACTIVITIES 11,939 6,161
--------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) in loans (23,645) (31,915)
Net (increase) decrease in federal funds sold (5,310) 49,785
Available-for-sale securities:
Proceeds from maturities and principal repayments 18,433 12,747
Purchases of securities (14,830) (10,230)
Held-to-maturity securities:
Proceeds from maturities and principal repayments 4,380 1,871
Purchases of securities (7,945) (10,107)
Purchase of premises and equipment (467) (699)
--------------------------
NET CASH FROM (USED IN) INVESTING ACTIVITIES (29,384) 11,452
--------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) in non-interest bearing and savings deposits (10,777) (22,349)
Net (decrease) in time deposits (3,588) (42,419)
Net increase in federal funds purchased and repurchase agreements 21,428 33,856
Net increase (decrease) in commercial paper 7,395 (8,720)
Net increase (decrease) in other borrowed funds (2,618) 8,752
Net increase in long-term debt 10,000
Purchase of treasury stock (594) (1)
--------------------------
NET CASH FROM (USED IN) FINANCING ACTIVITIES 11,246 (20,881)
--------------------------
Net (decrease) in cash and due from banks (6,199) (3,268)
Cash and due from banks at beginning of year 52,847 47,934
--------------------------
Cash and due from banks at end of period $ 46,648 $ 44,666
==========================
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for:
Interest $ 9,003 $ 8,653
Income taxes 2,454 421
Unrealized securities (losses) net of tax (12) (827)
</TABLE>
<PAGE>
NATIONAL CITY BANCORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
(IN THOUSANDS) 1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Total interest income 20,326 18,407
Total interest expense 8,875 8,028
---------- ----------
Net interest income 11,451 10,379
Provision for loan losses 480 790
---------- ----------
Net interest income after provision for loan losses 10,971 9,589
Total noninterest income 2,409 2,980
Total noninterest expense 7,350 7,126
--------------------------
Earnings from operations before taxes 6,030 5,443
Applicable income taxes 2,379 2,150
--------------------------
Net Earnings 3,651 3,293
Other comprehensive income, before tax:
Unrealized (loss) on investments in securities (21) (1,390)
Applicable income tax (benefit) (8) (562)
--------------------------
Other comprehensive income, net of tax (13) (828)
--------------------------
Comprehensive Income $ 3,638 $ 2,465
==========================
</TABLE>
<PAGE>
The Consolidated Balance Sheet as of March 31, 1998, the
Consolidated Statements of Earnings for the three-month periods ended March 31,
1998 and 1997, the Consolidated Statements of Cash Flows for the three-month
periods then ended March 31, 1998 and 1997 and the Consolidated Statements of
Earnings and Comprehensive Income for the three-month periods then ended March
31, 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 March 31, 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 shareholders. The results of
operations for the period ended March 31, 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 first quarter ended March 31, 1998 increased to
$3,651,000 up 11 percent over 1997 earnings of $3,293,000. Basic earnings per
share increased to $ .45 for the first quarter of 1998, compared with earnings
per share of $ .41 in the first quarter of 1997. Earnings information is
summarized below:
- ------------------------------------------------------------------------------
First Quarter
1998 1997
---- ----
Net income $3,651 $3,293
Basic earnings per share $ .45 $ .41
Return on average equity 11.10% 11.17%
Return on average assets 1.59% 1.52%
- ------------------------------------------------------------------------------
Net interest income for the first quarter was $11,451,000 up
$1,072,000 or 10 percent over the first quarter 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 FIRST QUARTER 1997
Resulting from:
Interest On: Total Rates Volumes
----- ----- -------
Total Earning Assets $ 1,917 $ 518 $ 1,399
Total Interest Bearing Liabilities 847 393 454
--------------------------------------
Change in Net Interest Income $ 1,070 $ 125 $ 945
======================================
*on a fully taxable equivalent basis
-----------------------------------------------------------------------------
The tax equivalent net interest margin for the quarter was 5.40
percent compared with 5.22 percent for the same period last year. We continue to
face strong competition for loans in our market niche. Notwithstanding the
competitive environment, loans increased by 10 percent over the first 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.
<PAGE>
Noninterest income for the first quarter was $2,409,000 compared
with $2,980,000 in 1997. An increase in trust fee income was offset by decreases
in service charges on deposit accounts and other income. The first quarter of
1997 included a one-time loan contract cancellation fee.
Noninterest expense increased $224,000 or 3 percent for the first
quarter. The Company's noninterest expense includes charges incurred in
connection with making its computer systems Year 2000 compliant. Personnel
expenses had the largest increase because of increased compensation costs and
recruiting expenses.
The efficiency ratio improved to 53.03 percent for the first quarter
of 1998 compared to 53.34 percent for the same period last year. The improvement
was due to a $1.1 million increase in net interest income, a relatively modest
increase in noninterest expense, but offset by a decrease in noninterest income
because of a one-time loan contract cancellation fee in 1997.
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 $700,000 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 enhancement. A
portion 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.
RESERVE FOR LOAN LOSSES:
Net loan recoveries during the first quarter were $15,000 compared
with net loan charge-offs of $470,000 for the same period last year. The loan
loss provision was $480,000 for the first quarter, compared with $790,000 in the
first quarter of 1997. The provision is based on
<PAGE>
management's continuing evaluation of the loan portfolio, including estimates
and appraisals of collateral values, and current economic conditions. At March
31, 1998, the allowance for loan losses was $10,566,000, or 1.53 percent of
loans, compared to 1.51 percent of loans at December 31, 1997. Credit quality
remains strong with non-performing loans at .1 percent of loans outstanding. At
quarter end the reserve coverage was more that ten times non-performing assets.
Activity regarding the allowance is summarized below:
- -----------------------------------------------------------------------------
(in thousands)
First Quarter
1998 1997
---- ----
Balance beginning of period $10,071 $8,511
Provision charge to operating expense 480 790
Less net loan (charge-offs) or recoveries 15 (470)
-----------------------
Balance March 31 $10,566 $8,831
=======================
- -----------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES:
The Company's average total assets were $ 933.1 million for the
three-months ended March 31, 1998, up from $ 875.5 million for the same period
in 1997. The majority of the increase was attributed 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 Diversified Business Credit, Inc. (DBCI). In
addition to deposits and short-term borrowings, the Company had long-term debt
of $ 67 million at March 31, 1998, in the form of senior notes, also used to
fund the loans of DBCI.
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,
1998 1997
---- ----
RISK CAPITAL RATIOS
Tier I Capital 16.5% 15.8%
Tier II Capital 17.8% 17.0%
LEVERAGE RATIO 14.2% 13.7%
- -----------------------------------------------------------------------------
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)
<PAGE>
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
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
maximum directors to 16 from 15.
Election of Directors
At the annual stockholders' meeting held on April 22, 1998, the
shareholders approved the proposed amendments of the Restated
Articles of Incorporation to increase the number of authorized
shares of common stock to 40,000,000 from 20,000,000, and to
increase the maximum number of directors to 16 from 15, and elected
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 to the Company's Board of Directors.
Affirmative Negative
Votes Votes Abstentions
Increase authorized shares 7,393,488 134,998 528,990
Increase number of directors 7,434,807 83,651 539,018
David L. Andreas 7,526,612 20,124 510,740
Michael J. Boris 7,522,559 24,177 510,740
Sharon N. Bredeson 7,522,217 24,519 510,740
James B. Goetz, Sr. 7,524,455 22,281 510,740
Esperanza Guerrero-Anderson 7,522,097 24,639 510,740
C. Bernard Jacobs 7,517,695 29,041 510,740
Robert L. Olson 7,527,396 19,340 510,740
Roger H. Scherer 7,527,396 19,340 510,740
Item 6. Exhibits and reports of Form 8-K.
Exhibit index:
Number Description
------ -----------
3 Amendments to the Company's Restated Articles of
Incorporation
3.1 Amendment dated April 22, 1998 to the Company's
By-laws
19 Quarterly Report to Stockholders
27 Financial Data Schedule
There were no reports on Form 8-K filed for the three months ended
March 31, 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: May 12, 1998 By: /S/David L. Andreas
----------------- -------------------------------------
President & Chief Executive Officer
Dated: May 12, 1998 By: /S/Thomas J. Freed
----------------- -------------------------------------
Secretary and Chief Financial Officer
NATIONAL CITY
BANCORPORATION
1998
FIRST QUARTER
REPORT
THREE MONTHS
ENDED
MARCH 31, 1998
TO OUR STOCKHOLDERS:
Net earnings were $3,651,000 for the first quarter of 1998, up 11 percent,
compared with $3,293,000 in the first quarter of 1997. Earnings per share
increased to $0.45 compared with $0.41 in the first quarter of 1997.
First quarter net interest income was $11,451,000, which was higher by
$1,072,000, or 10 percent, than in the first quarter of 1997. The improvement
was primarily attributable to an increase in average loans, which were up $55.9
million, or 9 percent from the first 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 first quarter compared with 5.22 percent for the same
period last year. Noninterest income for the first quarter was $2,409,000
compared with $2,980,000 in the same period of 1997. Noninterest expense for the
first quarter was $7,350,000, an increase of $224,000, or 3 percent compared
with the first quarter of 1997.
There were net loan recoveries for the first quarter of $15,000. Additional loss
provisions of $480,000 were added to the reserve during the quarter. As a
result, the Company's reserve for loan losses at quarter-end was $10,566,000 or
1.53 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 $978,000 or .14
percent of total loans at March 31, 1998 compared with $1.2 million or .18
percent of total loans at December 31, 1997. The reserve was more than 10 times
the nonperforming assets at March 31.
At the Annual Stockholders' meeting held on April 22, 1998, the Articles of
Incorporation were amended to increase the authorized shares of common stock
from 20 million shares to 40 million shares and to increase the maximum number
of directors on the Board of Directors from 15 to 16. Lowell W. Andreas did not
stand for reelection to the Board of Directors. At the meeting, the Chairman
recognized Mr. Andreas for his number of years of service and contributions to
the Company. In addition, David L. Andreas, C. Bernard Jacobs, and Roger H.
Scherer were reelected, and Michael J. Boris, Sharon N. Bredeson, James B.
Goetz, Sr., Esperanza Guerrero-Anderson, and Robert L. Olson were elected to the
Board of Directors. The Directors declared a 10 percent stock dividend to
stockholders of record May 6, 1998, payable June 8, 1998.
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
(in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
- ----------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Cash & due from banks .......................................... $ 46,648 $ 52,847
Federal funds sold and resale agreements ....................... 9,050 3,740
Available-for-sale securities:
U.S. Treasury .............................................. 12,000 23,997
U.S. Government agencies ................................... 9,820 9,844
Mortgage-backed ............................................ 110,803 102,529
Other securities ........................................... 4,955 4,955
----------- -----------
Total available-for-sale securities .................. 137,578 141,325
Held-to-maturity securities:
Mortgage-backed ............................................ 40,970 37,402
----------- -----------
Total held-to-maturity securities .................... 40,970 37,402
(approximate market value: 1998 - $41,289; 1997 - $37,861)
Loans .......................................................... 690,027 666,382
Less allowance for loan losses ............................. (10,566) (10,071)
----------- -----------
Net loans ............................................... 679,461 656,311
Bank premises and equipment .................................... 11,139 11,413
Accrued interest receivable .................................... 7,155 7,260
Customer acceptance liability .................................. 604 811
Other assets ................................................... 20,931 24,063
----------- -----------
Total assets ......................................... $ 953,536 $ 935,172
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing ........................................ $ 140,310 $ 149,624
Interest bearing ........................................... 323,975 329,026
----------- -----------
Total deposits ....................................... 464,285 478,650
Federal funds purchased and repurchase agreements .............. 125,827 104,399
Commercial paper ............................................... 126,476 119,081
Other short-term borrowed funds ................................ 20,600 23,218
Acceptances outstanding ........................................ 604 811
Other liabilities .............................................. 12,773 9,086
Long-term debt ................................................. 67,000 67,000
----------- -----------
Total liabilities .................................... 817,565 802,245
Stockholders' equity
Common stock, par value $1.25
Authorized shares: 20,000,000
Issued shares: 1998 - 8,110,836; 1997 - 8,110,836..... 10,139 10,139
Additional paid-in capital ................................. 94,756 94,756
Unrealized gains net of tax effect ......................... 411 424
Retained earnings .......................................... 32,115 28,464
----------- -----------
Subtotal ............................................. 137,421 133,783
Less common stock in treasury at cost:
1998 - 53,360 shares; 1997 - 33,553 shares (1,450) (856)
----------- -----------
Total stockholders' equity ........................... 135,971 132,927
----------- -----------
Total liabilities and stockholders' equity ........... $ 953,536 $ 935,172
=========== ===========
</TABLE>
<PAGE>
NATIONAL CITY BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands except per share)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans ............................ $ 17,302 $ 15,333
Interest on federal funds sold & resale agreements .... 118 258
Interest and dividends on securities .................. 2,906 2,816
---------- ----------
Total interest income ....................... 20,326 18,407
INTEREST EXPENSE
Interest on deposits .................................. 4,009 3,863
Interest on short-term borrowed funds ................. 3,726 3,323
Interest on long-term debt ............................ 1,140 842
---------- ----------
Total interest expense ...................... 8,875 8,028
---------- ----------
Net interest income ......................... 11,451 10,379
Provision for loan losses ............................. 480 790
---------- ----------
Net interest income after provision for loan losses ... 10,971 9,589
NONINTEREST INCOME
Service charges on deposit accounts ................... 563 655
Fees for other customer services ...................... 353 372
Trust fees ............................................ 1,330 1,284
Other ................................................. 163 669
---------- ----------
Total noninterest income .................... 2,409 2,980
NONINTEREST EXPENSES
Salaries and employee benefits ........................ 4,052 3,879
Net occupancy expense ................................. 759 764
Equipment rentals, depreciation & maintenance ......... 873 892
Other ................................................. 1,666 1,591
---------- ----------
Total noninterest expense ................... 7,350 7,126
---------- ----------
Earnings before taxes ................................. 6,030 5,443
Applicable income taxes ............................... 2,379 2,150
---------- ----------
Net earnings ................................ $ 3,651 $ 3,293
========== ==========
Basic earnings per common share ....................... $ 0.45 $ 0.41
Average common and common equivalent shares outstanding 8,063,639 8,110,866
</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_______________________
Date__________________________________________________________
<PAGE>
DIRECTORS OF NATIONAL CITY
BANCORPORATION
David C. Malmberg
CHAIRMAN OF THE BOARD
National City Bancorporation
Wendell R. Anderson*
OF COUNSEL
Larkin, Hoffman, Daly and
Lindgren Ltd.
David L. Andreas
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
National City Bancorporation
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
National City Bank of
Minneapolis
Terry L. Andreas
CHAIRMAN OF THE BOARD
School for Field Studies
Beverly, Massachusetts
Michael J. Boris*
PRIVATE INVESTOR AND
CONSULTANT
Marvin Borman*
PARTNER
Maslon, Edelman, Borman
and Brand
Sharon Bredeson
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Staff-Plus, Inc.
Kenneth H. Dahlberg
CHAIRMAN OF THE BOARD
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
OFFICERS OF NATIONAL CITY
BANCORPORATION
David L. Andreas
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Thomas J. Freed
SECRETARY AND
CHIEF FINANCIAL OFFICER
PRINCIPAL OFFICERS OF
SUBSIDIARIES
DIVERSIFIED BUSINESS
CREDIT INC.
Robert L. Olson
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Janet L. Pomeroy
SENIOR VICE PRESIDENT
NATIONAL CITY BANK
OF MINNEAPOLIS
David L. Andreas
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
William J. Klein
EXECUTIVE VICE PRESIDENT
CLIENT SERVICES
Thomas J. Freed
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Donald W. Kjonaas
SENIOR VICE PRESIDENT
OPERATIONS
<PAGE>
FINANCIAL HIGHLIGHTS
(in thousands except per share)
<TABLE>
<CAPTION>
FIRST QUARTER ENDED
MARCH 31,
------------------------ PERCENT
1998 1997 CHANGE
-------- ------- --------
<S> <C> <C> <C>
EARNINGS:
Net interest income .......... $ 11,451 $ 10,379 10%
Net earnings ................. 3,651 3,293 11%
BASIC EARNINGS PER COMMON SHARE:
Net earnings* ................ $ 0.45 $ 0.41
MARCH 31, DECEMBER 31,
1998 1997
-------- ------------
BALANCE SHEET ITEMS
Total assets ................. $953,536 $935,172 2%
Loans ........................ 690,027 666,382 4%
Deposits ..................... 464,285 478,650 (3)%
Stockholders' equity ......... 135,971 132,927 2%
Book value per share ......... 16.88 16.46
- ---------------------------------
*Restated for stock dividends
</TABLE>
<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
ARTICLES OF AMENDMENT
OF
RESTATED ARTICLES OF INCORPORATION
OF
NATIONAL CITY BANCORPORATION
NATIONAL CITY BANCORPORATION, a corporation organized and existing under and by
virtue of the laws of the State of Iowa (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: That at the annual meeting of the Corporation's stockholders held April
22, 1998 (the "Annual Meeting"), an aggregate of 7,546,736 shares of the
Corporation's common stock, $1.25 par value per share, were represented in
person or by proxy, representing a majority of the Corporation's 8,057,478
shares issued and outstanding on the Annual Meeting record date of February 20,
1998.
SECOND: That the Corporation has no other class or series of capital stock
designated, issued or outstanding; accordingly, the holders of the Corporation's
common stock are the only voting group entitled to act with respect to matters
brought before the stockholders of the Corporation for approval.
THIRD: That during the Annual Meeting, acting pursuant to the recommendation of
the Corporation's Board of Directors, the holders of 7,393,488 shares of the
Corporation's common stock voted in favor of adopting the following resolution
setting forth an amendment to the Corporation's Restated Articles of
Incorporation:
RESOLVED, that Article III of the Restated Articles of Incorporation of
this Corporation be amended by replacing the phrase "20,000,000 shares"
with the phrase "40,000,000 shares."
FOURTH: That said 7,393,488 shares is sufficient for approval of the above
resolution by the holders of the Corporation's common stock.
FIFTH: That during the Annual Meeting, acting pursuant to the recommendation of
the Corporation's Board of Directors, the holders of 7,434,807 shares of the
Corporation's common stock voted in favor of adopting the following resolution
setting forth an amendment to the Corporation's Restated Articles of
Incorporation:
RESOLVED FURTHER, that the first sentence of Article VI of the Restated
Articles of Incorporation of this Corporation be amended by replacing
the phrase "fifteen (15) in number" with the phrase "sixteen (16) in
number."
SIXTH: That said 7,434,807 shares is sufficient for approval of the above
resolution by the holders of the Corporation's common stock.
<PAGE>
IN WITNESS WHEREOF, said National City Bancorporation has caused these
Articles of Amendment to be executed by Thomas J. Freed, its Secretary and Chief
Financial Officer this 12th day of May, 1998.
By: /s/ Thomas J. Freed
Thomas J. Freed, Secretary and
Chief Financial Officer
AMENDMENTS TO
THE BYLAWS
OF NATIONAL CITY BANCORPORATION
The undersigned, Thomas J. Freed, being the Secretary of National City
Bancorporation, a corporation organized under the laws of the State of Iowa (the
"Corporation"), does hereby state that pursuant to a meeting of the Board of
Directors of the Corporation held on April 22, 1998, the Board approved the
following amendments to the Bylaws of the Corporation:
Article I, Section 1, is hereby amended to read as follows:
"The principal office shall be in the City of Minneapolis,
County of Hennepin, State of Minnesota."
Article I, Section 2, is hereby amended to read as follows:
"The Corporation may also have offices at such other places
both within and without the state of Minnesota as the Board of
Directors may, from time to time, determine or the business of
the Corporation may require."
Article I, Section 3, is hereby created to read as follows:
"The Corporation shall maintain a registered office within the
state of Iowa as set forth in the Articles of Incorporation
and as required by law. The Board of Directors shall have the
authority to change the registered office of the Corporation
and a statement evidencing any such change shall be filed with
the Secretary of State of Iowa as required by law."
Article II, Section 1, is hereby amended to read as follows:
"The annual meeting of the stockholders shall be held at the
Corporation's principal office or at such other place within
or without the state of Minnesota as is designated by the
Board of Directors. A meeting of stockholders shall be held at
such place, date or hour as stated in the Notice of Meeting as
determined by the Board of Directors or as otherwise permitted
by law or these Bylaws."
Article IV, Section 1, is hereby amended to read as follows:
"Notices to directors and stockholders shall be in writing and
delivered personally or mailed to the directors or
stockholders at the addresses appearing in the books of the
Corporation. Notice by mail shall be deemed given at the time
when the same shall be mailed. Notice to shareholders and
directors may also be given by telegram, facsimile or
electronic communication.
Article VI, Section 5, Closing of Transfer Books, is hereby
amended to read as follows:
<PAGE>
Closing of Transfer Books
Section 5. The board of directors may close the stock transfer
books of the corporation for a period not exceeding seventy
(70) days preceding the date of any meeting of stockholders or
the date for payment of any dividend or the date for the
allotment of rights or the date when any change or conversion
or exchange of capital stock shall go into effect or for a
period of not exceeding seventy (70) days in connection with
obtaining the consent of stockholders for any purpose. If the
stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at
least ten (10) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the board of
directors may fix, in advance, a date, not exceeding seventy
(70) days preceding the date of any meeting of stockholders,
or the date for the payment of any dividend, or the date for
the allotment of rights or the date when any change or
conversion or exchange of capital stock shall go into effect,
or a date in connection with obtaining such consent, as a
record date for the determination of the stockholders entitled
to notice of, and to vote at, any such meeting, and any
adjournment thereof, or entitled to receive payment of any
such dividend, or to any such allotment of rights, or to
exercise the rights in respect of any such change, conversion
or exchange of capital stock, or to give such consent, and in
such case such stockholders and only such stockholders as
shall be stockholders of record on the record date shall be
entitled to such notice of, and to vote at, such meeting and
any adjournment thereof, or to receive payment of such
dividend, or to receive such allotment of rights, or to
exercise such rights, or to give such consent, as the case may
be, notwithstanding any transfer of any stock on the books of
the corporation after any such record date fixed as aforesaid.
Article VII, Section 3, Annual Statement, is hereby deleted.
Article VII, Section 7, Indemnification, is hereby created to
read as follows:
"The Corporation shall indemnify its officers and directors to
the full extent permitted by the laws of the State of Iowa as
now in effect, or as the same may be hereafter modified."
IN WITNESS WHEREOF, the undersigned has set his hand on this 12th day
of May, 1998.
/s/ Thomas J. Freed
Thomas J. Freed,
Secretary
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