[LOGO] NATIONAL CITY
BANCORPORATION
2000
SECOND QUARTER
REPORT
SIX MONTHS
ENDED
JUNE 30, 2000
<PAGE>
TO OUR STOCKHOLDERS:
The Company's performance in the second quarter was an all-time high for net
income from operations, largely due to an outstanding performance by our bank
subsidiary, National City Bank of Minneapolis. We are seeing the results of
increased recognition by business customers that we compete effectively with the
big banks on the breadth of services and the ability to help businesses from
growth to maturity achieve their goals. Existing business customers have been
responsible for much of the new business activity, with unprecedented numbers
adding services such as OptiLINK(SM) Internet treasury management.
Net earnings were $4,723,000 for the second quarter of 2000, compared with
$3,914,000 in the second quarter of 1999. Earnings per share were 56 cents,
compared with 45 cents in the second quarter of 1999. Nonperforming assets,
including nonperforming loans, were $13.8 million or 1.58 percent of total loans
at June 30, 2000 compared with $16.3 million or 1.94 percent of total loans at
December 31, 1999.
Net earnings for the first six months were $8,993,000 or 1.05 cents per share,
compared with $7,519,000 or 86 cents per share last year.
The Company's reserve for loan losses at quarter-end was $14,079,000 or 1.60
percent of loans outstanding compared to $13,883,000 and 1.66 percent at
December 31, 1999. There were net chargeoffs during the quarter of $734,000
compared with $3,269,000 in the second quarter of 1999.
Net interest income which represents 85 percent of total revenues, was
$13,546,000 in the quarter, up 10 percent from the year-earlier period. The
increase was largely a result of increased loan volume. Noninterest income for
the second quarter was down from the year-earlier period. The relative decline
relates primarily to higher trust fees collected in the prior year. Noninterest
expense increased 4.4 percent compared with last year, mainly due to increased
performance-related compensation costs.
At its July 19, 2000 meeting the Board of Directors declared a regular quarterly
cash dividend on common stock of 14 cents per share, payable September 1, 2000,
to stockholders of record August 3, 2000. The announced dividend is an increase
of 17 percent over the 12 cents paid in previous quarters.
/s/ David C. Malmberg /s/ David L. Andreas
David C. Malmberg David L. Andreas
Chairman of the Board President and
Chief Executive Officer
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NATIONAL CITY BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash & due from banks ................................................ $ 38,004 $ 36,997
Federal funds sold and resale agreements ............................. 37,295 55,655
Available-for-sale securities:
U.S. Treasury .................................................... 4,996 4,958
U.S. Government agencies ......................................... 33,637 21,637
Mortgage-backed .................................................. 88,295 95,921
Municipal ........................................................ 19,507 9,189
Other securities ................................................. 4,607 3,635
----------- -----------
Total available-for-sale securities ......................... 151,042 135,340
Held-to-maturity securities:
Mortgage-backed .................................................. 42,949 46,572
----------- -----------
Total held-to-maturity securities ........................... 42,949 46,572
(approximate market value: 2000 -- $41,674; 1999 -- $45,297)
Loans ................................................................ 878,799 838,585
Less allowance for loan losses ................................... (14,079) (13,883)
----------- -----------
Net loans ....................................................... 864,720 824,702
Premises and equipment ............................................... 8,066 8,921
Accrued interest receivable .......................................... 8,706 7,600
Customer acceptance liability ........................................ 1,237 1,424
Other assets ......................................................... 23,382 22,969
----------- -----------
Total assets ................................................ $ 1,175,401 $ 1,140,180
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing .............................................. $ 161,299 $ 166,039
Interest bearing ................................................. 514,642 448,269
----------- -----------
Total deposits .............................................. 675,941 614,308
Federal funds purchased and repurchase agreements .................... 63,606 89,950
Commercial paper ..................................................... 33,677 38,777
Other short-term borrowed funds ...................................... 38,057 45,053
Acceptances outstanding .............................................. 1,237 1,424
Other liabilities .................................................... 12,050 22,719
Long-term debt ....................................................... 196,000 176,000
----------- -----------
Total liabilities ........................................... 1,020,568 988,231
Stockholders' equity:
Common stock, par value $1.25
Authorized shares: 40,000,000
Issued shares: 2000 -- 8,864,791; 1999 -- 8,861,944 ......... 11,081 11,077
Additional paid-in capital ....................................... 122,020 121,982
Unrealized gains net of tax effect ............................... (1,861) (1,883)
Retained earnings ................................................ 30,659 23,735
----------- -----------
Subtotal .................................................... 161,899 154,911
Less common stock in treasury at cost:
2000 -- 394,177 shares; 1999 125,122 shares .................... (7,066) (2,962)
----------- -----------
Total stockholders' equity .................................. 154,833 151,949
----------- -----------
Total liabilities and stockholders' equity .................. $ 1,175,401 $ 1,140,180
=========== ===========
</TABLE>
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NATIONAL CITY BANCORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands except per share) Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans ................................. $ 22,770 $ 18,614 $ 43,823 $ 36,314
Interest on federal funds sold and resale agreements ....... 268 57 410 194
Interest and dividends on securities ....................... 3,230 2,788 6,259 5,482
---------- ---------- ---------- ----------
Total interest income ............................. 26,268 21,459 50,492 41,990
INTEREST EXPENSE
Interest on deposits ....................................... 6,188 3,726 11,866 7,410
Interest on short-term borrowed funds ...................... 2,936 3,785 5,379 6,342
Interest on long-term debt ................................. 3,598 1,641 6,922 4,214
---------- ---------- ---------- ----------
Total interest expense ............................ 12,722 9,152 24,167 17,966
---------- ---------- ---------- ----------
Net interest income ............................... 13,546 12,307 26,325 24,024
Provision for loan losses .................................. 630 997 1,150 1,859
---------- ---------- ---------- ----------
Net interest income after provision for loan losses 12,916 11,310 25,175 22,165
NONINTEREST INCOME
Service charges on deposit accounts ........................ 604 643 1,247 1,237
Fees for other customer services ........................... 423 471 916 885
Trust fees ................................................. 1,098 1,187 2,232 2,425
Other ...................................................... 201 122 408 289
---------- ---------- ---------- ----------
Total noninterest income .......................... 2,326 2,423 4,803 4,836
NONINTEREST EXPENSES
Salaries and employee benefits ............................. 4,410 4,065 8,714 8,262
Net occupancy expense ...................................... 794 853 1,658 1,679
Equipment rentals, depreciation and maintenance ............ 890 869 1,795 1,745
Other ...................................................... 1,487 1,476 3,078 2,881
---------- ---------- ---------- ----------
Total noninterest expense ......................... 7,581 7,263 15,245 14,567
---------- ---------- ---------- ----------
Earnings before taxes ...................................... 7,661 6,470 14,733 12,434
Applicable income taxes .................................... 2,938 2,556 5,740 4,915
---------- ---------- ---------- ----------
Net earnings ...................................... $ 4,723 $ 3,914 $ 8,993 $ 7,519
========== ========== ========== ==========
Basic earnings per share ............................... $ 0.56 $ 0.45 $ 1.05 $ 0.86
Average common and common equivalent shares outstanding 8,499,669 8,761,732 8,590,418 8,778,735
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
(in thousands except per share)
SECOND QUARTER ENDED
JUNE 30,
--------------------------- PERCENT
2000 1999 CHANGE
----------- ----------- --------
EARNINGS:
Net interest income ... $ 13,546 $ 12,307 10%
Net earnings .......... 4,723 3,914 21%
BASIC EARNINGS PER SHARE:
Net earnings .......... $ 0.56 $ 0.45 24%
SIX MONTHS ENDED
JUNE 30,
---------------------------
2000 1999
EARNINGS: ----------- -----------
Net interest income ... $ 26,325 $ 24,024 10%
Net earnings .......... 8,993 7,519 20%
BASIC EARNINGS PER SHARE:
Net earnings .......... $ 1.05 $ 0.86 22%
JUNE 30, DECEMBER 31,
2000 1999
----------- -----------
BALANCE SHEET ITEMS
Total assets .......... $1,175,401 $1,140,180 3%
Loans ................. 878,799 838,585 5%
Deposits .............. 675,941 614,308 10%
Stockholders' equity .. 154,833 151,949 2%
Book value per share .. 18.28 17.39 5%
[GRAPHIC] PRINTED WITH SOY INK [GRAPHIC] RECYCLED PAPER
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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
Sharon Bredeson
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Staff-Plus, 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.
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>
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>
NATIONAL CITY BANCORPORATION BULK RATE
651 Nicollet Mall U.S. POSTAGE
Minneapolis, Minnesota 55402-1611 PAID
Telephone 612-904-8503 MINNEAPOLIS, MN
PERMIT NO. 2816
