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, 1999 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, 1999, 8,766,899 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, 1999, 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, 1999 and December 31, 1998.
Consolidated Statements of Earnings - Three months ended March 31, 1999
and 1998.
Consolidated Statements of Cash Flows - Three months ended March 31, 1999 and
1998 are included on page 2 of this report.
Consolidated Statements of Earnings and Comprehensive Income - Three months
ended March 31, 1999 and 1998 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 10 of this report.
Part II. Other Information
- --------------------------
Part II items requiring a response are included on page 11 of this report.
1
<PAGE>
NATIONAL CITY BANCORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31,
(In Thousands) 1999 1998
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<S> <C> <C>
Cash flows from operating activities:
Net earnings $3,605 $3,651
Adjustments to reconcile net earnings to net cash from operating
activities:
Depreciation and amortization 693 741
Amortization of securities premiums and discounts 155 143
Provision for loan losses 612 480
Decrease in accrued income receivable 305 105
Decrease (increase) in other assets (136) 3,132
Increase (decrease) in other liabilities (342) 3,687
Other increase 183 22
-------------------------
Total operating adjustments 1,470 8,310
-------------------------
Net cash from operating activities 5,075 11,961
-------------------------
Cash flows from investing activities:
Net (increase) in loans (16,350) (23,645)
Net (increase) in federal funds sold (12,040) (5,310)
Available-for-sale securities:
Proceeds from maturities and principal repayments 16,266 18,411
Purchases of securities (14,240) (14,830)
Held-to-maturity securities:
Proceeds from maturities and principal repayments 4,499 4,380
Purchases of securities (17,396) (7,945)
Purchase of premises and equipment (378) (467)
-------------------------
Net cash from (used in) investing activities (39,639) (29,406)
-------------------------
Cash flows from financing activities:
Net increase (decrease) in non-interest bearing and savings deposits 8,545 (10,777)
Net (decrease) in time deposits (8,821) (3,588)
Net increase in federal funds purchased and repurchase agreements 9,850 21,428
Net increase in commercial paper 18,188 7,395
Net increase (decrease) in other borrowed funds 3,465 (2,618)
Purchase of treasury stock (1,226) (594)
-------------------------
Net cash from (used in) financing activities 30,001 11,246
-------------------------
Net (decrease) in cash and due from banks (4,563) (6,199)
Cash and due from banks at beginning of year 52,271 52,847
-------------------------
Cash and due from banks at end of period $47,708 $46,648
=========================
Supplemental disclosures
Cash paid during the year for:
Interest $11,628 $9,003
Income taxes 545 2,454
Unrealized securities (losses) net of tax (416) (13)
</TABLE>
2
<PAGE>
NATIONAL CITY BANCORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
(IN THOUSANDS) 1999 1998
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<S> <C> <C>
Total interest income $ 20,281 $ 20,326
Total interest expense 8,814 8,875
------------ -------------
Net interest income 11,467 11,451
Provision for loan losses 612 480
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Net interest income after provision for loan losses 10,855 10,971
Total noninterest income 2,413 2,409
Total noninterest expense 7,304 7,350
------------ -------------
Earnings from operations before taxes 5,964 6,030
Applicable income taxes 2,359 2,379
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Net Earnings 3,605 3,651
Other comprehensive income, before tax:
Unrealized (loss) on investments in securities (700) (21)
Applicable income tax (benefit) (284) (8)
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Other comprehensive income, net of tax (416) (13)
------------ -------------
Comprehensive Income $3,189 $3,638
============ =============
</TABLE>
3
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The Consolidated Balance Sheet as of March 31, 1999, the Consolidated
Statements of Earnings for the three-month periods ended March 31, 1999 and
1998, the Consolidated Statements of Cash Flows for the three-month periods then
ended March 31, 1999 and 1998 and the Consolidated Statements of Earnings and
Comprehensive Income for the three-month periods then ended March 31, 1999 and
1998 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, 1999 and 1998, 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, 1998 annual report to shareholders. The results of
operations for the period ended March 31, 1999 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 first quarter ended March 31, 1999 were $3,605,000
compared with $3,430,000 in the fourth quarter of 1998 and $3,651,000 in the
first quarter of 1998. Basic earnings per share was $ .41 for the first quarter
of 1999, compared with earnings per share of $.39 and $ .41 in the fourth and
first quarters of 1998, respectively. Net earnings in the first quarter of 1999
in comparison with the same period last year, were adversely affected by the
loss of interest income on nonperforming assets, which acted to lower the
current quarter net earnings compared with last year by $204,000. Earnings
information is summarized below:
- ------------------------------------------------------------------------------
First Fourth First
Quarter Quarter Quarter
1999 1998 1998
------- ------- -------
Net income $3,605 $3,430 $3,651
Basic earnings per share $ .41 $ .39 $ .41
Return on average equity 9.94% 10.90% 11.10%
Return on average assets 1.43% 1.48% 1.59%
- ------------------------------------------------------------------------------
Net interest income for the first quarter was $11,467,000 compared with
$11,451,000 in the first quarter of 1998. Net interest income in the first
quarter of 1999 was adversely affected by the loss of interest income on
nonperforming assets, which reduced net interest income by $339,000.
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:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
NET INTEREST INCOME* CHANGE FROM FIRST QUARTER 1998
Resulting from:
Interest On: Total Rates Volumes
----- ----- -------
<S> <C> <C> <C>
Total Earning Assets $ (53) $ (2,327) $2,274
Total Interest Bearing Liabilities (61) (1,064) 1,003
--------------------------------------
Change in Net Interest Income $ 8 $ (1,263) $1,271
======================================
*on a fully taxable equivalent basis
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</TABLE>
The tax equivalent net interest margin for the quarter was 4.90 percent
compared with 5.40 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 13 percent over the first quarter of
1998.
5
<PAGE>
Noninterest income for the first quarter was $2,413,000 compared with
$2,409,000 in 1998. An increase in service charges on deposit accounts was
offset by a decrease in trust fee income.
Noninterest expense was $7,304,000 for the first quarter compared with
$7,350,000 for the first quarter of 1998. The Company's noninterest expense
includes charges incurred in connection with making its computer systems Year
2000 compliant as discussed below. Increases in personnel expenses and occupancy
costs were offset by decreases in other expenses, such as, advertising and
marketing expense, consulting fees, Federal Reserve Bank service charges, supply
costs, and telephone expense.
The efficiency ratio improved to 52.62 percent for the first quarter of
1999 compared to 53.03 percent for the same period last year. The improvement
was due to a moderate increase in net interest income and a decrease in
noninterest expense, offset by a decrease in noninterest income.
YEAR 2000 COMPLIANCE:
In 1997 the Company formed a project team, and with the assistance of an outside
consulting firm, assessed the effect of Year 2000 on the Company's critical
hardware and software, and on the embedded technology in its physical facilities
and automated equipment. This assessment also considered the potential effect of
Year 2000 on customers, business partners and vendors. A Year 2000 plan was
developed, which included prioritized tasks, implementation, testing schedules,
and contingency plans. The Company has replaced or modified certain systems to
ensure Year 2000 compliance. The Company has substantially completed the testing
of remediated systems related to Year 2000 compliance. The Company anticipates
that substantially all of the testing related to critical systems will be
concluded by the end of second quarter 1999. The Company estimates that the cost
of its Year 2000 compliance program will approximate $1.1 million, of which the
Company has incurred approximately $1 million 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 Company
will fund the expenditures from operating earnings.
The potential effect 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
6
<PAGE>
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 adversely affected. 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
new system replacements, system remediation, 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. Business continuation plans will be developed for critical business
processes to assure that service to customers will not be impaired. Federal
banking regulators have conducted special examinations of banks to determine
whether they are taking the necessary steps to prepare for Year 2000. They are
closely monitoring the progress being made by the banks to ensure that key steps
are fully completed as required by the individual bank plans.
RESERVE FOR LOAN LOSSES:
Net loan recoveries during the first quarter were $4,000 compared with
net loan recoveries of $15,000 for the same period last year. The loan loss
provision was $612,000 for the first quarter, compared with $480,000 in the
first quarter of 1998. The provision is based on management's continuing
evaluation of the Company's loan portfolio, including estimates and appraisals
of collateral values, and current economic conditions. At March 31, 1999, the
allowance for loan losses was $11,039,000, or 1.42 percent of loans, compared to
1.37 percent of loans at December 31, 1998. Nonperforming assets were 11.8
million at March 31, 1999 compared with 11.5 million at December 31, 1998.
Nonperforming assets consist of loans 90 days or more past due, non-accrual
loans and restructured loans. The past due loan total at March 31, 1999 included
a loan of $1.9 million, which was brought current subsequent to the end of the
quarter and is no longer nonperforming.
7
<PAGE>
Activity regarding the allowance is summarized below:
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(in thousands)
First Quarter
1999 1998
---- ----
Balance beginning of period $10,423 $10,071
Provision charge to operating expense 612 480
Less net loan (charge-offs) or recoveries 4 15
------- -------
Balance March 31 $11,039 $10,566
======= =======
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LIQUIDITY AND CAPITAL RESOURCES:
The Company's average total assets were $ 1.021 billion for the
three-months ended March 31, 1999, up from $ 933.1 million for the same period
in 1998. The majority of the increase was attributed to loans to businesses. The
Company continues to fund asset growth from various liability sources, including
interest and noninterest bearing deposits, short-term borrowings, and retention
of earnings. 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 $ 139
million at March 31, 1999, in the form of Federal Home Loan Bank advances and
senior notes which are 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:
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March 31,
1999 1998
---- ----
RISK CAPITAL RATIOS
Tier I Capital 16.1% 16.5%
Tier II Capital 17.3% 17.8%
LEVERAGE RATIO 14.0% 14.2%
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BUSINESS SEGMENTS:
The Company has two business segments, National City Bank of Minneapolis
(commercial bank) and Diversified Business Credit, Inc. (commercial finance).
The main offices of each segment are located in the business district of
downtown Minneapolis. The commercial bank has a detached facility drive-up
location in downtown Minneapolis and a full service branch bank in Edina,
Minnesota. The commercial finance segment also has an office in Milwaukee,
Wisconsin.
8
<PAGE>
The commercial bank offers the usual banking services including business,
consumer, and real estate loans, deposit and cash management services,
correspondent banking, and safe deposit. In addition, the commercial bank also
offers trust services including management of funds for individuals, the
administration of estates and trusts, and for corporations, governmental bodies,
and public authorities, paying agent services, trustee under corporate
indenture, pension and profit sharing agreements, and record keeping and
reporting for 401-K savings plans. The commercial bank originates the majority
of its business in the Minneapolis/St. Paul area.
The net income of the commercial bank increased to $1.9 million in the first
quarter of 1999 from $1.6 million in the same period of 1998. The bank has
increased its net earnings through the growth of its loan portfolio and the use
of low-cost funding sources, primarily deposits, and by maintaining the level of
non-interest expenses incurred.
The following table summarizes the commercial bank's performance measures:
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(in thousands)
First Quarter
1999 1998
---- ----
Total revenue $14,765 $14,906
Net earnings 1,853 1,608
Total assets 735,768 693,171
Return on average equity 11.72% 11.06%
Efficiency ratio 64.29% 67.15%
- --------------------------------------------------------------------------
The commercial finance segment specializes in providing working capital loans
secured by accounts receivable, inventory, and other marketable assets. Loans
are made on a demand basis with no fixed repayment schedule. Compared to
equity-based loans made by commercial banks and others, asset-based loans
require closer monitoring and typically interest rates earned on these loans are
higher. The commercial finance segment funds its loans through the issuance of
long-term debt in the form of Senior Notes and borrowings from the parent
company. The commercial finance segment originates the majority of its loans in
Minnesota with approximately 15 percent originated in its Wisconsin office.
The net earnings of the commercial finance segment were $1.4 million in the
first quarter of 1999 compared with $1.7 million in the same period of 1998. An
increased level of non-performing loans compared to the prior year resulted in a
loss of interest income and a corresponding decrease in net income.
9
<PAGE>
The following table summarizes the commercial finance segment's performance
measures:
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(in thousands)
First Quarter
1999 1998
---- ----
Total revenue $8,017 $7,900
Net earnings 1,413 1,740
Total assets 326,899 265,855
Return on average equity 16.73% 25.03%
Efficiency ratio 30.49% 27.84%
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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.
10
<PAGE>
NATIONAL CITY BANCORPORATION
Part II Other Information
- -------------------------
Item 4. Submission of matters to a vote of security holders.
Election of Directors
At the annual stockholders' meeting held on April 21, 1999, the
shareholders reelected Wendell R. Anderson, John H. Daniels, Jr., David
C. Malmberg, and Walter E. Meadley, Jr. to the Company's Board of
Directors.
Affirmative Negative
Votes Votes Abstentions
Wendell R. Anderson 8,107,927 34,672 639,300
John H. Daniels, Jr. 8,137,208 5,391 639,300
David C. Malmberg 8,130,498 12,101 639,300
Walter E. Meadley, Jr. 8,138,951 3,648 639,300
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
March 31, 1999.
11
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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, 1999 By: /S/David L. Andreas
--------------------- ----------------------------------------
President & Chief Executive Officer
Dated: May 12, 1999 By: /S/Thomas J. Freed
------------------- ----------------------------------------
Secretary and Chief Financial Officer
EXHIBIT 19
NATIONAL CITY
BANCORPORATION
1999
FIRST QUARTER
REPORT
THREE MONTHS
ENDED
MARCH 31, 1999
<PAGE>
TO OUR STOCKHOLDERS:
The expanding national economy and good regional earnings of our customers have
contributed to our maintaining your Company's earnings and credit quality.
During the third quarter of 1998, two loans totaling $15.9 million were placed
on non-accrual. These loans totaled less than $7.8 million at March 31, 1999.
Subsequent to the quarter end, these loans were reduced to less than $500,000.
This is the kind of result we anticipated when these two customers and our
financial risk managers planned to resolve this unacceptable risk. We expect the
Company to return to its consistent and continuing strong performance.
Net earnings were $3,605,000 for the first quarter of 1999, compared with
$3,430,000 in the fourth quarter of 1998 and $3,651,000 in the first quarter of
1998. Earnings per share were $0.41, compared with $0.39 in the fourth quarter
of 1998 and $0.41 in the first quarter of 1998. Net earnings for the first
quarter of 1999 in comparison with the same period last year, were adversely
affected by the loss of interest income on two non-accrual loans, which acted to
lower the current quarter net earnings compared with last year by $204,000.
Nonperforming assets were $11.8 million or 1.51 percent of total loans at March
31, 1999 compared with $11.5 million or 1.51 percent of total loans at December
31, 1998. The total at March 31, 1999 included a past due loan of $1.9 million
that was brought current subsequent to the quarter end and is no longer
nonperforming. Excluding this past due loan, nonperforming assets would be $9.9
million, an improvement from last quarter.
The Company's reserve for loan losses at quarter-end was $11,039,000 or 1.42
percent of loans outstanding compared to $10,423,000 and 1.37 percent at
December 31, 1998.
First quarter net interest income was $11,467,000 compared with $11,451,000 in
the first quarter of 1998. Net interest income was adversely affected by the
lost interest income on nonperforming assets in comparison with last year. The
net interest margin was 4.90 percent for the first quarter compared with 4.63
percent in the fourth quarter of 1998 and 5.40 percent in the first quarter of
1998. Noninterest income for the first quarter was $2,413,000 or compared with
$2,409,000 in the same period of 1998. Noninterest expense for the first quarter
was $7,304,000 compared with $7,350,000 in the first quarter of 1998.
At the Annual Stockholders' meeting held on April 21, 1999, Wendell R. Anderson,
John H. Daniels, Jr., David C. Malmberg, and Walter E. Meadley, Jr. were
reelected to the Board of Directors. The Directors declared a sixty cent per
share cash dividend to stockholders of record May 5, 1999, payable June 7, 1999.
Forty-eight cents of this dividend is related to our 1998 earnings, and twelve
cents is for the first quarter 1999 earnings. Of course, this is a departure
from our history of declaring stock dividends since the Company's stock was
issued in 1980. David C. Malmberg our Board Chairman described the Board's
intentions when he stated, "This cash dividend reflects the intention of the
Company to more closely model the dividend yield to shareholders that other peer
financial institutions employ. The dividend payout is made to properly reflect
the strong and consistent performance of the Company and our outlook for the
future. The investing market will now have a dividend payout style comparable to
that used by other banks." Your Board will consider future dividends on a
quarterly basis and take action to provide a decent return to you reflective of
our earnings.
/s/ David C. Malmberg /s/ David L. Andreas
David C. Malmberg David L. Andreas
Chairman of the Board President and
Chief Executive Officer
<PAGE>
NATIONAL CITY BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash & due from banks $ 47,708 $ 52,271
Federal funds sold and resale agreements ...................... 18,140 6,100
Available-for-sale securities:
U.S. Treasury ............................................. 5,034 5,077
U.S. Government agencies .................................. 24,860 17,089
Mortgage-backed ........................................... 98,328 108,930
Other securities .......................................... 2,884 2,801
----------- -----------
Total available-for-sale securities .................. 131,106 133,897
Held-to-maturity securities:
Mortgage-backed ........................................... 54,163 41,255
----------- -----------
Total held-to-maturity securities .................... 54,163 41,255
(approximate market value: 1999--$54,316; 1998--$41,569)
Loans ......................................................... 779,101 762,747
Less allowance for loan losses ............................ (11,039) (10,423)
----------- -----------
Net loans ............................................... 768,062 752,324
Premises and equipment ........................................ 10,084 10,399
Accrued interest receivable ................................... 7,194 7,499
Customer acceptance liability ................................. 781 824
Other assets .................................................. 21,249 21,113
----------- -----------
Total assets ......................................... $ 1,058,487 $ 1,025,682
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing ....................................... $ 168,583 $ 165,598
Interest bearing .......................................... 348,635 351,896
----------- -----------
Total deposits ....................................... 517,218 517,494
Federal funds purchased and repurchase agreements ............. 108,552 98,702
Commercial paper .............................................. 117,584 99,396
Other short-term borrowed funds ............................... 16,128 12,663
Acceptances outstanding ....................................... 781 824
Other liabilities ............................................. 9,973 10,315
Long-term debt ................................................ 139,000 139,000
----------- -----------
Total liabilities
909,236 878,394
Stockholders' equity:
Common stock, par valu $1.25
Authorized shares: 40,000,000
Issued shares: 1999--8,861,944; 1998--8,861,944 ...... 11,077 11,077
Additional paid-in capital ................................ 121,982 121,982
Unrealized gains net of tax effect ........................ 496 913
Retained earnings ......................................... 18,076 14,470
----------- -----------
Subtotal
151,631 148,442
Less common stock in treasury at cost:
1999--95,045 shares; 1998--45,030 shares .................. (2,380) (1,154)
----------- -----------
Total stockholders' equity ........................... 149,251 147,288
----------- -----------
Total liabilities and stockholders' equity
$ 1,058,487 $ 1,025,682
=========== ===========
</TABLE>
<PAGE>
NATIONAL CITY BANCORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands except per share) Three Months Ended
March 31,
1999 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans ................................. $ 17,450 $ 17,302
Interest on federal funds sold & resale agreements ......... 137 118
Interest and dividends on securities ....................... 2,694 2,906
---------- ----------
Total interest income ............................. 20,281 20,326
INTEREST EXPENSE
Interest on deposits ....................................... 3,684 4,009
Interest on short-term borrowed funds ...................... 2,557 3,726
Interest on long-term debt ................................. 2,573 1,140
---------- ----------
Total interest expense ............................ 8,814 8,875
---------- ----------
Net interest income ............................... 11,467 11,451
Provision for loan losses .................................. 612 480
---------- ----------
Net interest income after provision for loan losses 10,855 10,971
NONINTEREST INCOME
Service charges on deposit accounts ........................ 594 563
Fees for other customer services ........................... 414 353
Trust fees ................................................. 1,238 1,330
Other ...................................................... 167 163
---------- ----------
Total noninterest income .......................... 2,413 2,409
NONINTEREST EXPENSES
Salaries and employee benefits ............................. 4,197 4,052
Net occupancy expense ...................................... 826 759
Equipment rentals, depreciation & maintenance .............. 876 873
Other ...................................................... 1,405 1,666
---------- ----------
Total noninterest expense ......................... 7,304 7,350
Earnings before taxes ...................................... 5,964 6,030
Applicable income taxes .................................... 2,359 2,379
---------- ----------
Net earnings ...................................... $ 3,605 $ 3,651
========== ==========
Basic earnings per share ........................................ $ 0.41 $ 0.41
Average common and common equivalent shares outstanding ......... 8,795,927 8,868,213
</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
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<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)
FIRST QUARTER ENDED
MARCH 31,
-------------------- PERCENT
1999 1998 CHANGE
------- ------- -------
EARNINGS:
Net interest income ... $11,467 $11,451 0%
Net earnings .......... 3,605 3,651 (1)%
BASIC EARNINGS PER SHARE:
Net earnings* ......... $ 0.41 $ 0.41
MARCH 31, DECEMBER 31
1999 1998
---------- -----------
BALANCE SHEET ITEMS
Total assets ........ $1,058,487 $1,025,682 3%
Loans ............... 779,101 762,747 2%
Deposits ............ 517,218 517,494 0%
Stockholders' equity 149,251 147,288 1%
Book value per share* 17.02 16.71
- -----------------------------------------
* (restated 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 |
| |
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000069968
<NAME> NATIONAL CITY BANCORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 47,708
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 18,140
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 131,106
<INVESTMENTS-CARRYING> 54,163
<INVESTMENTS-MARKET> 54,316
<LOANS> 779,101
<ALLOWANCE> 11,039
<TOTAL-ASSETS> 1,058,487
<DEPOSITS> 517,218
<SHORT-TERM> 242,264
<LIABILITIES-OTHER> 9,973
<LONG-TERM> 139,000
11,077
0
<COMMON> 0
<OTHER-SE> 138,174
<TOTAL-LIABILITIES-AND-EQUITY> 1,058,487
<INTEREST-LOAN> 17,450
<INTEREST-INVEST> 2,694
<INTEREST-OTHER> 137
<INTEREST-TOTAL> 20,281
<INTEREST-DEPOSIT> 3,684
<INTEREST-EXPENSE> 8,814
<INTEREST-INCOME-NET> 11,467
<LOAN-LOSSES> 612
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 7,304
<INCOME-PRETAX> 5,964
<INCOME-PRE-EXTRAORDINARY> 5,964
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,605
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.41
<YIELD-ACTUAL> 4.90
<LOANS-NON> 9,614
<LOANS-PAST> 1,931
<LOANS-TROUBLED> 231
<LOANS-PROBLEM> 7,065
<ALLOWANCE-OPEN> 10,423
<CHARGE-OFFS> 41
<RECOVERIES> 45
<ALLOWANCE-CLOSE> 11,039
<ALLOWANCE-DOMESTIC> 3,800
<ALLOWANCE-FOREIGN> 239
<ALLOWANCE-UNALLOCATED> 7,000
</TABLE>
