<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
Commission file number 1-10074
-------
NATIONAL CITY CORPORATION
-------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 34-1111088
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1900 East Ninth Street
Cleveland, Ohio 44114
----------------------
(Address of principal executive office)
216-575-2000
-------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required 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
------ ------
Indicate the number share outstanding of each of the issuer's classes of
Common Stock as of April 22, 1994
Common stock, $4.00 Par Value -- 150,660,317
<PAGE> 2
[Paste-up National City Logo]
QUARTER ENDED MARCH 31, 1994
FINANCIAL REPORT
AND FORM 10-Q
<PAGE> 3
LOGO
FINANCIAL REPORT AND FORM 10-Q
QUARTER ENDED MARCH 31, 1994
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I -- FINANCIAL INFORMATION
Financial Highlights.............................................................. 3
Financial Statements (Item 1):
Consolidated Statements of Income............................................ 4
Consolidated Balance Sheets.................................................. 5
Consolidated Statements of Cash Flows........................................ 6
Consolidated Statements of Changes in Stockholders' Equity................... 7
Notes to Financial Statements................................................ 7
Management's Discussion and Analysis (Item 2)..................................... 11
Quarterly Average Balances/Net Interest Income/Rates.............................. 16
PART II -- OTHER INFORMATION
Changes in Securities (Item 2)
Refer to Reports on Form 8-K below.
Exhibits and Reports on Form 8-K (Item 6)
Instruments Defining the Rights of Security Holders Including Indentures.
See Report on Form 8-K dated March 2, 1994.
Reports on Form 8-K:
March 2, 1994: Submission of certain legal documents and exhibits for filing
as anticipated in the Prospectus dated February 23, 1994 and Prospectus
Supplement in connection therewith, both as included in Registrant's
Registration Statement on Form S-3 (File No. 33-39480). Filing is in
connection with current issuance of $250 million subordinated debt.
March 4, 1994: Board of Directors authorized the purchase of up to 5 million
shares of the Corporation's issued and outstanding common stock and any
amount of depositary shares of its 8% Cumulative Convertible Preferred
Stock, subject to a combined purchase limit of $200 million. This stock
repurchase program will commence following the completion of an existing 5
million share repurchase program that was announced in December, 1993.
Signature......................................................................... 19
</TABLE>
2
<PAGE> 4
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Three Months Ended
March 31
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Percent
1994 1993 Change
<S> <C> <C> <C>
EARNINGS (IN THOUSANDS):
Net interest income -- taxable equivalent............. $309,407 $303,208 2%
Provision for loan losses............................. 20,442 25,382 (19)
Fees and other income................................. 203,808 188,030 8
Security gains........................................ 5,893 2,509 135
Noninterest expense................................... 340,938 324,871 5
Net income............................................ 103,807 95,322 9
Net income applicable to common stock................. 99,930 91,322 9
PERFORMANCE RATIOS:
Net interest margin................................... 4.61% 4.84%
Overhead ratio........................................ 44.32 45.13
Efficiency ratio...................................... 66.43 66.13
Return on average assets.............................. 1.39 1.38
Return on average common equity....................... 16.11 15.88
Return on average total equity........................ 15.52 15.27
PER SHARE MEASURES:
Net income per common share........................... $ .63 $ .57 11%
Dividends paid per common share....................... .29 .26 12
Book value per common share........................... 15.87 14.93 6
Market value per share (close):
Common........................................... 26.63 26.13 2
Preferred........................................ 67.50 71.50 (6)
AVERAGE BALANCES (IN MILLIONS):
Assets................................................ $ 30,325 $ 28,004 8%
Loans................................................. 21,077 18,300 15
Securities............................................ 4,923 5,546 (11)
Earning assets........................................ 26,971 25,142 7
Deposits.............................................. 22,588 21,413 5
Common stockholders' equity........................... 2,517 2,332 8
Total stockholders' equity............................ 2,713 2,532 7
AT PERIOD END:
Total equity to assets................................ 8.68% 9.32%
Tier 1 capital ratio.................................. 9.65 10.38
Total risk-based capital ratio........................ 13.35 12.47
Leverage ratio........................................ 7.79 8.48
Common shares outstanding............................. 151,072,522 160,319,642 (6)
Full-time equivalent employees........................ 19,771 19,000 4
ASSET QUALITY:
Net charge-offs to loans (annualized)................. .27% .40%
Loan loss reserve to loans............................ 2.12 2.10
Nonperforming assets to loans & OREO.................. .86 1.76
</TABLE>
COMMON STOCK AND PER SHARE DATA HAVE BEEN ADJUSTED FOR THE TWO-FOR-ONE STOCK
SPLIT DECLARED AND PAID IN JULY 1993.
3
<PAGE> 5
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
(Dollars in Thousands Except Per Share Amounts) March 31
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
<CAPTION>
1994 1993
<S> <C> <C>
INTEREST INCOME
Loans:
Taxable............................................................ $ 404,676 $ 374,513
Exempt from Federal income taxes................................... 3,525 4,362
Securities:
Taxable............................................................ 48,825 63,495
Exempt from Federal income taxes................................... 9,089 12,725
Federal funds sold and security resale agreements.................... 3,577 3,938
Eurodollar time deposits in banks.................................... 2,398 5,248
Other short-term investments......................................... 1,783 3,435
----------- -----------
Total interest income............................................ 473,873 467,716
INTEREST EXPENSE
Deposits............................................................. 132,422 141,175
Federal funds borrowed and security repurchase agreements............ 19,637 15,487
Borrowed funds....................................................... 11,332 11,077
Corporate long-term debt............................................. 8,337 5,977
----------- -----------
Total interest expense........................................... 171,728 173,716
----------- -----------
Net interest income.............................................. 302,145 294,000
PROVISION FOR LOAN LOSSES.............................................. 20,442 25,382
----------- -----------
Net interest income after provision for loan losses.............. 281,703 268,618
NONINTEREST INCOME
Item processing revenues............................................. 72,195 57,212
Service charges on deposit accounts.................................. 37,357 37,025
Trust fees........................................................... 33,163 30,431
Credit card fees..................................................... 19,810 23,625
Mortgage servicing fees.............................................. 14,153 14,903
Other................................................................ 27,130 24,834
----------- -----------
Total fees and other income...................................... 203,808 188,030
Security gains....................................................... 5,893 2,509
----------- -----------
Total noninterest income......................................... 209,701 190,539
NONINTEREST EXPENSE
Salaries and employee benefits....................................... 161,296 156,489
Equipment............................................................ 23,235 22,646
Net occupancy........................................................ 22,910 22,162
Assessments and taxes................................................ 20,185 20,129
Expense of other real estate owned................................... 3,341 8,692
Other................................................................ 109,971 94,753
----------- -----------
Total noninterest expense........................................ 340,938 324,871
----------- -----------
Income before income taxes............................................. 150,466 134,286
Income tax expense..................................................... 46,659 38,964
----------- -----------
NET INCOME............................................................. $ 103,807 $ 95,322
----------- -----------
----------- -----------
NET INCOME APPLICABLE TO COMMON STOCK.................................. $ 99,930 $ 91,322
----------- -----------
----------- -----------
NET INCOME PER COMMON SHARE............................................ $.63 $.57
Average Common Shares Outstanding...................................... 158,277,962 161,690,248
<FN>
COMMON STOCK AND PER SHARE DATA HAVE BEEN ADJUSTED FOR THE TWO-FOR-ONE STOCK
SPLIT DECLARED AND PAID IN JULY 1993.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
4
<PAGE> 6
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARCH 31 December 31 March 31
1994 1993 1993
<S> <C> <C> <C>
ASSETS
Loans:
Commercial.................................... $ 8,558,565 $ 8,429,119 $ 7,962,756
International................................. 49,259 69,776 50,202
Real estate construction...................... 450,746 439,406 510,606
Lease financing............................... 220,435 228,352 227,502
Real estate mortgage -- nonresidential........ 2,290,024 2,328,228 2,089,196
Real estate mortgage -- residential........... 3,528,395 3,523,836 2,289,543
Mortgage loans held for sale.................. 344,034 509,187 365,142
Consumer...................................... 4,262,675 4,241,461 3,724,373
Revolving credit.............................. 1,552,525 1,516,776 1,377,728
------------ ------------ ------------
Total loans.............................. 21,256,658 21,286,141 18,597,048
Allowance for loan losses................ 450,112 443,412 390,703
------------ ------------ ------------
Net loans................................ 20,806,546 20,842,729 18,206,345
Securities held to maturity (market value
$1,578,372, $1,824,855 and $2,721,185,
respectively)................................. 1,551,907 1,763,025 2,626,480
Securities available for sale (market value
$3,130,302 at March 31, 1993)................. 3,125,953 3,403,201 3,074,209
Federal funds sold and security resale
agreements.................................... 565,940 611,743 206,345
Trading account assets........................... 13,549 150,296 14,938
Eurodollar time deposits in banks................ -- 457,000 265,000
Other short-term money market investments........ 81,997 85,677 177,712
Cash and demand balances due from banks.......... 1,939,026 1,933,888 1,827,884
Properties and equipment......................... 390,382 386,219 357,450
Customers' acceptance liability.................. 60,599 68,148 50,593
Accrued income and other assets.................. 1,325,415 1,365,783 1,030,557
------------ ------------ ------------
TOTAL ASSETS............................. $29,861,314 $31,067,709 $27,837,513
------------ ------------ ------------
------------ ------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Demand deposits (noninterest bearing)............ $ 4,952,684 $ 5,214,560 $ 4,446,639
Savings and NOW accounts......................... 5,214,242 5,161,593 4,284,271
Insured money market accounts.................... 5,313,030 5,489,785 5,308,023
Time deposits of individuals..................... 6,119,226 6,224,231 6,399,556
Other time deposits.............................. 522,463 500,421 608,667
Deposits in overseas offices..................... 551,411 472,431 204,375
------------ ------------ ------------
Total deposits........................... 22,673,056 23,063,021 21,251,531
Federal funds borrowed and security repurchase
agreements.................................... 2,054,397 3,082,821 2,106,356
Borrowed funds................................... 1,282,072 1,201,011 1,194,460
Acceptances outstanding.......................... 60,599 68,148 50,593
Accrued expenses and other liabilities........... 443,183 379,268 316,885
Corporate long-term debt......................... 757,136 510,173 323,393
------------ ------------ ------------
TOTAL LIABILITIES........................ 27,270,443 28,304,442 25,243,218
Stockholders' Equity:
Preferred stock.................................. 193,865 198,310 200,000
Common stock..................................... 2,397,006 2,564,957 2,394,295
------------ ------------ ------------
TOTAL STOCKHOLDERS' EQUITY............... 2,590,871 2,763,267 2,594,295
------------ ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY................................. $29,861,314 $31,067,709 $27,837,513
------------ ------------ ------------
------------ ------------ ------------
<FN>
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
5
<PAGE> 7
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Dollars in Thousands) Three Months Ended March 31
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
1994 1993
OPERATING ACTIVITIES
Net income.................................................... $ 103,807 $ 95,322
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses................................ 20,442 25,382
Depreciation and amortization of goodwill and
intangibles........................................... 30,262 23,890
Security gains........................................... (5,893) (2,509)
Net change in trading account securities................. 136,747 (1,894)
Originations and purchases of mortgage loans held for
sale.................................................. (527,356) (623,623)
Proceeds from the sale of mortgage loans held for sale... 712,509 642,966
Net change in interest receivable........................ (2,092) (8,582)
Net change in interest payable........................... 5,667 10,054
Net change in other assets............................... 42,935 39,447
Net change in other liabilities.......................... 57,909 5,294
----------- -----------
Net Cash Provided (Used) by Operating Activities...... 574,937 205,747
LENDING AND INVESTING ACTIVITIES
Net change in short-term investments.......................... 506,483 948,331
Purchases of securities....................................... (514,744) (927,314)
Proceeds from sales of securities............................. 525,757 300,198
Proceeds from maturities of securities........................ 448,061 427,653
Net change in loans........................................... (169,412) 102,646
Net change in properties and equipment........................ (18,330) 880
Acquisitions.................................................. -- (19,641)
----------- -----------
Net Cash Provided (Used) by Lending and Investing
Activities.......................................... 777,815 832,753
DEPOSIT AND FINANCING ACTIVITIES
Net change in Federal funds borrowed and security repurchase
agreements................................................. (1,028,424) 287,632
Net change in borrowed funds.................................. 81,061 (198,760)
Net change in demand, savings, NOW, insured money market
accounts, and deposits in overseas offices................. (307,002) (975,903)
Net change in time deposits................................... (82,963) (357,890)
Proceeds from issuance of long-term debt...................... 247,080 --
Repayment of long-term debt................................... (1,816) (6,379)
Dividends paid, net of tax benefit of ESOP Shares............. (49,696) (45,142)
Issuances of common shares.................................... 4,996 12,030
Repurchase of common and preferred stock...................... (215,051) --
ESOP trust repayment.......................................... 4,201 2,864
----------- -----------
Net Cash Provided (Used) by Deposit and Financing
Activities.......................................... (1,347,614) (1,281,548)
----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents.......... 5,138 (243,048)
Cash and Cash Equivalents, January 1.......................... 1,933,888 2,070,932
----------- -----------
Cash and Cash Equivalents, March 31........................... $ 1,939,026 $ 1,827,884
----------- -----------
----------- -----------
SUPPLEMENTAL DISCLOSURES
Interest paid................................................. $ 166,000 $ 164,000
Income taxes paid............................................. 39,000 30,000
Shares issued in purchase acquisitions........................ -- 29,335
<FN>
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
6
<PAGE> 8
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Unallocated
Shares
(Dollars in Thousands Except Per Preferred Common Capital Retained Held by
Share Amounts) Stock Stock Surplus Earnings ESOP Trust
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Balance January 1, 1993.................... $200,000 $316,335 $300,307 $1,708,506 $(25,262)
Net Income............................... 95,322
Common dividends paid, $.26 per share.... (41,142)
Preferred dividends paid, $1.00 per
depositary share....................... (4,000)
Issuance of 638,392 common shares under
corporate stock and dividend
reinvestment plans..................... 1,277 10,753
Issuance of 1,514,070 restricted shares
pursuant to acquisition................ 3,028 26,307
Two-for-one stock split.................. 316,107 (316,107)
Shares distributed by ESOP trust......... 2,864
------------ ------------ ------------ ------------ ------------
Balance March 31, 1993..................... $200,000 $636,747 $ 21,260 $1,758,686 $(22,398)
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Balance January 1, 1994.................... $198,310 $635,119 $105,140 $1,841,144 $(16,446)
Net income............................... 103,807
Common dividends paid, $.29 per share.... (45,870)
Preferred dividends paid, $1.00 per
depositary share....................... (3,966)
Issuance of 278,275 common shares under
corporate stock and dividend
reinvestment plans..................... 1,113 3,883
Purchase of 7,985,364 common shares and
30,000 depositary shares of preferred
stock.................................. (4,445) (31,942) (16,574) (162,090)
Shares distributed by ESOP trust and tax
benefit on dividends................... 140 4,201
Adjustment to unrealized gain on
securities available for sale, net of
tax.................................... (20,653)
------------ ------------ ------------ ------------ ------------
Balance March 31, 1994..................... $193,865 $604,290 $ 92,449 $1,712,512 $(12,245)
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
<CAPTION>
(Dollars in Thousands Except Per
Share Amounts) Total
<S> <C<C>
- -------------------------------------------
Balance January 1, 1993.................... $2,499,886
Net Income............................... 95,322
Common dividends paid, $.26 per share.... (41,142)
Preferred dividends paid, $1.00 per
depositary share....................... (4,000)
Issuance of 638,392 common shares under
corporate stock and dividend
reinvestment plans..................... 12,030
Issuance of 1,514,070 restricted shares
pursuant to acquisition................ 29,335
Two-for-one stock split.................. --
Shares distributed by ESOP trust......... 2,864
------------
Balance March 31, 1993..................... $2,594,295
------------
------------
Balance January 1, 1994.................... $2,763,267
Net income............................... 103,807
Common dividends paid, $.29 per share.... (45,870)
Preferred dividends paid, $1.00 per
depositary share....................... (3,966)
Issuance of 278,275 common shares under
corporate stock and dividend
reinvestment plans..................... 4,996
Purchase of 7,985,364 common shares and
30,000 depositary shares of preferred
stock.................................. (215,051)
Shares distributed by ESOP trust and tax
benefit on dividends................... 4,341
Adjustment to unrealized gain on
securities available for sale, net of
tax.................................... (20,653)
------------
Balance March 31, 1994..................... $2,590,871
------------
------------
<FN>
COMMON STOCK AND PER SHARE DATA HAVE BEEN ADJUSTED FOR THE TWO-FOR-ONE STOCK
SPLIT DECLARED AND PAID IN JULY 1993.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
In the opinion of management, the accompanying unaudited consolidated
financial statements have been prepared on a basis consistent with accounting
principles applied in the prior periods and include all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation of
the financial position, results of operations and cash flows for the interim
periods presented. The results of operations for the interim periods are not
necessarily indicative of the results that may be expected for the full year or
any other interim period.
Certain prior period amounts have been reclassified to conform with current
period presentation.
2. ACQUISITIONS
On February 1, 1993, the Corporation acquired JBS Associates, Inc. (JBS), a
check authorization business, and accounted for the acquisition as a purchase.
JBS stockholders received cash of $24.3 million and were issued approximately
1.5 million shares of the Corporation's common stock. A provision in the
purchase agreement guarantees the total value of the consideration received by
the JBS stockholders to be not less than $56.6 million as of February 1, 1998.
Total goodwill recorded was $51.5 million and is being amortized over 20 years.
In October 1993, the Corporation acquired Ohio Bancorp, a $1.6 billion
assets bank holding company headquartered in Youngstown, Ohio. Ohio Bancorp
shareholders received approximately
7
<PAGE> 9
$104 million in cash and were issued approximately 4.3 million shares of the
Corporation's common stock, for a total transaction value of approximately $215
million. The transaction was accounted for as a purchase. Total goodwill
recorded was $64 million and is being amortized over 20 years.
3. CONTINGENT LIABILITIES
In the normal course of business, there are outstanding commitments to
extend credit, guarantees, etc., which are not reflected in the financial
statements. In addition, the Corporation's subsidiaries are involved in a number
of legal proceedings arising out of their businesses. In management's opinion,
the financial statements would not be materially affected by the outcome of any
present legal proceedings or other commitments and contingent liabilities.
4. SECURITIES
On December 31, 1993, the Corporation adopted the requirements of SFAS 115
"Accounting For Certain Investments in Debt and Equity Securities." The adoption
did not have a material effect on the results of operations in 1993 and prior
period financial statements were not restated.
The following is a summary of securities held to maturity and available for
sale:
<TABLE>
<CAPTION>
MARCH 31, 1994
--------------------------------------------
Unrealized Unrealized Market
(In Thousands) Cost Gains Losses Value
<S> <C> <C> <C> <C>
- ------------------------------------------------------------
Held to maturity:
U.S. Treasury and
Federal agency
debentures...... $ 237,292 $ 415 $ 291 $ 237,416
Mortgage-backed
securities...... 646,034 4,775 12,668 638,141
States and
political
subdivisions.... 558,014 46,250 12,529 591,735
Other............. 110,567 589 76 111,080
---------- -------- ------- ----------
Total held to
maturity...... 1,551,907 52,029 25,564 1,578,372
Available for
Sale:
U.S. Treasury and
Federal agency
debentures...... 1,036,099 13,834 15,018 1,034,915
Mortgage-backed
securities...... 1,851,224 5,354 8,155 1,848,423
States and
political
subdivisions.... 31,961 772 -- 32,733
Other............. 184,646 29,796 4,560 209,882
---------- -------- ------- ----------
Total available
for sale...... 3,103,930 49,756 27,733 3,125,953
---------- -------- ------- ----------
Total
securities.... $4,655,837 $101,785 $53,297 $4,704,325
---------- -------- ------- ----------
---------- -------- ------- ----------
</TABLE>
<TABLE>
<CAPTION>
March 31, 1993
----------------------------------------------
Unrealized Unrealized Market
(In Thousands) Cost Gains Losses Value
<S> <C> <C> <C> <C>
- ------------------------------------------------------------
Held to
maturity:
U.S. Treasury
and Federal
agency
debentures.... $ 361,657 $ 11,660 $ -- $ 373,317
Mortgage-backed
securities.... 1,177,847 13,469 2,912 1,188,404
States and
political
subdivisions.. 754,235 74,177 3,835 824,577
Other........... 332,741 5,486 3,340 334,887
---------- -------- -------- ----------
Total held to
maturity.... 2,626,480 104,792 10,087 2,721,185
Available for
Sale:
U.S. Treasury
and Federal
agency
debentures.... 822,423 23,141 373 845,191
Mortgage-backed
securities.... 2,149,721 19,440 3,125 2,166,036
Other........... 102,065 17,749 739 119,075
---------- -------- -------- ----------
Total
available
for sale.... 3,074,209 60,330 4,237 3,130,302
---------- -------- -------- ----------
Total
securities... $5,700,689 $165,122 $ 14,324 $5,851,487
---------- -------- -------- ----------
---------- -------- -------- ----------
</TABLE>
8
<PAGE> 10
For the three months ended March 31, 1994 and 1993, gross gains of $7.8
million and $2.6 million, and gross losses of $1.9 million and $.1 million were
realized, respectively.
At March 31, 1994, the unrealized appreciation in securities available for
sale included in retained earnings totalled $14.3 million, net of tax.
For the three months ended March 31, 1994, the following represents the
segregation of cash flows between securities available for sale and securities
held to maturity:
<TABLE>
<CAPTION>
AVAILABLE HELD TO
(In Thousands) FOR SALE MATURITY TOTAL
- ----------------------------- --------- -------- --------
<S> <C> <C> <C>
Purchases of securities...... $506,393 $ 8,351 $514,744
Proceeds from sale of
securities................. 525,757 -- 525,757
Proceeds from maturities of
securities................. 207,206 240,855 448,061
</TABLE>
As of March 31, 1994, there were no securities of a single issuer, other
than U.S. Treasury securities and other U.S. government agencies, which exceeded
10% of stockholders' equity.
5. BORROWED FUNDS
<TABLE>
<CAPTION>
MARCH 31 Dec 31 March 31
(In Thousands) 1994 1993 1993
<S> <C> <C> <C>
- -----------------------------------------------------------------
U.S. Treasury demand
notes and Federal funds
borrowed-term.......... $ 405,465 $ 309,832 $ 206,325
Trading account
liabilities-short
sales.................. 24,969 -- --
Securities sold with
recourse............... 5,121 12,805 22,488
Notes payable to Student
Loan Marketing
Association............ 243,400 243,400 243,400
Military banking
liabilities............ 187,471 185,493 349,290
Other.................... 36,367 50,632 79,153
---------- ---------- ----------
Bank subsidiaries...... 902,793 802,162 900,656
Commercial paper......... 379,222 398,790 293,502
Other.................... 57 59 302
---------- ---------- ----------
Other subsidiaries..... 379,279 398,849 293,804
---------- ---------- ----------
Total............ $1,282,072 $1,201,011 $1,194,460
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
6. CORPORATE LONG-TERM DEBT
<TABLE>
<CAPTION>
MARCH 31 Dec 31 March 31
(In Thousands) 1994 1993 1993
<S> <C> <C> <C>
- ---------------------------------------------------------------
6 5/8% Subordinated Notes due
2004........................ $250,000 $ -- $ --
Less discount............... (1,284) -- --
8 3/8% Notes due 1996......... 100,000 100,000 100,000
Less discount............... (154) (174) (235)
Floating Rate Sub. Notes due
1997......................... 75,000 75,000 75,000
Less discount............... (53) (58) (72)
Floating Rate Notes due 1997.. 50,000 50,000 50,000
Less discount............... (74) (80) (105)
9 7/8% Sub. Notes due 1999.... 65,000 65,000 65,000
Less discount............... (257) (268) (304)
Medium-Term Notes............. 6,000 6,000 23,232
Less discount............... (6) (9) (17)
Floating Rate Notes due 1994.. 5,000 5,000 5,000
Other......................... 5,943 7,609 1,972
-------- -------- --------
Total parent company........ 555,115 308,020 319,471
6 1/2% Subordinated Notes due
2003........................ 200,000 200,000 --
Less discount............... (681) (699) --
Other......................... 2,702 2,852 3,922
-------- -------- --------
Total subsidiaries.......... 202,021 202,153 3,922
-------- -------- --------
Total................. $757,136 $510,173 $323,393
-------- -------- --------
-------- -------- --------
</TABLE>
In March 1994 the Corporation issued $250 million principal amount of
6 5/8% Subordinated Notes Due 2004. Interest on the notes is payable
semi-annually. The notes are not redeemable prior to their maturity and qualify
as Tier 2 capital for regulatory purposes.
A credit agreement with a group of banks allows the Corporation to borrow
up to $200 million until December 31, 1995, with a provision to extend the
expiration date one year at each anniversary date, under certain circumstances.
The agreement contains several financial covenants, including a limitation on
future dividends and other distributions of $1,052,828,000 at March 31, 1994,
plus 70% of future consolidated net income. There were no borrowings outstanding
under this agreement at March 31, 1994.
7. STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
MARCH 31 Dec 31 March 31
Outstanding Shares 1994 1993 1993
<S> <C> <C> <C>
- -------------------------------------------------------------
Preferred Stock, no par
value, authorized
5,000,000 shares...... 775,460 793,240 800,000
Common Stock, $4.00 par
value, authorized
350,000,000 shares,
adjusted for two-for-
one stock split....... 151,072,522 158,779,611 160,319,642
</TABLE>
9
<PAGE> 11
8. INCOME TAX EXPENSE
The composition of income tax expense follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31
---------------------------
(In Thousands) 1994 1993
<S> <C> <C>
- ------------------------------------------------------------
Applicable to income exclusive
of security transactions..... $44,537 $38,091
Applicable to security
transactions................. 2,122 873
----------- -----------
Total.................. $46,659 $38,964
----------- -----------
----------- -----------
</TABLE>
The effective tax rate was approximately 31.0% and 29.0% for the quarters
ended March 31, 1994 and 1993, respectively. The increase reflects declining
levels of tax-exempt interest income and a higher federal statutory rate.
9. EARNINGS PER SHARE
The calculation of net income per common share follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31
(Dollars In Thousands Except Per -------------------------
Share Amounts) 1994 1993
<S> <C> <C>
- -----------------------------------------------------------
PRIMARY:
Net income..................... $103,807 $95,322
Less preferred dividend
requirements................. 3,877 4,000
----------- -----------
Net income applicable to common
stock........................ $ 99,930 $91,322
----------- -----------
----------- -----------
Average common shares
outstanding.................. 158,277,962 161,690,248
----------- -----------
----------- -----------
Net income per common share.... $.63 $.57
----------- -----------
----------- -----------
ASSUMING FULL DILUTION:
Net income..................... $103,807 $95,322
----------- -----------
----------- -----------
Average common shares
outstanding.................. 158,277,962 161,690,248
Pro forma adjustment to common
shares outstanding assuming
exercise of all outstanding
stock options as of the
beginning of year or date of
grant, if later.............. 65,407 126,450
Pro forma effect of assumed
conversion of 8% Cumulative
Convertible Preferred
Stock........................ 9,243,483 9,535,160
----------- -----------
Average common shares
outstanding, as adjusted..... 167,586,852 171,351,858
----------- -----------
----------- -----------
Pro forma fully diluted net
income per common share...... $.62 $.56
----------- -----------
----------- -----------
</TABLE>
10. REGULATORY DIVIDENDS
A significant source of liquidity for the Parent company is dividends from
subsidiaries. Dividends paid by the subsidiary banks are subject to various
legal and regulatory restrictions. At March 31, 1994, bank subsidiaries may pay
the Parent company, without prior regulatory approval, approximately $89 million
of dividends. During the first quarter 1994, dividends totalling $2.4 million
were declared and $119.5 million of previously declared dividends were paid to
the Parent company.
10
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS
EARNINGS SUMMARY
Net income for the quarter ended March 31, 1994 was $103.8 million, an
increase of 8.9% over the $95.3 million earned in the first quarter 1993. Net
income per common share was $.63 for the first quarter 1994 compared with $.57
for the corresponding quarter last year. The per share amounts reflect the
two-for-one stock split declared and paid in July 1993.
Return on average common equity was 16.11% for the three months ended March
31, 1994 compared with 15.88% for the same quarter in 1993. Return on average
assets for the first quarter 1994 was 1.39%, compared with 1.38% for the first
three months of 1993.
Net income for the quarter increased from a year ago due primarily to
increased fee income, higher net interest income that resulted from loan growth,
and a lower provision for loan losses. Noninterest expenses increased 4.9%
during the first quarter 1994 compared with the same quarter a year ago due to
the acquisition of Ohio Bancorp and JBS Associates, Inc. (JBS) in 1993.
Net income per share included net after-tax security gains of $.02 for the
first quarter 1994, compared with $.01 per share for the first quarter 1993. At
March 31, 1994, the securities portfolio had net unrealized gains of $48
million.
Tables 1 and 2 present profitability contributions by the Corporation's
major units to consolidated results. The units shown are reflective of how
management operates and monitors these businesses inter-
[table 1:]
[table 2:]
nally. Inherent in the reported amounts are cost allocations for centrally
provided services that approximate the pro-rata cost to the units using such
services. Equity has been allocated among the business units in the current and
prior year to reflect well-capitalized levels as defined by bank regulatory
agencies. An income credit is granted to the functional units to reflect their
use of this noninterest-bearing source of funds. Return on equity as reported
in both years reflects these allocations. Corporate and retail banking net
income results include actual interest earned and paid on transactions with
customers, with adjustments for matched-maturity, internal funds transfer
charges and credits for loans and deposits. Investment securities and all gains
and losses associated with interest rate risk are reported in the
investment/funding unit.
The corporate and retail banking businesses' earnings improved for the
first three months of 1994 compared with the first quarter 1993 due to higher
net interest income that resulted from loan growth and a decline in noninterest
expenses and the provision for loan losses. The improvement in the Kentucky
corporate banking unit was also affected by lower net OREO losses. The
decline in Indiana corporate banking was due
11
<PAGE> 13
mainly to nonrecurring OREO gains in the first quarter 1993.
The decline in national credit card net income is due primarily to the loss
of a major customer in the fourth quarter 1993.
The lower return on equity in the item processing business relative to the
other functional units reflects a higher equity allocation to this business as
if it were an independent organization. The decline in return on equity versus
the prior year is due to increased equity allocations to cover the full purchase
price of companies acquired in 1993.
The decline in mortgage servicing net income was due to losses on the sale
of mortgage loans in 1994.
The increase in investment/
funding net income was due primarily to higher gains on the sale of securities
in the first quarter 1994 and a higher contribution from the interest rate
derivative portfolio (see Table 3). These gains were offset by the effects of a
smaller investment portfolio.
The decline in the corporate contribution is due primarily to the higher
interest expense and other costs associated with the corporate debt issuance in
the first quarter 1994.
EARNING ASSETS AND
INTEREST-BEARING LIABILITIES
Average earning assets totalled $26,971 million for the quarter ended March
31, 1994, a decline of $247 million from the quarter ended December 31, 1993 and
an increase of $1,829 million from the quarter ended March 31, 1993. The
increase over the first quarter last year is due to both the acquisition of Ohio
Bancorp and new loan growth. The decline from fourth quarter 1993 is the result
of paydowns of existing loans offsetting new loan activity.
[table 3:]
Core deposits decreased 2% in the first quarter from fourth quarter 1993
due mainly to small declines in most of the individual components. For the
quarter
ended March 31, 1994, average core deposits funded over 100% of average loans.
NET INTEREST INCOME
On a fully taxable equivalent basis, net interest income increased to
$309.4 million in the first quarter 1994 compared with $303.2 million for the
corresponding quarter in 1993.
The tax equivalent net interest margin was 4.61% in the quarter ended March
31, 1994 compared with 4.84% a year ago and 4.63% for the quarter ended December
31, 1993. The lower
net interest margin is due to the loss of a large private-label credit card
customer and the acquisition of Ohio Bancorp.
Management attempts to prevent adverse swings in net interest income
resulting from interest rate movements by placing conservative limits on
interest rate risk. Interest rate risk is monitored through static gap,
simulation and duration analyses.
At March 31, 1994, the Corporation has moved to a less liability-sensitive
position than at December 31, 1993.
Table 3 presents the contributions to net interest income from the
Corporation's interest rate derivative portfolio. Transactions in derivatives,
principally
[table 4:]
12
<PAGE> 14
[table 5:]
[table 6:]
[table 7:]
interest rate swaps, contributed to the reduction in the Corporation's liability
sensitivity during the first quarter of 1994. The notional value of interest
rate swaps wherein the Corporation receives a fixed rate declined by $533
million in the quarter, while those swaps that hedge the Corporation's income as
interest rates rise increased by $550 million. The combined effect contributed
significantly to the reduced interest rate sensitivity position.
FEES AND OTHER INCOME
Fee income was $203.8 million for the quarter ended March 31, 1994, up 8.4%
from $188.0 million for the first quarter 1993. The increase in fee income was
due primarily to growth in item processing revenues which have
resulted mainly from increased volume and acquisitions. Trust fees have also
increased over the prior year. Offsetting these increases is a decline in
credit card fees that has resulted from the loss of a large customer and the
unwinding of a credit card securitization. The fees associated with the credit
card securitization are replaced with net interest income as the related loan
balances are added to the balance sheet.
There was no significant nonrecurring income in the first quarter 1994 or
1993.
NONINTEREST EXPENSES
Noninterest expenses were $340.9 million for the quarter ended March 31,
1994 compared with $324.9 million a year ago. The increase from a year ago was
due mainly to the acquisition of Ohio Bancorp and JBS. Total expenses related
to acquired companies in the first quarter 1994 and 1993 were
13
<PAGE> 15
$25.1 million and $8.3 million, respectively. Excluding the effect of the
acquired companies, expenses declined slightly in 1994 compared to first quarter
1993. There were no other significant unusual expenses in the first quarter
1994. Severance and other costs related to the Corporation's cost redesign
program were $4.4 million and writedowns of OREO properties were $5.7 million
for the quarter ended March 31, 1993.
The efficiency ratio, defined as noninterest expense as a percentage of fee
income plus fully-
taxable net interest income, was
66.43% for the first quarter 1994 compared with 66.13% a year ago.
The overhead ratio, defined as noninterest expenses less fee income as a
percentage of fully-taxable net interest income, was 44.32% for the first
quarter 1994 compared with 45.13% a year ago.
Table 4 shows full-time equivalent staff and the efficiency and overhead
ratios within the Corporation's major units.
Total staff at March 31, 1994 increased slightly from a year ago due mainly
to the acquisition of Ohio Bancorp which accounted for 837 banking and 52 trust
positions at March 31, 1994.
ASSET QUALITY
Table 5 summarizes the activity in the allowance for loan losses.
The allowance for loan losses was $450 million at March 31, 1994
representing 2.12% of loans outstanding at quarter-end. This loan loss reserve
ratio compared with 2.08% at year-end 1993 and 2.10% at March 31, 1993.
The provision for loan losses of $20.4 million for the first quar-
[table 8:]
ter declined from $25.4 million in the first quarter 1993.
Net charge-offs for the first quarter 1993 were $14.2 million compared with
$18.5 million for the first three months of 1993.
The decline in provision and net charge-offs for the quarter is reflective
of the continued im-
provement in overall asset quality. Table 6 shows net charge-offs as a
percentage of average loans by portfolio type.
Table 7 summarizes nonperforming assets and related data.
Nonperforming assets of $184 million at March 31, 1994 declined by $25
million from the fourth quarter 1993 due to sales of foreclosed real estate and
commercial loan charge-offs and repayments.
Nonperforming assets as a percentage of loans and OREO were .86% at March
31, 1994 compared with 1.76% a year ago and .98% at December 31, 1993.
CAPITAL
Table 8 reflects various measures of capital at quarter-end. The changes in
the ratios reflect lower capital levels that have resulted from the repurchase
of outstanding capital stock and a slightly lower asset base. Book value per
common share at March 31, 1994 was $15.87 compared with $14.93 at March 31,
1993 and $15.15 at December 31, 1993. The book value per common share at March
31, 1994 and December 31, 1993 included $.09 and $.22, respectively, related to
the market value appreciation of securities available for sale.
In March 1994 the Corporation issued $250 million principal amount of
6-5/8% Subordinated Notes which qualify as Tier 2 capital for regulatory
purposes.
In the first three months of 1994, approximately 8 million shares of
common stock were repurchased in the open market at an average price of $26.18
per share. In April, the remaining common shares authorized for repurchase
(approximately 1.3 million) were acquired.
14
<PAGE> 16
[This page left intentionally blank.]
15
<PAGE> 17
DAILY AVERAGE BALANCE SHEETS/NET INTEREST INCOME/RATES
<TABLE>
<CAPTION>
(Dollars In Millions) Daily Average Balance
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
1994 1993
------- ----------------------------------------
FIRST Fourth Third Second First
QUARTER Quarter Quarter Quarter Quarter
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
ASSETS
Earning Assets:
Loans:
Commercial...................................... $ 9,105 $ 9,123 $ 8,695 $ 8,795 $ 8,646
Real estate mortgage............................ 6,192 6,251 5,407 4,982 4,528
Consumer........................................ 5,780 5,623 5,398 5,212 5,126
------- ------- ------- ------- -------
Total loans................................... 21,077 20,997 19,500 18,989 18,300
Securities:
Taxable......................................... 4,164 4,636 4,560 4,687 4,665
Tax-exempt...................................... 759 839 847 879 881
------- ------- ------- ------- -------
Total securities.............................. 4,923 5,475 5,407 5,566 5,546
Federal funds sold................................ 46 86 28 81 119
Security resale agreements........................ 412 302 186 298 333
Eurodollar time deposits in banks................. 366 223 73 219 606
Short-term money market investments............... 147 135 155 129 238
------- ------- ------- ------- -------
Total earning assets/
Total interest income/rates................ 26,971 27,218 25,349 25,282 25,142
Market value appreciation of securities available
for sale.......................................... 46 -- -- -- --
Allowance for loan losses........................... (450) (452) (402) (395) (387)
Cash and demand balances due from banks............. 2,033 2,111 1,948 1,927 1,850
Properties and equipment............................ 390 386 362 356 364
Customers' acceptance liability..................... 64 57 45 47 53
Accrued income and other assets..................... 1,271 1,148 1,177 1,104 982
------- ------- ------- ------- -------
Total assets.................................. $30,325 $30,468 $28,479 $28,321 $28,004
------- ------- ------- ------- -------
------- ------- ------- ------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Savings and NOW accounts.......................... $ 5,174 $ 5,065 $ 4,409 $ 4,319 $ 4,211
Insured money market accounts..................... 5,313 5,482 5,291 5,489 5,343
Time deposits of individuals...................... 6,146 6,291 6,036 6,249 6,499
Other time deposits............................... 487 565 510 606 687
Deposits in overseas offices...................... 640 305 245 198 305
Federal funds borrowed............................ 1,588 1,631 1,649 1,294 1,181
Security repurchase agreements.................... 1,079 1,158 1,086 1,072 1,001
Borrowed funds.................................... 1,266 1,237 1,187 1,159 1,186
Corporate long-term debt.......................... 592 509 509 461 326
------- ------- ------- ------- -------
Total interest bearing liabilities/
Total interest expense/rates............... 22,285 22,243 20,922 20,847 20,739
Non-interest bearing deposits..................... 4,828 5,087 4,524 4,495 4,368
Acceptances outstanding........................... 64 57 45 48 53
Accrued expenses and other liabilities............ 435 372 380 355 312
------- ------- ------- ------- -------
Total liabilities............................. 27,612 27,759 25,871 25,745 25,472
Stockholders' equity.......................... 2,713 2,709 2,608 2,576 2,532
------- ------- ------- ------- -------
Total liabilities and stockholders' equity.... $30,325 $30,468 $28,479 $28,321 $28,004
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Net interest income.................................................................................
Interest spread.....................................................................................
Contribution of non-interest bearing sources of funds...............................................
Net interest margin.................................................................................
</TABLE>
16
<PAGE> 18
<TABLE>
<CAPTION>
Quarterly Interest Average Annualized Rate
------------------------------------------------------- -------------------------------------------------------
1994 1993 1994 1993
------- ------------------------------------------- ------- -------------------------------------------
FIRST Fourth Third Second First FIRST Fourth Third Second First
QUARTER Quarter Quarter Quarter Quarter QUARTER Quarter Quarter Quarter Quarter
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$164.6 $167.6 $162.5 $160.9 $157.8 7.33% 7.29% 7.42% 7.34% 7.39%
116.5 120.0 106.6 100.9 94.0 7.53 7.68 7.89 8.10 8.30
129.1 127.8 134.1 130.1 129.6 9.02 9.03 9.88 10.01 10.20
------- ------- ------- ------- -------
410.2 415.4 403.2 391.9 381.4 7.85 7.87 8.23 8.27 8.41
48.8 54.1 53.6 58.9 63.5 4.71 4.65 4.69 5.03 5.46
14.3 17.7 18.1 18.8 19.5 7.52 8.45 8.56 8.54 8.84
------- ------- ------- ------- -------
63.1 71.8 71.7 77.7 83.0 5.14 5.23 5.30 5.58 6.00
.3 .7 .2 .6 1.2 2.82 2.95 3.01 2.77 4.21
3.3 2.4 1.4 2.3 2.7 3.21 3.14 2.90 3.15 3.29
2.4 1.9 .6 1.8 5.2 2.66 3.40 3.43 3.37 3.51
1.8 2.1 1.7 1.6 3.4 4.92 6.29 4.31 5.07 5.85
------- ------- ------- ------- -------
$481.1 $494.3 $478.8 $475.9 $476.9 7.19% 7.23% 7.52% 7.54% 7.64%
$ 33.0 $ 33.9 $ 29.7 $ 29.2 $ 29.0 2.58% 2.66% 2.67% 2.71% 2.78%
27.5 28.5 28.5 29.1 30.1 2.10 2.06 2.14 2.13 2.29
63.9 67.1 65.2 70.6 74.1 4.21 4.23 4.29 4.53 4.63
3.9 4.7 4.3 5.2 6.0 3.23 3.36 3.34 3.42 3.49
4.1 2.1 1.6 1.2 2.0 2.62 2.73 2.65 2.41 2.63
12.4 14.3 12.6 9.4 9.2 3.18 3.48 3.03 2.91 3.18
7.2 7.6 6.8 7.0 6.2 2.71 2.60 2.49 2.61 2.53
11.3 12.9 11.2 11.3 11.1 3.63 4.14 3.73 3.90 3.79
8.4 7.5 7.8 7.1 6.0 5.71 5.85 6.04 6.22 7.44
------- ------- ------- ------- -------
171.7 178.6 167.7 170.1 173.7 3.12% 3.19% 3.18% 3.27% 3.40%
------- ------- ------- ------- -------
$309.4 $315.7 $311.1 $305.8 $303.2
------- ------- ------- ------- -------
------- ------- ------- ------- -------
........................................................... 4.07% 4.04% 4.34% 4.27% 4.24%
........................................................... .54 .59 .56 .57 .60
------- ------- ------- ------- -------
........................................................... 4.61% 4.63% 4.90% 4.84% 4.84%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>
17
<PAGE> 19
CORPORATE INVESTOR INFORMATION
CORPORATE HEADQUARTERS
National City Center
1900 East Ninth Street
Cleveland, Ohio 44114-3484
(216) 575-2000
TRANSFER AGENT AND REGISTRAR
National City Bank
Corporate Trust Department
1900 East Ninth Street
Cleveland, Ohio 44114-3484
1-800-622-6757
INVESTOR INFORMATION
Janis E. Lyons, Vice President
Corporate Investor Relations
Department 2145
P.O. Box 5756
Cleveland, Ohio 44101-0756
1-800-622-4204
COMMON STOCK LISTING
National City Corporation common stock is traded on the New York Stock
Exchange under the symbol NCC. The stock is abbreviated in financial
publications as NTLCITY.
PREFERRED STOCK LISTING
National City Corporation 8% Cumulative Convertible Preferred Stock
depositary shares are traded on the New York Stock Exchange under the
symbol NCC PR. The preferred stock is abbreviated as NTLCITY PF in
financial publications.
DIVIDEND REINVESTMENT AND STOCK
PURCHASE PLAN
Common stockholders participating in the plan receive a three percent
discount from market price when they reinvest their National City dividends
in additional shares. Participants can also make optional cash purchases of
common stock at a three percent discount from market price and pay no
brokerage commissions. To obtain our Plan prospectus and authorization
card, write or call:
National City Bank
Corporate Trust Department
Dividend Reinvestment Plan
P.O. Box 92301
Cleveland, Ohio 44193-0900
1-800-622-6757
DEBT RATINGS
<TABLE>
<CAPTION>
STANDARD DUFF & THOMSON
MOODY'S & POOR'S PHELPS BANKWATCH
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
National City Corporation........................ A/B
Commercial paper (short-term debt)............. P-1 A-1 Duff 1+
Senior debt.................................... A1 A AA-
Subordinated debt.............................. A2 A- A+
Preferred stock................................ "a1" BBB+ A
Certificates of deposit:
National City Bank (Cleveland)................. Aa3 A+ AA
National City Bank, Columbus................... Aa3 A+ AA
National City Bank, Kentucky................... Aa3 A+ AA
National City Bank, Indiana.................... Aa3 A+ AA
National City Bank, Northeast (Akron).......... Aa3 -- --
National City Bank, Dayton..................... Aa3 -- --
National City Bank, Northwest (Toledo)......... Aa3 -- --
Subordinated Bank Notes:
National City Bank (Cleveland)................. A1 A AA-
National City Bank, Columbus................... A1 A AA-
</TABLE>
18
<PAGE> 20
[LOGO]
FORM 10-Q -- MARCH 31, 1994
SIGNATURE
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 CORPORATION
Date: April 29, 1994
/s/ ROBERT G. SIEFERS
----------------------------
Robert G. Siefers
Executive Vice President
Chief Financial Officer
(Duly Authorized Signer and
Principal Financial Officer)
19
<PAGE> 21
TABLE 1: UNIT PROFITABILITY
<TABLE>
<CAPTION>
THREE MONTHS ENDED Three months ended
MARCH 31, 1994 March 31, 1993
---------------------------------- ----------------------------------
NET RETURN ON RETURN ON Net Return on Return on
(Dollars in Millions) INCOME ASSETS(1) EQUITY Income Assets(1) Equity
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Corporate banking..... $ 45.6 1.82% 17.59% $38.7 1.61% 16.15%
Retail banking........ 39.6 .83 15.91 32.8 .73 16.43
National credit
card................ 2.7 2.01 11.69 6.1 3.72 26.24
Investment/funding.... 15.2 .57 14.80 12.8 .60 19.85
Trust................. 9.0 27.77 27.35 8.2 27.52 27.07
Item processing....... 3.1 4.19 9.50 3.7 6.40 15.91
Mortgage servicing.... (1.1) (6.42) (25.70) 1.2 6.80 11.58
Corporate............. (10.3) -- -- (8.2) -- --
------ ------
Consolidated
total........... $103.8 1.39% 15.52% $95.3 1.38% 15.27%
------ ------
------ ------
</TABLE>
(1) Return on revenue in the case of fee-based businesses.
TABLE 2: GEOGRAPHIC UNIT PERFORMANCE
<TABLE>
<CAPTION>
FIRST QUARTER 1994 FIRST QUARTER 1993
--------------------------------------------- ---------------------------------------------
Corporate Banking Retail Banking Corporate Banking Retail Banking
-------------------- -------------------- -------------------- --------------------
(Dollars in Net Return on Net Return on Net Return on Net Return on
Millions) Income Assets Income Assets Income Assets Income Assets
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Cleveland.......... $17.1 2.04% $10.2 1.00% $13.2 1.69% $ 8.4 .77%
Columbus........... 7.8 1.84 6.4 .71 7.5 1.76 6.2 .67
Indiana............ 3.6 1.51 9.5 1.08 4.6 1.76 5.0 .71
Kentucky........... 10.3 1.66 4.8 .64 6.9 1.20 5.4 .70
Akron(1)........... 2.1 1.86 4.0 .84 2.3 2.27 2.3 .78
Dayton............. 2.6 1.63 2.9 .86 2.6 1.68 4.2 1.13
Toledo............. 2.1 1.77 1.8 .96 1.6 1.46 1.3 .67
------ ------ ------ ------
Total............. $45.6 1.82% $39.6 .83% $38.7 1.61% $32.8 .73%
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
(1) Includes Ohio Bancorp in 1994.
TABLE 3: CONTRIBUTION OF INTEREST RATE DERIVATIVE PORTFOLIO
<TABLE>
<CAPTION>
Three months ended
March 31
-----------------------------
(IN MILLIONS) 1994 1993
<S> <C> <C>
- --------------------------------------------------------------------------------------
Interest adjustment to loans......................... $ 17.8 $ 15.1
Interest adjustment to securities.................... (4.8) (7.7)
----------- -----------
Interest adjustment to earning assets.............. 13.0 7.4
Interest adjustment to deposits...................... (5.3) (6.1)
----------- -----------
Effect on net interest income...................... $ 18.3 $ 13.5
----------- -----------
----------- -----------
</TABLE>
NOTE: Amounts in brackets represent reductions of the related interest income
or expense line, as applicable.
<PAGE> 22
TABLE 4: FULL-TIME EQUIVALENT STAFFING AND
OVERHEAD PERFORMANCE MEASURES
<TABLE>
<CAPTION>
MARCH 31, 1994 March 31, 1993
-------------------------------------- --------------------------------------
FULL-TIME Full-Time
EQUIVALENT OVERHEAD EFFICIENCY Equivalent Overhead Efficiency
STAFF RATIO RATIO Staff Ratio Ratio
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
Corporate and retail banking:
Cleveland................... 2,717 34.07% 48.60% 2,580 40.02% 52.37%
Columbus.................... 2,245 52.52 63.91 2,383 55.75 65.32
Indiana..................... 2,287 50.32 62.44 2,678 59.94 69.85
Kentucky.................... 2,065 49.83 60.74 1,935 55.79 64.95
Akron(1).................... 1,348 59.35 65.10 465 45.22 53.05
Dayton...................... 595 54.90 62.05 641 44.90 56.71
Toledo...................... 384 52.67 59.78 402 53.71 61.33
---------- ----------
Total..................... 11,641 48.17 58.93 11,084 49.68 59.96
National credit card......... 476 50.56 57.57 622 37.90 45.88
Investment/funding........... 263 (13.07) 23.28 208 (45.03) 30.24
Trust(1)..................... 1,038 -- 62.14 954 -- 62.61
Item processing.............. 4,718 -- 92.04 4,286 -- 90.83
Mortgage servicing........... 864 -- 110.69 865 -- 89.98
Corporate.................... 771 -- -- 981 -- --
---------- ----------
Consolidated total........ 19,771 44.32% 66.43% 19,000 45.13% 66.13%
---------- ----------
---------- ----------
</TABLE>
(1) Includes Ohio Bancorp in 1994.
<PAGE> 23
TABLE 5: ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
Three Months Ended
March 31
-----------------------
(In Thousands) 1994 1993
<S> <C> <C>
-------------------------------------------------------------------------
Balance at beginning of year.................... $443,412 $383,849
Provision....................................... 20,442 25,382
Reserves acquired (sold)........................ 422 (35)
Charge-offs:
Commercial.................................... 8,690 11,589
Real estate -- construction................... 265 2,184
Real estate -- commercial..................... 1,508 1,686
Real estate -- residential.................... 511 940
Revolving credit.............................. 8,259 9,419
Consumer...................................... 8,850 8,827
-------- --------
Total Charge-offs............................. 28,083 34,645
Recoveries:
Commercial.................................... 3,902 7,348
Real estate -- construction................... 963 407
Real estate -- commercial..................... 199 278
Real estate -- residential.................... 131 350
Revolving credit.............................. 2,743 2,541
Consumer...................................... 5,981 5,228
-------- --------
Total Recoveries.............................. 13,919 16,152
-------- --------
Net Charge-offs................................. 14,164 18,493
-------- --------
Balance at end of period........................ $450,112 $390,703
-------- --------
-------- --------
</TABLE>
TABLE 6: ANNUALIZED NET CHARGE-OFFS AS A PERCENTAGE OF
AVERAGE LOANS
<TABLE>
<CAPTION>
First Quarter
1994 1993
<S> <C> <C>
----------------------------------------------------------------------------
Commercial................................................ .22 % .21%
Real estate -- construction............................... (.64) 1.38
Real estate -- commercial................................. .23 .29
Real estate -- residential................................ .04 .09
Revolving credit.......................................... 1.44 1.95
Consumer.................................................. .27 .39
Total net charge-offs to average loans.................... .27 .40
</TABLE>
<PAGE> 24
TABLE 7: NONPERFORMING ASSETS
<TABLE>
<CAPTION>
MARCH 31 December 31 March 31
(In Millions) 1994 1993 1993
<S> <C> <C> <C>
----------------------------------------------------------------------------
Commercial:
Nonaccrual.......................... $ 70.1 $ 79.4 $ 118.2
Restructured........................ 1.0 1.1 2.2
--------- ------------ ---------
Total commercial.................. 71.1 80.5 120.4
Real estate related:
Nonaccrual.......................... 59.6 64.4 81.1
Restructured........................ 4.5 6.5 10.0
--------- ------------ ---------
Total real estate related......... 64.1 70.9 91.1
--------- ------------ ---------
Total nonperforming loans......... 135.2 151.4 211.5
Other real estate owned (OREO)........ 49.1 57.8 117.4
--------- ------------ ---------
Nonperforming assets.................. $ 184.3 $209.2 $ 328.9
--------- ------------ ---------
--------- ------------ ---------
Loans 90 days past-due accruing
interest............................ $ 31.1 $ 42.2 $ 52.2
--------- ------------ ---------
--------- ------------ ---------
</TABLE>
<PAGE> 25
TABLE 8: CAPITAL AND CAPITAL/ASSET RATIOS
<TABLE>
<CAPTION>
MARCH 31, 1994 Dec 31, 1993 March 31, 1993
(In Millions) AMOUNT RATIO Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------
Total equity1............ $2,590.9 8.68 % $2,763.3 8.89 % $$2,594.3 9.32 %
Common equity1........... 2,397.0 8.03 2,565.0 8.26 2,394.3 8.60
Tangible common equity2.. 2,021.0 6.85 2,185.2 7.12 2,044.2 7.44
Tier 1 capital3.......... 2,341.0 9.65 2,468.9 8.94 2,355.0 10.38
Total risk-based
capital4............... 3,238.9 13.35 3,206.8 11.62 2,829.4 12.47
Leverage ratio5.......... 2,341.0 7.79 2,468.9 8.18 2,355.0 8.48
</TABLE>
--------------------
1 Computed in accordance with generally accepted accounting principles,
which includes the market value appreciation of securities at December
31, 1993 and March 31, 1994.
2 Common equity less all intangible assets; computed as a ratio to total
assets less intangible assets.
3 Stockholders' equity less certain intangibles and the market value
appreciation of securities available for sale; computed as a ratio to
risk-adjusted assets, as defined.
4 Tier 1 capital plus qualifying loan loss allowance and subordinated debt;
computed as a ratio to risk-adjusted assets, as defined.
5 Tier 1 capital; computed as a ratio to average total assets less certain
intangible assets.
<PAGE> 26
<TABLE>
<S> <C>
NEW LOGO HERE Bulk Rate
National City Center U.S. Postage
1900 East Ninth Street PAID
Cleveland, Ohio 44114-3484 National City
Corporation
</TABLE>
