<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 June 30, 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 of shares outstanding in each of the issuer's classes
of Common Stock as of July 22, 1994
Common Stock, $4.00 Par Value -- 150,229,116
<PAGE> 2
National City Corporation
QUARTER ENDED JUNE 30, 1994
FINANCIAL REPORT
AND FORM 10-Q
<PAGE> 3
<TABLE>
NATIONAL CITY CORPORATION
FINANCIAL REPORT AND FORM 10-Q
QUARTER ENDED JUNE 30, 1994
TABLE OF CONTENTS
<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
Consolidated Average Balance Sheets............................................... 15
Quarterly Average Balances/Net Interest Income/Rates.............................. 16
PART II -- OTHER INFORMATION
Changes in Securities (Item 2)
Refer to Note 7 on page 9.
Submission of Matters to a Vote of Security Holders (Item 4)
On April 25, 1994, at the Annual Meeting of Stockholders of the Registrant,
stockholders took the following actions:
1. elected as directors all nominees designated in the proxy statement of
March 4, 1994;
2. approved the amendment of the National City Corporation Amended and
Restated 1991 Restricted Stock Plan;
3. approved the selection of independent auditors for 1994.
Exhibits and Reports on Form 8-K (Item 6)
Reports on Form 8-K: None
Exhibit 10.1: Amended and Second Restated 1991 Restricted Stock Plan
Signature......................................................................... 19
</TABLE>
2
<PAGE> 4
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
- - ----------------------------------------------------------------------------------------------------------------------------
Percent Percent
1994 1993 Change 1994 1993 Change
<S> <C> <C> <C> <C> <C> <C>
EARNINGS (IN THOUSANDS):
- - ------------------------
Net interest income -- taxable
equivalent.............................. $314,006 $305,828 3% $623,413 $609,036 2%
Provision for loan losses................. 20,071 23,896 (16) 40,513 49,278 (18)
Fees and other income..................... 211,746 200,564 6 415,554 388,594 7
Security gains............................ 799 3,195 (75) 6,692 5,704 17
Noninterest expense....................... 346,954 332,469 4 687,892 657,340 5
Net income................................ 105,841 102,454 3 209,648 197,776 6
Net income applicable to common stock..... 102,055 98,454 4 201,985 189,776 6
PERFORMANCE RATIOS:
- - -------------------
Net interest margin....................... 4.68% 4.84% 4.65% 4.84%
Overhead ratio............................ 43.06 43.13 43.69 44.13
Efficiency ratio.......................... 65.99 65.65 66.21 65.89
Return on average assets.................. 1.41 1.45 1.40 1.41
Return on average common equity........... 17.32 16.62 16.70 16.26
Return on average total equity............ 16.61 15.95 16.05 15.62
PER SHARE MEASURES:
- - -------------------
Net income per common share............... $.67 $.61 10% $1.30 $1.18 10%
Dividends paid per common share........... .29 .26 12 .58 .52 12
Book value per common share............... 16.02 15.16 6
Market value per share (close):
Common................................ 27.38 25.19 9
Preferred............................. 65.75 68.50 (4)
AVERAGE BALANCES (IN MILLIONS):
- - -------------------------------
Assets.................................... $30,146 $28,321 6% $30,235 $28,188 7%
Loans..................................... 21,359 18,989 12 21,219 18,647 14
Securities................................ 4,691 5,566 (16) 4,806 5,556 (13)
Earning assets............................ 26,843 25,282 6 26,907 25,212 7
Deposits.................................. 22,600 21,356 6 22,594 21,384 6
Common stockholders' equity............... 2,363 2,376 (1) 2,440 2,354 4
Total stockholders' equity................ 2,555 2,576 (1) 2,634 2,554 3
AT PERIOD END:
- - --------------
Total equity to assets.................... 8.58% 9.05%
Tier 1 capital ratio...................... 9.10 10.30
Total risk-based capital ratio............ 12.65 13.22
Leverage ratio............................ 7.86 8.51
Common shares outstanding................. 150,086,328 157,916,456
Full-time equivalent employees............ 20,415 19,226
ASSET QUALITY:
- - --------------
Net charge-offs to loans (annualized)..... .18% .34% .22% .37%
Loan loss reserve to loans................ 2.14 2.04
Nonperforming assets to loans & OREO...... .76 1.37
</TABLE>
3
<PAGE> 5
<TABLE>
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended Six Months Ended
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) June 30 June 30
- - -----------------------------------------------------------------------------------------------------------
1994 1993 1994 1993
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans:
Taxable..................................... $ 423,738 $ 385,454 $ 828,414 $ 759,967
Exempt from Federal income taxes............ 3,881 4,187 7,406 8,549
Securities:
Taxable..................................... 48,664 58,880 97,489 122,375
Exempt from Federal income taxes............ 10,287 12,245 19,376 24,970
Federal funds sold and security resale
agreements.................................. 6,108 2,901 9,685 6,839
Eurodollar time deposits in banks............. 578 1,840 2,976 7,088
Other short-term investments.................. 1,206 1,631 2,989 5,066
----------- ----------- ----------- -----------
Total interest income..................... 494,462 467,138 968,335 934,854
INTEREST EXPENSE
Deposits...................................... 138,492 135,314 270,914 276,489
Federal funds borrowed and security repurchase
agreements.................................. 22,778 16,360 42,415 31,847
Borrowed funds................................ 13,260 11,269 24,592 22,346
Corporate long-term debt...................... 13,745 7,152 22,082 13,129
----------- ----------- ----------- -----------
Total interest expense.................... 188,275 170,095 360,003 343,811
----------- ----------- ----------- -----------
Net interest income....................... 306,187 297,043 608,332 591,043
PROVISION FOR LOAN LOSSES....................... 20,071 23,896 40,513 49,278
----------- ----------- ----------- -----------
Net interest income after provision for
loan losses............................ 286,116 273,147 567,819 541,765
NONINTEREST INCOME
Item processing revenues...................... 77,195 66,750 149,390 123,962
Service charges on deposit accounts........... 38,581 37,801 75,938 74,826
Trust fees.................................... 32,559 30,046 65,722 60,477
Credit card fees.............................. 20,183 24,105 39,993 47,730
Mortgage banking revenues..................... 17,315 15,878 31,468 30,781
Other......................................... 25,913 25,984 53,043 50,818
----------- ----------- ----------- -----------
Total fees and other income............... 211,746 200,564 415,554 388,594
Security gains................................ 799 3,195 6,692 5,704
----------- ----------- ----------- -----------
Total noninterest income.................. 212,545 203,759 422,246 394,298
NONINTEREST EXPENSE
Salaries and employee benefits................ 162,598 154,080 323,894 310,569
Equipment..................................... 23,246 22,439 46,481 45,085
Net occupancy................................. 22,286 22,376 45,196 44,538
Assessments and taxes......................... 20,672 20,398 40,857 40,527
Other......................................... 118,152 113,176 231,464 216,621
----------- ----------- ----------- -----------
Total noninterest expense................. 346,954 332,469 687,892 657,340
----------- ----------- ----------- -----------
Income before income taxes...................... 151,707 144,437 302,173 278,723
Income tax expense.............................. 45,866 41,983 92,525 80,947
----------- ----------- ----------- -----------
NET INCOME...................................... $ 105,841 $ 102,454 $ 209,648 $ 197,776
========== ========== ========== ==========
NET INCOME APPLICABLE TO COMMON STOCK........... $ 102,055 $ 98,454 $ 201,985 $ 189,776
========== ========== ========== ==========
NET INCOME PER COMMON SHARE..................... $.67 $.61 $1.30 $1.18
Average Common Shares Outstanding............... 152,211,896 161,124,271 155,228,172 161,405,696
<FN>
See notes to financial statements.
</TABLE>
4
<PAGE> 6
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
(DOLLARS IN THOUSANDS)
- - ----------------------------------------------------------------------------------------------------
JUNE 30 December 31 June 30
1994 1993 1993
<S> <C> <C> <C>
ASSETS
Loans:
Commercial.................................... $ 8,512,112 $8,429,119 $ 8,161,464
International................................. 52,384 69,776 50,311
Real estate construction...................... 417,837 439,406 516,653
Lease financing............................... 222,743 228,352 218,186
Real estate mortgage -- nonresidential........ 2,500,083 2,328,228 2,254,191
Real estate mortgage -- residential........... 3,598,905 3,523,836 2,618,726
Mortgage loans held for sale.................. 212,555 509,187 364,692
Consumer...................................... 4,396,513 4,241,461 3,827,777
Revolving credit.............................. 1,768,998 1,516,776 1,506,863
----------- ----------- -----------
Total loans.............................. 21,682,130 21,286,141 19,518,863
Allowance for loan losses................ 463,829 443,412 398,921
----------- ----------- -----------
Net loans................................ 21,218,301 20,842,729 19,119,942
Securities held to maturity(market value
$1,433,530, $1,824,855, and $2,786,473,
respectively)................................. 1,427,438 1,763,025 2,692,452
Securities available for sale (market value
$2,870,102 at June 30, 1993).................. 3,246,081 3,403,201 2,815,052
Federal funds sold and security resale
agreements.................................... 563,945 611,743 235,521
Trading account assets........................... 9,235 150,296 28,246
Eurodollar time deposits in banks................ 5,000 457,000 105,000
Other short-term money market investments........ 68,865 85,677 52,288
Cash and demand balances due from banks.......... 1,858,076 1,933,888 2,033,503
Properties and equipment......................... 389,363 386,219 351,211
Customers' acceptance liability.................. 67,489 68,148 42,169
Accrued income and other assets.................. 1,398,789 1,365,783 1,185,023
----------- ----------- -----------
TOTAL ASSETS............................. $ 30,252,582 $ 31,067,709 $ 28,660,407
============ ============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Demand deposits (noninterest bearing)............ $ 4,869,746 $5,214,560 $ 4,671,942
Savings and NOW accounts......................... 5,080,010 5,161,593 4,372,684
Insured money market accounts.................... 5,034,272 5,489,785 5,364,545
Time deposits of individuals..................... 6,335,247 6,224,231 6,124,984
Other time deposits.............................. 454,102 500,421 531,594
Deposits in overseas offices..................... 803,886 472,431 182,964
----------- ----------- -----------
Total deposits........................... 22,577,263 23,063,021 21,248,713
Federal funds borrowed and security repurchase
agreements.................................... 2,408,619 3,082,821 2,581,588
Borrowed funds................................... 1,432,792 1,201,011 1,293,019
Acceptances outstanding.......................... 67,489 68,148 42,169
Accrued expenses and other liabilities........... 415,680 379,268 383,682
Corporate long-term debt......................... 756,101 510,173 517,518
----------- ----------- -----------
TOTAL LIABILITIES........................ 27,657,944 28,304,442 26,066,689
Stockholders' Equity:
Preferred stock.................................. 189,890 198,310 200,000
Common stock..................................... 2,404,748 2,564,957 2,393,718
----------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY............... 2,594,638 2,763,267 2,593,718
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY................................. $ 30,252,582 $ 31,067,709 $ 28,660,407
============ ============= ============
<FN>
See notes to financial statements.
5
</TABLE>
<PAGE> 7
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
(DOLLARS IN THOUSANDS) Six Months Ended June 30
- - ------------------------------------------------------------------------------------------------
<S> <C> <C>
1994 1993
OPERATING ACTIVITIES
Net income..................................................... $ 209,648 $ 197,776
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses................................. 40,513 49,278
Depreciation and amortization of goodwill and
intangibles............................................ 57,824 49,441
Security gains............................................ (6,692) (5,704)
Net change in trading account assets...................... 141,061 (15,202)
Originations and purchases of mortgage loans held for
sale................................................... (873,840) (1,545,633)
Proceeds from the sale of mortgage loans held for sale.... 1,186,410 1,489,701
Net change in interest receivable......................... (15,969) (22,067)
Net change in interest payable............................ 12,308 19,852
Net change in other assets................................ (15,925) (120,383)
Net change in other liabilities........................... 24,160 69,572
----------- -----------
Net Cash Provided (Used) by Operating Activities....... 759,498 166,631
LENDING AND INVESTING ACTIVITIES
Net change in short-term investments........................... 516,610 1,204,579
Purchases of securities........................................ (1,312,292) (1,954,310)
Proceeds from sales of securities.............................. 932,730 1,077,890
Proceeds from maturities of securities......................... 808,176 872,031
Net change in loans............................................ (728,655) (785,780)
Proceeds from sales of loans................................... -- 26,208
Net change in properties and equipment......................... (31,882) (7,174)
Acquisitions................................................... -- (19,641)
----------- -----------
Net Cash Provided (Used) by Lending and Investing
Activities........................................... 184,687 413,803
DEPOSIT AND FINANCING ACTIVITIES
Net change in Federal funds borrowed and security repurchase
agreements.................................................. (674,202) 762,864
Net change in borrowed funds................................... 231,781 (100,201)
Net change in demand, savings, NOW, insured money market
accounts, and deposits in overseas offices.................. (550,455) (575,000)
Net change in time deposits.................................... 64,697 (761,611)
Proceeds from issuance of long-term debt....................... 247,080 197,950
Repayment of long-term debt.................................... (2,946) (8,586)
Dividends paid, net of tax benefit of ESOP shares.............. (97,088) (90,351)
Issuances of common shares..................................... 10,457 18,094
Repurchase of common and preferred stock....................... (254,643) (66,166)
ESOP trust repayment........................................... 5,322 5,144
----------- -----------
Net Cash Provided (Used) by Deposit and Financing
Activities........................................... (1,019,997) (617,863)
----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents........... (75,812) (37,429)
Cash and Cash Equivalents, January 1........................... 1,933,888 2,070,932
----------- -----------
Cash and Cash Equivalents, June 30............................. $ 1,858,076 $ 2,033,503
============ ============
SUPPLEMENTAL DISCLOSURES
Interest paid.................................................. $ 348,000 $ 324,000
Income taxes paid.............................................. 101,000 82,000
Shares issued in purchase acquisitions......................... -- 29,335
<FN>
See notes to financial statements.
</TABLE>
6
<PAGE> 8
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<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............................... 197,776
Common dividends paid, $.52 per share.... (82,843)
Preferred dividends paid, $2.00 per
depositary share....................... (8,000)
Issuance of 950,106 common shares under
corporate stock and dividend
reinvestment plans..................... 1,900 16,194
Issuance of 1,514,070 restricted shares
pursuant to acquisition................ 3,028 26,307
Purchase of 2,714,900 common shares...... (5,430) (9,778) (50,958)
Two-for-one stock split.................. 315,833 (315,833)
Shares distributed by ESOP trust and tax
benefit on dividends................... 492 5,144
------------ ------------ ------------ ------------ ------------
Balance June 30, 1993...................... $200,000 $631,666 $ 17,197 $1,764,973 $(20,118)
============ ============ ============ ============ ============
Balance January 1, 1994.................... $198,310 $635,119 $105,140 $1,841,144 $(16,446)
Net income............................... 209,648
Common dividends paid, $.58 per share.... (89,560)
Preferred dividends paid, $2.00 per
depositary share....................... (7,843)
Issuance of 582,117 common shares under
corporate stock and dividend
reinvestment plans..................... 2,329 8,128
Purchase of 9,275,400 common shares and
180,400 depositary shares of preferred
stock.................................. (8,420) (37,102) (19,401) (189,720)
Shares distributed by ESOP trust and tax
benefit on dividends................... 315 5,322
Adjustment to unrealized gain on
securities available for sale, net of
tax.................................... (42,325)
------------ ------------ ------------ ------------ ------------
Balance June 30, 1994...................... $189,890 $600,346 $ 93,867 $1,721,659 $(11,124)
============ ============ ============ ============ ============
<CAPTION>
Total
<S> <C>
- - -----------------------------------------------------------
Balance January 1, 1993.................... $2,499,886
Net income............................... 197,776
Common dividends paid, $.52 per share.... (82,843)
Preferred dividends paid, $2.00 per
depositary share....................... (8,000)
Issuance of 950,106 common shares under
corporate stock and dividend
reinvestment plans..................... 18,094
Issuance of 1,514,070 restricted shares
pursuant to acquisition................ 29,335
Purchase of 2,714,900 common shares...... (66,166)
Two-for-one stock split.................. --
Shares distributed by ESOP trust and tax
benefit on dividends................... 5,636
------------
Balance June 30, 1993...................... $2,593,718
============
Balance January 1, 1994.................... $2,763,267
Net income............................... 209,648
Common dividends paid, $.58 per share.... (89,560)
Preferred dividends paid, $2.00 per
depositary share....................... (7,843)
Issuance of 582,117 common shares under
corporate stock and dividend
reinvestment plans..................... 10,457
Purchase of 9,275,400 common shares and
180,400 depositary shares of preferred
stock.................................. (254,643)
Shares distributed by ESOP trust and tax
benefit on dividends................... 5,637
Adjustment to unrealized gain on
securities available for sale, net of
tax.................................... (42,325)
------------
Balance June 30, 1994...................... $2,594,638
============
<FN>
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.
7
<PAGE> 9
Ohio Bancorp shareholders received approximately $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>
JUNE 30, 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...... $ 128,687 $ -- $ 664 $ 128,023
Mortgage-backed
securities...... 689,833 2,862 21,030 671,665
States and
political
subdivisions.... 532,503 29,031 4,275 557,259
Other............. 76,415 290 122 76,583
---------- ------- ------- ----------
Total held to
maturity...... 1,427,438 32,183 26,091 1,433,530
Available for
Sale:
U.S. Treasury and
Federal agency
debentures...... 1,213,178 4,514 25,341 1,192,351
Mortgage-backed
securities...... 1,802,931 3,003 25,044 1,780,890
States and
political
subdivisions.... 31,849 332 31 32,150
Other............. 209,443 36,733 5,486 240,690
---------- ------- ------- ----------
Total available
for sale...... 3,257,401 44,582 55,902 3,246,081
---------- ------- ------- ----------
Total
securities.... $4,684,839 $76,765 $81,993 $4,679,611
========== ======== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
June 30, 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..... $ 361,650 $ 12,365 $ -- $ 374,015
Mortgage-backed
securities..... 1,316,857 14,970 2,034 1,329,793
States and
political
subdivisions... 715,681 71,286 3,821 783,146
Other............ 298,264 3,884 2,629 299,519
---------- -------- ------- ----------
Total held to
maturity..... 2,692,452 102,505 8,484 2,786,473
Available for
Sale:
U.S. Treasury and
Federal agency
debentures..... 818,151 23,500 308 841,343
Mortgage-backed
securities..... 1,865,247 17,522 998 1,881,771
Other............ 131,654 16,770 1,436 146,988
---------- -------- ------- ----------
Total available
for sale..... 2,815,052 57,792 2,742 2,870,102
---------- -------- ------- ----------
Total
securities... $5,507,504 $160,297 $11,226 $5,656,575
========== ========= ======== ==========
</TABLE>
For the six months ended June 30, 1994 and 1993, gross gains of $10.5
million and $6.5 million, and gross losses of $3.8 million and $.8 million were
realized, respectively.
At June 30, 1994, the unrealized depreciation in securities available for
sale included in retained earnings totalled $7.4 million, net of tax.
For the six months ended June 30, 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..... $1,221,176 $91,116 $1,312,292
Proceeds from sale of
securities................ 932,730 -- 932,730
Proceeds from maturities of
securities................ 348,364 459,812 808,176
</TABLE>
As of June 30, 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.
8
<PAGE> 10
5. BORROWED FUNDS
<TABLE>
<CAPTION>
JUNE 30 Dec 31 June 30
(IN THOUSANDS) 1994 1993 1993
<S> <C> <C> <C>
- - -------------------------------------------------------------------
U.S. Treasury demand
notes and Federal funds
borrowed-term.......... $ 491,307 $ 309,832 $ 367,913
Trading account
liabilities-short
sales.................. -- -- 12,529
Securities sold with
recourse............... 5,094 12,805 21,369
Notes payable to Student
Loan Marketing
Association............ 300,000 243,400 243,400
Military banking
liabilities............ 161,366 185,493 246,764
Other.................... 50,443 50,632 73,605
---------- ---------- ----------
Bank subsidiaries...... 1,008,210 802,162 965,580
Commercial paper......... 424,520 398,790 327,138
Other.................... 62 59 301
---------- ---------- ----------
Other subsidiaries..... 424,582 398,849 327,439
---------- ---------- ----------
Total............ 1,432,792 $1,201,011 $1,293,019
========== ========== ==========
</TABLE>
6. CORPORATE LONG-TERM DEBT
<TABLE>
<CAPTION>
JUNE 30 Dec 31 June 30
(IN THOUSANDS) 1994 1993 1993
<S> <C> <C> <C>
- - ------------------------------------------------------------
6 5/8% Subordinated Notes due
2004..........................$250,000 $ -- $ --
Less discount................. (1,252) -- --
8 3/8% Notes due 1996........... 100,000 100,000 100,000
Less discount................. (134) (174) (214)
Floating Rate Sub. Notes due
1997........................... 75,000 75,000 75,000
Less discount................. (48) (58) (67)
9 7/8% Sub. Notes due 1999...... 65,000 65,000 65,000
Less discount................. (243) (268) (303)
Floating Rate Notes due 1997.... 50,000 50,000 50,000
Less discount................. (69) (80) (90)
Medium-Term Notes............... 4,000 6,000 16,000
Less discount................. (4) (9) (15)
Floating Rate Notes due 1994.... 5,000 5,000 5,000
Other........................... 6,980 7,609 4,192
-------- -------- --------
Total parent company.......... 554,230 308,020 314,503
6 1/2% Sub. Notes due 2003...... 200,000 200,000 200,000
Less discount................. (662) (699) (737)
Other........................... 2,533 2,852 3,752
-------- -------- --------
Total subsidiaries............ 201,871 202,153 203,015
-------- -------- --------
Total..................$ 756,101 $ 510,173 $517,518
========= ========= =========
</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 dated June 30, 1994 with a group of banks allows the
Corporation to borrow up to $300 million until June 30, 1997, with a provision
to extend the expiration date under certain circumstances. There were no
borrowings outstanding under this agreement at June 30, 1994.
7. STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
JUNE 30 Dec. 31 June 30
(OUTSTANDING SHARES) 1994 1993 1993
<S> <C> <C> <C>
- - -----------------------------------------------------------------
Preferred Stock, no par
value, authorized
5,000,000 shares...... 757,160 793,240 800,000
Common Stock, $4.00 par
value, authorized
350,000,000 shares.... 150,086,328 158,779,611 157,916,456
</TABLE>
8. INCOME TAX EXPENSE
The composition of income tax expense follows:
<TABLE>
<CAPTION>
Six Months Ended
June 30
---------------------------
(IN THOUSANDS) 1994 1993
<S> <C> <C>
- - ------------------------------------------------------------
Applicable to income exclusive
of security transactions..... $90,122 $78,975
Applicable to security
transactions................. 2,403 1,972
----------- -----------
Total.................. $92,525 $80,947
=========== ===========
</TABLE>
The effective tax rate was approximately 30.6% and 29.0% for the six months
ended June 30, 1994 and 1993, respectively. The increase reflects declining
levels of tax-exempt interest income and a higher federal statutory rate.
9. 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 June 30, 1994, bank subsidiaries may pay
the Parent company, without prior regulatory approval, approximately $192.4
million of dividends. During the first six months of 1994, dividends totalling
$2.4 million were declared and $169.5 million of previously declared dividends
were paid to the Parent company.
9
<PAGE> 11
10. EARNINGS PER SHARE
The calculation of net income per common share follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------------ ------------------------
(IN THOUSANDS) 1994 1993 1994 1993
<S> <C> <C> <C> <C>
- - ---------------------------------------------------------------------
PRIMARY:
Net income....... $105,841 $102,454 $209,648 $197,776
Less preferred
dividend
requirements... 3,786 4,000 7,663 8,000
----------- ----------- ----------- -----------
Net income
applicable to
common stock... $102,055 $98,454 $201,985 $189,776
=========== =========== =========== ===========
Average common
shares
outstanding.... 152,211,896 161,124,271 155,228,172 161,405,696
=========== =========== =========== ===========
Net income per
common share... $ .67 $ .61 $ 1.30 $ 1.18
=========== =========== =========== ===========
ASSUMING FULL
DILUTION:
Net income....... $105,841 $102,454 $209,648 $197,776
=========== =========== =========== ===========
Average common
shares
outstanding.... 152,211,896 161,124,211 155,228,172 161,405,696
Stock option
adjustment..... 73,220 81,710 73,220 81,710
Preferred stock
adjustment..... 9,025,347 9,535,160 9,025,347 9,535,160
----------- ----------- ----------- -----------
Average common
shares
outstanding, as
adjusted....... 161,310,463 170,741,081 164,326,739 171,022,566
=========== =========== =========== ===========
Pro forma fully
diluted net
income per
common share... $ .66 $ .60 $ 1.28 $ 1.16
=========== =========== =========== ===========
</TABLE>
The stock option adjustment in the calculation of fully diluted common
shares outstanding represents the assumed exercise of all outstanding stock
options as of the beginning of year or date of grant, if later, computed using
the treasury stock method.
The preferred stock adjustment in the calculation of fully diluted common
shares outstanding represents the proforma effect of assumed conversion of 8%
Cumulative Convertible Preferred Stock.
10
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS
EARNINGS SUMMARY
Net income per common share was $.67 for the quarter ended June 30, 1994,
an increase of 10% over the $.61 for the corresponding quarter last year. Net
income for the quarter ended June 30, 1994 was $105.8 million versus $102.5
million earned in the quarter ended June 30, 1993.
Per share earnings were $1.30 for the first six months, also up 10% over
the $1.18 earned in 1993. Net income for the first six months was $209.6
million, compared with $197.8 million in the prior year.
Return on average common equity for the second quarter and first half of
1994 were 17.32% and 16.70%, respectively, compared with 16.62% and 16.26% for
the same periods in 1993. Return on average assets for the second quarter and
first half of 1994 were 1.41% and 1.40%, respectively, compared with 1.45%, and
1.41% for the same periods in 1993.
Net after-tax security gains were negligible for the second quarter 1994
and increased net income per share $.03 year-to-date, compared with $.01 and
$.02 per share for the second quarter and year-to-date 1993, respectively.
The improved profitability for the quarter and year-to-date was driven by
several factors, including: higher net interest income resulting from loan
growth, increased fee income, and a continuing decline in the provision for loan
losses. Average loan outstandings in the second quarter increased 1.3% over
first quarter 1994 (a 5.3% annualized growth rate) and 1.7% over fourth quarter
1993. Fee income increased 5.6% and 6.9%, respectively, over the second quarter
and year-to-date 1993. Noninterest expenses increased
<TABLE>
<CAPTION>
TABLE 1: UNIT PROFITABILITY
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1994 JUNE 30, 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..... $ 88.4 1.70% 16.13% 80.7 1.64% 16.63%
Retail banking........ 78.7 .82 16.58 66.5 .74 16.42
National credit card.. 3.6 1.31 7.78 11.7 3.60 24.94
Investment/funding.... 27.8 .64 14.54 28.4 .72 21.66
Trust................. 18.2 25.08 26.66 16.8 25.07 27.61
Item processing....... 7.4 4.92 11.27 8.5 6.77 16.06
Mortgage banking...... 1.3 3.34 9.61 2.5 6.20 12.01
Corporate............. (15.8) -- -- (17.3) -- --
------ ------
Total......... $209.6 1.40% 16.05% $197.8 1.41% 15.62%
====== ====== ====== ====== ====== ======
<FN>
(1) RETURN ON REVENUE IN THE CASE OF FEE-BASED BUSINESSES.
</TABLE>
<TABLE>
<CAPTION>
TABLE 2: GEOGRAPHIC UNIT PERFORMANCE
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1994 JUNE 30, 1993
---------------------------------- ---------------------------------
CORPORATE BANKING RETAIL BANKING CORPORATE BANKING RETAIL BANKING
----------------- -------------- ----------------- --------------
(Dollars NET RETURN ON NET RETURN ON NET RETURN ON NET RETURN ON
in millions) INCOME ASSETS INCOME ASSETS INCOME ASSETS INCOME ASSETS
- - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cleveland $34.2 2.00% $20.7 1.01% $27.4 1.71% $16.8 .83%
Columbus 15.9 1.86 14.1 .77 14.8 1.72 12.8 .69
Indiana.... 7.4 1.56 17.5 .99 8.7 1.62 11.8 .64
Kentucky... 16.4 1.37 10.2 .67 16.8 1.42 11.1 .72
Akron(1) 4.6 1.14 7.7 .59 4.7 2.19 4.4 .75
Dayton .... 5.4 1.86 5.8 .85 4.9 1.54 7.4 1.01
Toledo .... 4.5 1.85 2.7 .73 3.4 1.57 2.2 .55
------ ----- ----- ---- ----- ---- ----- ----
$88.4 1.70% $78.7 .82% $80.7 1.64% $66.5 .74%
====== ===== ===== ==== ===== ==== ===== ====
<FN>
(1) INCLUDES OHIO BANCORP IN 1994.
</TABLE>
4.4% and 4.6% for the quarter and year-to-date, respectively, versus the same
periods last year due mainly to the acquisition of Ohio Bancorp in October 1993.
Excluding the effect of acquired companies, noninterest expense in 1994 was flat
compared to 1993.
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 internally. 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. Income on 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 six months of 1994 compared with 1993 due primarily to higher net
interest income that resulted from loan growth and the continuing decline in
the provision for loan losses. Also contributing to the improvement are lower
expense levels, as seen in the improved overhead and efficiency ratios.
The decline in national credit card net income is due to the
11
<PAGE> 13
settlement of litigation in the second quarter 1994, the loss of a major
customer in the fourth quarter 1993, and increased marketing expenses directed
at replacing the lost business.
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 banking net income was due to lower gains on the
sale of mortgage loans and lower origination fees in 1994, offset somewhat by
the sale of mortgage servicing in the second quarter 1994 and reduced
amortization of purchased mortgage servicing rights from the level recorded in
1993. The reduced amortization is expected to continue unless mortgage
refinancings accelerate.
The improvement in the corporate contribution is due primarily to net
reduced expenses in 1994.
EARNING ASSETS AND INTEREST-BEARING LIABILITIES
Average earning assets totalled $26,843 million for the quarter ended June
30, 1994, a decrease of $128 million from the quarter ended March 31, 1994 and
an increase of $1,561 million from the quarter ended June 30, 1993. The decline
in the second quarter was due to lower balances in the securities portfolio and
money market assets. These decreases were somewhat offset by increases in
commercial, real estate mortgage and consumer loans. Average total loans of
$21,359 million were approximately 1.3% higher than the first quarter 1994. The
increase over the second quarter last year is due to both loan growth and the
acquisition of Ohio Bancorp.
<TABLE>
TABLE 3: CONTRIBUTION OF INTEREST RATE DERIVATIVE PORTFOLIO
<CAPTION>
Six months ended
June 30
-----------------------
(In Millions) 1994 1993
<S> <C> <C>
- - -----------------------------------------------------------------------------------
Interest adjustment to loans.............................. $30.6 $33.3
Interest adjustment to securities......................... (9.3) (14.9)
--------- -------
Interest adjustment to earning assets................... 21.3 18.4
Interest adjustment to deposits........................... (8.0) (11.1)
--------- -------
Effect on net interest income........................... $29.3 $29.5
========= ========
<FN>
NOTE: Amounts in brackets represent reductions of the related interest income or
expense line, as applicable.
</TABLE>
<TABLE>
TABLE 4: FULL-TIME EQUIVALENT STAFFING AND OVERHEAD PERFORMANCE MEASURES
<CAPTION>
JUNE 30, 1994 June 30, 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(1)......... 11,951 49.74% 60.10% 11,250 50.28% 60.78%
National credit
card............... 491 57.76 64.46 625 39.90 47.53
Investment/ funding.. 285 (11.09) 38.11 222 (41.75) 27.96
Trust(1)............. 974 -- 61.38 956 -- 61.52
Item processing...... 5,179 -- 91.36 4,394 -- 90.25
Mortgage servicing... 803 -- 94.32 860 -- 90.29
Corporate............ 732 -- -- 919 -- --
Total............ 20,415 43.69% 66.21% 19,226 44.13% 65.89%
========== ========= ========== ========== ========= =========
<FN>
(1) INCLUDES OHIO BANCORP IN 1994.
</TABLE>
Core deposits decreased slightly in the second quarter due mainly to
decreased transaction accounts. There has also been a shifting of deposits from
customer savings accounts to certificates of deposit. At June 30, 1994, average
core deposits funded over 100% of average loans.
NET INTEREST INCOME
On a fully taxable equivalent basis, net interest income increased to
$314.0 million in the second quarter 1994 compared with $305.8 million for the
corresponding quarter in 1993. For the first half 1994, fully taxable equivalent
net interest income increased 2.4% to $623.4 million from $609.0 million in
1993.
The tax equivalent net interest margin was 4.68% in the quarter ended June
30, 1994, compared with 4.61% and 4.84% for the quarters ended March 31, 1994
and June 30, 1993, respectively. The improvement shown in the second quarter
1994 relative to the first quarter is due to a slightly higher concentration of
loans to total earning assets and increased yields on the securities portfolio
and other earning assets. The spread between yields on loans and rates paid on
interest bearing liabilities has remained fairly constant over the past three
quarters. The lower margin in comparison to the prior year was mainly due to the
loss of a large credit card customer in the fourth quarter 1993.
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 June 30, 1994, the Corporation was less liability-sensitive than at
December 31, 1993. The cumulative one-year gap had contracted to 8.8% of
adjusted earning assets from 10.8% at year-end 1993. The earnings simulation
model projects that net income would decrease by 1.1% if rates rose two
percentage points over the next year. At
12
<PAGE> 14
the end of 1993, the corresponding exposure was 2.0% of net income. Finally, the
Corporation's duration model indicates that a two percentage point immediate
upward shock in rates would cause a reduction in the value of expected asset and
liability cashflows by an amount equal to 1.0% of total assets, down from 1.1%
at year-end 1993.
Contributing to the decreased liability sensitivity was a reduced volume of
interest-rate swaps where the Corporation receives a fixed rate along with
increased volume of swaps which hedge exposure to rising rates. The contribution
to net interest income of the interest-rate derivative portfolio is presented in
Table 3.
FEES AND OTHER INCOME
Fee income was $211.7 million for the second quarter 1994, up 5.6% from
$200.6 million for the second quarter 1993. The increase in fee income was due
primarily to growth in item processing revenues which have resulted from
business growth and acquisitions. The increase in mortgage banking revenue for
the quarter and year-to-date was due to a $4.3 million gain on sale of mortgage
servicing rights in the second quarter 1994. Offsetting these increases was a
decline in credit card fees that resulted from the loss of a large customer in
the fourth quarter 1993 and the unwinding of a credit card securitization. The
fees associated with the credit card securitization were replaced with net
interest income as the related loan balances were returned to the balance sheet.
NONINTEREST EXPENSES
Noninterest expenses were $347.0 million for the quarter ended June 30,
1994, compared with $332.5 million for the corresponding quarter in 1993. Year-
to-date noninterest expenses were $687.9 million compared with $657.3 million in
1993. Ex-
<TABLE>
TABLE 5: ALLOWANCE FOR LOAN LOSSES
<CAPTION>
Six Months Ended
June 30
-----------------------
(In Thousands) 1994 1993
<S> <C> <C>
- - -------------------------------------------------------------------------------
Balance at beginning of year.......................... $443,412 $383,849
Provision............................................. 40,513 49,278
Reserves acquired (sold).............................. 3,458 461
Charge-offs:
Commercial.......................................... 16,026 20,177
Real estate -- construction......................... 265 3,384
Real estate -- commercial........................... 3,222 2,798
Real estate -- residential.......................... 939 1,296
Revolving credit.................................... 17,113 18,808
Consumer............................................ 15,852 15,734
-------- --------
Total Charge-offs................................... 53,417 62,197
Recoveries:
Commercial.......................................... 10,561 10,236
Real estate -- construction......................... 988 644
Real estate -- commercial........................... 443 472
Real estate -- residential.......................... 412 447
Revolving credit.................................... 5,408 5,139
Consumer............................................ 12,051 10,592
-------- --------
Total Recoveries.................................... 29,863 27,530
-------- --------
Net Charge-offs....................................... 23,554 34,667
-------- --------
Balance at end of period.............................. $463,829 $398,921
========= =========
</TABLE>
<TABLE>
TABLE 6: ANNUALIZED NET CHARGE-OFFS AS A PERCENTAGE OF
AVERAGE LOANS
<CAPTION>
Second Quarter First Six
Months
1994 1993 1994 1993
<S> <C> <C> <C> <C>
- - ----------------------------------------------------------------------------------
Commercial....................................... .03% .27% .13% .24%
Real estate -- construction...................... (.02) .77 (.33) 1.08
Real estate -- commercial........................ .24 .17 .23 .22
Real estate -- residential....................... .02 .04 .03 .06
Revolving credit................................. 1.49 1.89 1.46 1.92
Consumer......................................... .09 .16 .18 .27
Total net charge-offs to average loans........... .18 .34 .22 .37
</TABLE>
cluding the effect of acquisitions, expenses in the second quarter and
year-to-date 1994 were flat in comparison to the same periods last year. Legal
settlements totalling $3.5 million were recorded in the second quarter 1994.
Severance and other costs related to the Corporation's cost redesign program
were $5.7 million for the six months ended June 30, 1993 and writedowns of OREO
properties were $8.2 million for the same year-to-date period.
The efficiency ratio, defined as noninterest expense as a percentage of fee
income plus fully taxable net interest income, was 66.21% for the first six
months of 1994 versus 65.89% for the first half of 1993.
The overhead ratio, defined as noninterest expense less fee income as a
percentage of fully taxable net interest income, was
43.69% for the first half of 1994 versus 44.13% a year ago.
The relationships between the overhead and efficiency ratios in comparison
to the prior year reflect equivalent dollar growth in both noninterest income
and expense, as well as higher net interest income. The current year ratios are
impaired by the legal settlements that occurred in 1994.
Total staff at June 30, 1994 increased from a year ago due to the
acquisition of Ohio Bancorp which accounted for 595 banking and 42 trust
positions at June 30, 1994. Also, the increase in item processing was due to
both acquisitions and increased business volume.
ASSET QUALITY
Table 5 sumarizes the activity in the allowance for loan losses.
13
<PAGE> 15
The allowance for loan losses was $463.8 million at June 30, 1994
representing 2.14% of loans outstanding at that date. This loan loss reserve
ratio compared with 2.08% at year-end 1993 and 2.04% at June 30, 1993.
The provision for loan losses declined to $20.1 million for the second
quarter 1994 and $40.5 million year-to-date from $23.9 million and $49.3 million
for the same periods in 1993, respectively.
Net charge-offs were $9.4 million and $16.2 million for the quarters ended
June 30, 1994 and 1993, respectively, and $23.6 million and $34.7 million,
respectively, for the first six months of 1994 and 1993.
The decline in provision and net charge-offs for both the quarter and
year-to-date is reflective of the continued improvement 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 $164 million at June 30, 1994 declined by $20
million from the prior quarter and $104 million from a year ago due primarily to
the sale of foreclosed real estate and commercial loan charge-offs and
repayments.
Nonperforming assets as a percentage of loans and OREO were .76% at June
30, 1994 compared with 1.37% a year ago and .98% at December 31, 1993.
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 114 "Accounting By Creditors For Impairment of
a Loan". The Corporation plans to adopt this standard on January 1, 1995 and
does not expect the adoption to have a material impact on financial position or
results of operations.
<TABLE>
TABLE 7: NONPERFORMING ASSETS
<CAPTION>
JUNE 30 December 31 June 30
(IN MILLIONS) 1994 1993 1993
<S> <C> <C> <C>
----------------------------------------------------------------------------
Commercial:
Nonaccrual.......................... $59.7 $79.4 $91.7
Restructured........................ 1.1 1.1 1.8
--------- ------------ ---------
Total commercial.................. 60.8 80.5 93.5
Real estate related:
Nonaccrual.......................... 57.8 64.4 80.6
Restructured........................ 4.6 6.5 13.7
--------- ------------ ---------
Total real estate related......... 62.4 70.9 94.3
--------- ------------ ---------
Total nonperforming loans......... 123.2 151.4 187.8
Other real estate owned (OREO)........ 41.2 57.8 80.2
--------- ------------ ---------
Nonperforming assets.................. $164.4 $209.2 $268.0
========== ============= ==========
Loans 90 days past-due accruing
interest............................ $30.1 $42.2 $57.2
========== ============= ==========
</TABLE>
<TABLE>
TABLE 8: CAPITAL AND CAPITAL/ASSET RATIOS
<CAPTION>
JUNE 30, 1994 Dec 31, 1993 June 30, 1993
(IN MILLIONS) AMOUNT RATIO Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------
Total equity1............ $2,594.6 8.58 % $2,763.3 8.89 % $2,593.7 9.05 %
Common equity1........... 2,404.7 7.95 2,565.0 8.26 2,393.7 8.35
Tangible common equity2.. 2,017.2 6.75 2,185.2 7.12 2,055.0 7.26
Tier 1 capital3.......... 2,350.4 9.10 2,468.9 8.94 2,392.6 10.30
Total risk-based
capital4............... 3,267.9 12.65 3,206.8 11.62 3,072.8 13.22
Leverage ratio5.......... 2,350.4 7.86 2,468.9 8.18 2,392.6 8.51
<FN>
--------------------
1 Computed in accordance with generally accepted accounting principles,
which includes the market value adjustment to securities at December 31,
1993 and June 30, 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
adjustment to 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
intangibles.
</TABLE>
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 was $16.02 at June 30, 1994, compared with $15.16 at June 30, 1993
and $16.15 at December 31, 1993.
The book value per common share at June 30, 1994 and December 31, 1993
included ($.05) and $.22, respectively, related to the market value
(depreciation)/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 half of 1994, approximately 10 million shares of common stock
were repurchased in the open market. In July 1994, the Board of Directors
authorized the purchase, in the open market or otherwise, of up to 10 million
shares of its outstanding common stock, subject to a total expenditure limit of
$300 million. Also in July, the quarterly dividend was raised $.01 from its
previous level of $.29 to $.30 per share.
14
<PAGE> 16
<TABLE>
CONSOLIDATED AVERAGE BALANCE SHEETS
<CAPTION>
Three Months Six Months
(DOLLARS IN MILLIONS) Ended June 30 Ended June 30
- - --------------------------------------------------------------------------------------------------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
ASSETS
Earning Assets:
Loans:
Commercial............................................. $ 9,148 $ 8,795 $ 9,121 $ 8,721
Real estate mortgage--nonresidential................... 2,449 2,169 2,380 2,072
Real estate mortgage--residential...................... 3,518 2,387 3,501 2,322
Mortgage loans held for sale........................... 261 426 332 362
Consumer............................................... 4,322 3,774 4,286 3,744
Revolving credit....................................... 1,661 1,438 1,599 1,426
-------- -------- -------- --------
Total loans.......................................... 21,359 18,989 21,219 18,647
Securities............................................. 4,691 5,566 4,806 5,566
Federal funds sold and security resale agreements...... 621 379 540 416
Trading account assets................................. 10 13 21 20
Eurodollar time deposits in banks...................... 66 219 216 411
Other short-term money market investments.............. 96 116 105 162
-------- -------- -------- --------
Total earning assets (gross of allowance for loan
losses)............................................ 26,843 25,282 26,907 25,212
Allowance for loan losses.............................. (457) (395) (454) (391)
Market value appreciation of securities available for
sale................................................. 4 -- 25 --
Cash and demand balances due from banks................ 2,029 1,927 2,031 1,888
Properties and equipment............................... 391 356 390 360
Customers' acceptance liability........................ 58 48 61 51
Accrued income and other assets........................ 1,278 1,103 1,275 1,068
-------- -------- -------- --------
Total Assets......................................... $ 30,146 $ 28,321 $ 30,235 $ 28,188
======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES:
Demand deposits........................................ $ 4,779 $ 4,495 4,802 $ 4,431
Savings and NOW accounts............................... 5,169 4,319 5,170 4,266
Insured money market accounts.......................... 5,239 5,489 5,276 5,416
Time deposits of individuals........................... 6,209 6,249 6,178 6,374
Other time deposits.................................... 488 606 490 646
Deposits in overseas office............................ 716 198 678 251
-------- -------- -------- --------
Total deposits....................................... 22,600 21,356 22,594 21,384
Federal funds borrowed and security repurchase
agreements........................................... 2,479 2,366 2,572 2,275
Borrowed funds......................................... 1,301 1,159 1,284 1,173
Acceptances outstanding................................ 58 48 61 51
Accrued expenses and other liabilities................. 396 355 415 358
Corporate long-term debt............................... 757 461 675 393
-------- -------- -------- --------
Total Liabilities.................................... 27,591 25,745 27,601 25,634
STOCKHOLDERS' EQUITY:
Preferred stock........................................ 192 200 194 200
Common stock........................................... 2,363 2,376 2,440 2,354
-------- -------- -------- --------
Total Stockholders' Equity........................... 2,555 2,576 2,634 2,554
-------- -------- -------- --------
Total Liabilities and Stockholders' Equity........... $ 30,146 $ 28,321 $ 30,235 $ 28,188
======= ======= ======= =======
15
</TABLE>
<PAGE> 17
<TABLE>
DAILY AVERAGE BALANCE SHEETS/NET INTEREST INCOME/RATES
<CAPTION>
(DOLLARS IN MILLIONS) Daily Average Balance
- - ----------------------------------------------------------------------------------------------------------
1994 1993
------------------ -----------------------------
SECOND First Fourth Third Second
QUARTER Quarter Quarter Quarter Quarter
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
ASSETS
Earning Assets:
Loans:
Commercial...................................... $ 9,148 $ 9,105 $ 9,123 $ 8,695 $ 8,795
Real estate mortgage............................ 6,228 6,192 6,251 5,407 4,982
Consumer........................................ 5,983 5,780 5,623 5,398 5,212
------- ------- ------- ------- -------
Total loans................................... 21,359 21,077 20,997 19,500 18,989
Securities:
Taxable......................................... 3,903 4,164 4,636 4,560 4,687
Tax-exempt...................................... 788 759 839 847 879
------- ------- ------- ------- -------
Total securities.............................. 4,691 4,923 5,475 5,407 5,566
Federal funds sold................................ 52 46 86 28 81
Security resale agreements........................ 569 412 302 186 298
Eurodollar time deposits in banks................. 66 366 223 73 219
Short-term money market investments............... 106 147 135 155 129
------- ------- ------- ------- -------
Total earning assets/
Total interest income/rates................ 26,843 26,971 27,218 25,349 25,282
Market value appreciation of securities available
for sale.......................................... 4 46 -- -- --
Allowance for loan losses........................... (457) (450) (452) (402) (395)
Cash and demand balances due from banks............. 2,029 2,033 2,111 1,948 1,927
Properties and equipment............................ 391 390 386 362 356
Customers' acceptance liability..................... 58 64 57 45 47
Accrued income and other assets..................... 1,278 1,271 1,148 1,177 1,104
------- ------- ------- ------- -------
Total assets.................................. $30,146 $30,325 $30,468 $28,479 $28,321
======= ======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Savings and NOW accounts.......................... $ 5,169 $ 5,174 $ 5,065 $ 4,409 $ 4,319
Insured money market accounts..................... 5,239 5,313 5,482 5,291 5,489
Time deposits of individuals...................... 6,209 6,146 6,291 6,036 6,249
Other time deposits............................... 488 487 565 510 606
Deposits in overseas offices...................... 716 640 305 245 198
Federal funds borrowed............................ 1,352 1,588 1,631 1,649 1,294
Security repurchase agreements.................... 1,127 1,079 1,158 1,086 1,072
Borrowed funds.................................... 1,301 1,266 1,237 1,187 1,159
Corporate long-term debt.......................... 757 592 509 509 461
------- ------- ------- ------- -------
Total interest bearing liabilities/
Total interest expense/rates............... 22,358 22,285 22,243 20,922 20,847
Non-interest bearing deposits..................... 4,779 4,828 5,087 4,524 4,495
Acceptances outstanding........................... 58 64 57 45 48
Accrued expenses and other liabilities............ 396 435 372 380 355
------- ------- ------- ------- -------
Total liabilities............................. 27,591 27,612 27,759 25,871 25,745
Stockholders' equity.......................... 2,555 2,713 2,709 2,608 2,576
------- ------- ------- ------- -------
Total liabilities and stockholders' equity.... $30,146 $30,325 $30,468 $28,479 $28,321
======= ======= ======= ======= =======
Net interest income.......................................................................................
Interest spread...........................................................................................
Contribution of noninterest bearing sources of funds......................................................
Net interest margin.......................................................................................
</TABLE>
16
<PAGE> 18
<TABLE>
<CAPTION>
Quarterly Interest Average Annualized Rate
------------------------------------------------------- -------------------------------------------------------
1994 1993 1994 1993
------------------- ------------------------------- ------------------- -------------------------------
SECOND First Fourth Third Second SECOND First Fourth Third Second
QUARTER Quarter Quarter Quarter Quarter QUARTER Quarter Quarter Quarter Quarter
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$175.4 $164.6 $167.6 $162.5 $160.9 7.69% 7.33% 7.29% 7.42% 7.34%
118.9 116.5 120.0 106.6 100.9 7.63 7.53 7.68 7.89 8.10
135.7 129.1 127.8 134.1 130.1 9.09 9.02 9.03 9.88 10.01
------- ------- ------- ------- -------
430.0 410.2 415.4 403.2 391.9 8.07 7.85 7.87 8.23 8.27
48.7 48.8 54.1 53.6 58.9 4.99 4.71 4.65 4.69 5.03
15.7 14.3 17.7 18.1 18.8 7.97 7.52 8.45 8.56 8.54
------- ------- ------- ------- -------
64.4 63.1 71.8 71.7 77.7 5.49 5.14 5.23 5.30 5.58
.5 .3 .7 .2 .6 4.14 2.82 2.95 3.01 2.77
5.6 3.3 2.4 1.4 2.3 3.93 3.21 3.14 2.90 3.15
.6 2.4 1.9 .6 1.8 3.51 2.66 3.40 3.43 3.37
1.2 1.8 2.1 1.7 1.6 4.56 4.92 6.29 4.31 5.07
------- ------- ------- ------- -------
$502.3 $481.1 $494.3 $478.8 $475.9 7.50% 7.19% 7.23% 7.52% 7.54%
$ 33.2 $ 33.0 $ 33.9 $ 29.7 $ 29.2 2.58% 2.58% 2.66% 2.67% 2.71%
28.4 27.5 28.5 28.5 29.1 2.17 2.10 2.06 2.14 2.13
66.2 63.9 67.1 65.2 70.6 4.27 4.21 4.23 4.29 4.53
4.1 3.9 4.7 4.3 5.2 3.53 3.23 3.36 3.34 3.42
6.6 4.1 2.1 1.6 1.2 3.68 2.62 2.73 2.65 2.41
13.6 12.4 14.3 12.6 9.4 4.02 3.18 3.48 3.03 2.91
9.2 7.2 7.6 6.8 7.0 3.28 2.71 2.60 2.49 2.61
13.3 11.3 12.9 11.2 11.3 4.09 3.63 4.14 3.73 3.90
13.7 8.4 7.5 7.8 7.1 7.28 5.71 5.85 6.04 6.22
------- ------- ------- ------- -------
188.3 171.7 178.6 167.7 170.1 3.38% 3.12% 3.19% 3.18% 3.27%
------- ------- ------- ------- -------
$314.0 $309.4 $315.7 $311.11 $305.8
======= ======= ======= ======= =======
........................................................... 4.12% 4.07% 4.04% 4.34% 4.27%
........................................................... .56 .54 .59 .56 .57
------- ------- ------- ------- -------
........................................................... 4.68% 4.61% 4.63% 4.90% 4.84%
======= ======= ======= ======= =======
17
</TABLE>
<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
NATIONAL CITY CORPORATION
FORM 10-Q -- JUNE 30, 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: July 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
+--------------------+
NATIONAL CITY CORPORATION | Bulk Rate |
NATIONAL CITY CENTER | U.S. Postage |
1900 EAST NINTH STREET | PAID |
CLEVELAND, OHIO 44114-3484 | National City |
| Corporation |
+--------------------+
<PAGE> 1
EXHIBIT 10.1
NATIONAL CITY CORPORATION
AMENDED AND SECOND RESTATED
1991 RESTRICTED STOCK PLAN
(THE PROPOSED CHANGES TO THE 1991 AMENDED AND RESTATED
RESTRICTED STOCK PLAN ARE SET FORTH BELOW. THE italicized
LANGUAGE IS THE LANGUAGE THAT WILL BE ADDED. THE LANGUAGE THAT
WILL BE DELETED IS SHOWN WITH A RULE DRAWN THROUGH THE TEXT.)
ARTICLE 1.
ESTABLISHMENT AND PURPOSE OF PLAN
1.1 ESTABLISHMENT OF THE PLAN. National City Corporation hereby
establishes the National City Corporation 1991 Restricted Stock Plan (herein
referred to as the "Plan"). The Plan shall become effective upon the later of
(i) when approved by the stockholders of the Corporation and (ii) when adopted
by the board of Directors of the Corporation, and shall remain in effect as
provided herein.
1.2 PURPOSE. The purpose of the Plan is to maximize the returns to the
stockholders and to promote the long-term profitability and success of the
Corporation by providing equity interests and equity based incentives in the
Corporation to key employees and members of the boards of directors of the
Corporation and its subsidiaries and by providing alternate means of
compensation.
1.3 OPERATION OF THE PLAN. The Plan shall be administered by the
Compensation and Organization Committee of the Board of Directors of the
Corporation.
ARTICLE 2.
DEFINITIONS
2.1 DEFINITIONS. Whenever used herein, the following terms shall have the
meanings set forth below, unless otherwise expressly provided. When the defined
meaning is intended, the term is capitalized.
(a) "Active Participant" shall mean an Eligible PERSON who is
approved by the Committee for participation in the Plan.
(b) "Award" means the grant to a Participant of a certain number of shares
of Restricted Stock.
(c) "Award Agreement" means the written agreement between the Participant
and the Corporation relating to the Award of Restricted Stock to the
Participant.
(d) "Board" means the Board of Directors of the Corporation.
(e) "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
(f) "Committee" means the Compensation and Organization Committee of the
Board, or another committee of Directors of the Corporation appointed by the
Board to serve as the committee responsible for administering of the Plan.
(g) "Common Stock" means the Common Stock, $4.00 par value per share, of
National City Corporation or any other securities into which the Common Stock
may be converted or for which they may be exchanged as contemplated by Section
3.3.
A-1
<PAGE> 2
(h) "Corporation" means National City Corporation, a Delaware corporation,
or any successor.
(i) "Director" means an elected or appointed member of the Board of
Directors of the Corporation, but does not include any honorary member of the
Board of Directors of the Corporation or other person not entitled as a matter
of law to vote and otherwise participate in regular meetings of the Board of
Directors of the Corporation.
(j) "Director Year" means a period of time commencing on the date of the
Corporation's Annual Meeting of Stockholders for any fiscal year of the
Corporation and ending on the day before the Corporation's Annual Meeting of
Stockholders for its next immediately ensuing fiscal year.
(k) "Disability" means, as to a specific Participant, permanent disability
as defined in the provisions of the Award Agreement relating to that
Participant.
(l) "Early Retirement" means, as to a specific Participant, early retirement
as defined in the provisions of the Award Agreement relating to that
Participant.
(m) "Eligible PERSON" means an Employee or a Subsidiary Director.
(n) "Employee" means an individual employed by the Corporation or any
Subsidiary. A member of the Board of Directors of the Corporation who is not
otherwise an Employee shall not be deemed an Employee of the Corporation for
purposes of this Plan.
(o) "Fair Market Value" means, as of any given date and unless otherwise
determined by the Committee, the closing price, per share, of the shares of
Common Stock on the New York Stock Exchange on that date, as reported by The
Wall Street Journal.
(p) "Normal Retirement" means, as to a specific Participant, normal
retirement as defined in the provisions of the Award Agreement relating to
that Participant.
(q) "Participant" means and includes all persons who are then registered
owners of Restricted Stock.
(r) "Plan Restrictions" means the restrictions set forth in Article 5 or 6
hereof on any transfer of Common Stock, or any interest therein, which is the
subject of an Award granted hereunder.
(s) "Restricted Period" means that period of time, as determined by the
Plan, during which the Common Stock subject of an Award is not transferable by
reason of Plan Restrictions.
(t) "Restricted Stock" means shares of Common Stock the transfer or
alienation of which are restricted by reason of Plan Restrictions.
(u) "Retirement" means: with respect to Employees, Normal Retirement or
Early Retirement as defined hereby; with respect to Subsidiary Directors, as
defined in the provisions of the Award Agreement relating to each Subsidiary
Director; and with respect to Directors who are not employees of the
Corporation or its subsidiaries, that point in time when a director is no
longer eligible to stand for reelection as a Director pursuant to Article III
of the Corporation's First Restatement of By-Laws.
(v) "Subsidiary" means any Corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation if each of the
corporations (other than the last corporation in the unbroken chain) owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one or more of the other corporations in the chain.
(w) "Subsidiary Director" means an elected or appointed member of the board
of directors of any Subsidiary, but does not include any person who is an
Employee or a Director.
A-2
<PAGE> 3
2.2 GENDER AND NUMBER. Except when otherwise indicated by the context,
any masculine terminology used herein also shall include the feminine, and the
definition of any term in the singular shall include the plural.
ARTICLE 3.
STOCK SUBJECT TO PLAN
3.1 AUTHORIZED AMOUNT. Subject to adjustment as provided by this Plan,
the total number of shares of Common Stock reserved and available for
distribution under the Plan shall be one million (1,000,000) shares of Common
Stock. Such shares may consist, in whole or in part, of authorized and unissued
shares or treasury shares.
3.2 EFFECT OF FORFEITURES. If any Participant forfeits any shares of
Restricted Stock that are subject to any Award granted hereunder, or any such
Award otherwise terminates with respect to any shares of Restricted Stock
thereunder without the Plan Restrictions being terminated, such shares shall
again be available for distribution in connection with future Awards under the
Plan.
3.3 ADJUSTMENTS. In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split, COMBINATION OF
SHARES, RECAPITALIZATION or other change in CAPITAL structure OF THE
CORPORATION, MERGER CONSOLIDATION, SPINOFF, REORGANIZATION, PARTIAL OR COMPLETE
LIQUIDATION, ISSUANCE OF RIGHTS OR WARRANTS TO PURCHASE SECURITIES, OR ANY
OTHER CORPORATE TRANSACTION OR EVENT HAVING AN EFFECT SIMILAR TO ANY OF THE
FOREGOING, the Board of Directors may make such substitution or adjustment in
the aggregate number of shares of Common Stock and, if necessary, in the kind
of securities reserved for issuance under the Plan, and in the number of shares
subject of outstanding Awards granted under the Plan in the aggregate or to any
Participant AND IN THE NUMBER OF SHARES SPECIFIED IN SECTION 4.2 HEREOF, all as
may be determined to be appropriate by the Board, acting in its sole
discretion, provided that the number of shares subject to any Award shall
always be a whole number.
ARTICLE 4.
EMPLOYEE ELIGIBILITY AND PARTICIPATION
4.1 ELIGIBILITY. The Committee shall, from time to time, determine
those ELIGIBLE PERSONS who are to receive Awards hereunder. Except as set forth
in Article 5 hereof, individuals who are appointed or elected as a Director but
who are not otherwise an Employee shall not be eligible to receive Awards
hereunder.
4.2 LIMITATION. No Participant shall have granted to him or to her,
or on his or on her behalf, in one or more Awards, more than ONE HUNDRED FIFTY
thousand (150,000) shares of Common Stock in the aggregate under this Plan.
4.3 TERMINATION. If a Participant ceases to be an ELIGIBLE PERSON
during a Restricted Period, the Award Agreement shall provide the extent to
which the Plan Restrictions on the Restricted Stock, or any portion thereof,
subject of such Award Agreement shall lapse or whether all or any portion of
such Restricted Stock shall be forfeited. Restricted Stock which is forfeited
shall be returned to the Corporation from the escrow established under Section
6.9, and the Participant shall have no further interest in such stock.
A-3
<PAGE> 4
ARTICLE 5.
DIRECTORS
5.1 DIRECTOR ELIGIBILITY. Annually, during each Director Year, each
Director of the Corporation who is not then an Employee of the Corporation or
any Subsidiary shall be entitled to an Award as provided by this Article 5,
provided that no Director shall be entitled to any Award if (i) there are not a
sufficient number of shares of Common Stock hereunder to make a full Award to
Directors in such Director Year, (ii) if the Plan has been terminated or (iii)
if the Committee determines to terminate Director Awards.
5.2 AMOUNT OF AWARD. In the Director Year in which the Director is first
elected or appointed as a Director of the Corporation, the Director shall be
granted an Award of ONE THOUSAND (1000) shares of Restricted
Stock. In each following Director Year when the individual is re-elected or
re-appointed a Director of the Corporation, such Director shall be granted an
Award of TWO hundred (200) shares of Restricted Stock. Each individual
holding the office of Director on the date when the Plan becomes effective in
accordance with its provisions shall be granted an Award of five hundred (500)
shares of Restricted Stock.
5.3 GRANT OF AWARDS. Awards to Directors shall be granted in accordance
with Sections 5.1 and 5.2 hereof, and the date of any Award shall be the actual
date of election or appointment, as the case may be, of the grantee as a
Director of the Corporation. No Award Agreement with a Director shall grant to
that Director any benefits not expressly provided by this Article 5, nor shall
it limit the Director's rights to receive dividends on or to vote the Restricted
Stock subject of that Award Agreement. The number of shares awarded in any
future grants under this paragraph 5.3 shall be adjusted by the Committee as
equitably required to prevent dilution or enlargement of the award to Directors
that otherwise would result from any stock dividend, stock split, combination of
shares, recapitalization or other change in the capital structure of the
Corporation, merger, consolidation, spin-off, reorganization, partial or
complete liquidation, issuance of rights or warrants to purchase securities, or
any other corporate transaction or event having an effect similar to any of the
foregoing.
5.4 TERM OF RESTRICTIONS. (a) The Restricted Period, with respect to the
Plan Restrictions on any Award to a Director under this Article 5, shall
terminate, and the Plan Restrictions on all Restricted Stock shall fully expire,
on the earlier of (i) such Director's death, (ii) such Director's Disability or
(iii) a date nine months after the date of the award.
(b) If a Director shall resign, or otherwise no longer be a member of the
Board of Directors of the Corporation for reasons other than those set forth in
subsection 5.4(a) of this Plan, then the director's interest in all shares of
Restricted Stock previously awarded to him under this Article 5 shall be
terminated and such Restricted Stock shall be forfeited and returned to the
Corporation.
ARTICLE 6.
AWARDS
6.1 GENERAL. Except as provided in Article 5 with respect to Directors,
the Committee shall, from time to time, designate those ELIGIBLE
PERSONS to be granted Awards under the Plan, the number of shares of Restricted
Stock to be granted in an Award to an ELIGIBLE PERSON, the terms upon
which the Plan Restrictions on any Restricted Stock shall lapse and the
Restricted Stock will become freely transferable, and such other conditions as
the Committee may deem appropriate. Not all grants of Awards need to be on the
same terms and conditions even though granted at the same time, and the terms of
Award Agreements may vary from time to time and from Participant to Participant,
depending upon the purpose of the Award; provided, however, all Awards shall be
subject of the provisions of Section 6.4 hereof.
A-4
<PAGE> 5
6.2 LIMITATION. (a) Except as expressly provided by Article 5 with
respect to Awards to Directors, the Plan Restrictions established by Section 6.4
hereof on any Award may be of any length of time greater than six (6) months as
determined by the Committee.
(b) No grants of Awards under the Plan may be made after ten (10) years
from the date the Plan becomes effective.
6.3 ADDITIONAL RESTRICTIONS. Restricted Stock Awards shall be expressly
subject to the terms and conditions of this Article 6, but the Committee may
establish additional restrictions on the transfer of the Common Stock subject of
any Award.
6.4 PLAN RESTRICTIONS. During the Restricted Period for any Award, a
Participant may not, voluntarily or involuntarily, sell, assign, encumber,
pledge or otherwise transfer any shares of Restricted Stock subject of the
Award, or any interest therein, otherwise than by will or the law of descent and
distribution. Any attempted sale, assignment, encumbrance, pledge or other
transfer of the Restricted Stock or any interest therein, in derogation of these
restrictions shall result in a forfeiture to the Corporation of all Restricted
Stock subject to such attempted transfer.
6.5 STOCKHOLDER RIGHTS. All Restricted Stock shall be registered in the
stockholder records of the Corporation in the name of the Participant to whom
the Award was made. Except for Plan Restrictions, and except for any additional
restrictions contained in the Award Agreement including any assignment of rights
to dividends payable from time to time on the Restricted Stock (cash or
property), the Participant shall have all rights of a holder of Common Stock.
6.6 AWARD AGREEMENT. Each Participant granted an Award of Restricted
Stock shall enter into an Award Agreement with the Corporation in a form
specified by the Committee, agreeing to the terms and conditions of the Award
and such other matters as the Committee shall in its sole discretion determine,
including any additional conditions of forfeiture. The execution and delivery of
the Award Agreement by the grantee of the Award shall be a condition precedent
to the registration in the name of the grantee of the Restricted Stock subject
to the Award. A failure to execute and deliver the Award Agreement within sixty
(60) days after the grant of an Award may terminate the Award upon the
determination of the Committee. The Award Agreement may, but need not, allow the
Plan Restrictions to lapse serially or in total over any period of time as
selected by the Committee and if terminated, the grantee shall have no further
interest in the Restricted Stock forfeited thereby, if any.
6.7 LEGEND. Each certificate issued in respect of Restricted Stock
awarded under the Plan shall be registered in the name of the Participant, shall
be deposited with the Corporation pursuant to Section 6.9 hereof together with a
stock power endorsed in blank and signed by the Participant and shall bear the
following (or a similar) legend:
"The transferability of this certificate and the shares of stock represented
hereby are subject to the terms and conditions (including forfeiture) contained
in the National City Corporation 1991 Restricted Stock Plan and in an Agreement
entered into between the registered owner hereof and National City Corporation."
6.8 LAPSE OF RESTRICTIONS. When the Plan Restrictions imposed by this
Article 6 expire or have otherwise been satisfied with respect to one or more
shares of Restricted Stock, subject to Section 10.3 hereof, the Corporation
shall deliver to the Participant (or his legal representative, beneficiary or
heir) within sixty (60) days thereafter Common Stock without the Legend referred
to in Section 6.7 hereof and free of Plan Restrictions. The number of shares of
Common Stock to be released shall be the same number as to which the Plan
Restrictions have lapsed. At that time, the Award Agreement referred to in
Section 6.6 as it relates to such shares of Common Stock delivered to the
Participant shall be terminated.
A-5
<PAGE> 6
6.9 ESCROW. Certificates representing shares of Restricted Stock which
are the subject of an Award shall be physically held by the Corporation, or its
nominee, during the Restricted Period. Upon the termination of the Restricted
Period, the Corporation shall cause the certificate representing the shares of
Common Stock subject of the Award to be reissued. If the Plan Restrictions have
been satisfied as to any shares of Restricted Stock, such shares shall be
removed from escrow and delivered to the Corporation for reissuance and delivery
of Common Stock in the name of the Participant in accordance with Section 6.8.
If any shares of Restricted Stock are to be forfeited, such shares shall be
delivered to the Corporation for reissuance in the name of the Corporation.
ARTICLE 7.
RIGHTS OF PARTICIPANTS
7.1 EMPLOYMENT. Nothing in this Plan shall interfere with or limit in any
way the right of the Corporation to terminate a Participant's employment at any
time, with the Corporation or any Subsidiary, nor confer upon any Participant
any right to continue in the employ of the Corporation.
7.2 RESTRICTIONS ON ASSIGNMENTS. The interest of a Participant or his or
her beneficiary under this Plan may not be sold, assigned, encumbered or
transferred in any manner, either voluntarily or involuntarily, in any attempt
to so anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge
the same shall be null and void; neither shall the benefits hereunder be liable
for or subject to the debts, contracts, liabilities, engagements, or torts of
any person to whom such benefits or funds are payable, nor shall they be subject
to garnishment, attachment, or other legal or equitable process, nor shall they
be an asset in bankruptcy.
ARTICLE 8.
ADMINISTRATION
8.1 ADMINISTRATION. The Plan shall be administered by the Committee in
accordance with any administrative guidelines and any rules that may be
established from time to time by the Committee. Except as expressly provided by
Article 5 hereof, the procedures, standards and provisions of this Plan for
determining eligibility for and amounts of Awards in themselves confer no
rights, duties or privileges upon participants nor place obligations upon either
the Board or the Corporation, and accordingly, the Committee may, in making such
determinations hereunder, deviate from such procedures and standards in whatever
manner that it, in its judgment, deems appropriate.
The Committee's interpretation of this Plan or of any term of an Award
granted pursuant thereto shall be final and binding on all Participants.
The Committee shall have the authority to establish, adopt or revise such
rules or regulations relating to the Plan as it may deem necessary or advisable
for the administration of the Plan. The Committee may elect to defer the
effective date of the Plan or the granting of any Award or the lapsing of any
Plan Restrictions, if the Committee determines that such actions may be
necessary in the compliance with any State or Federal statute, regulatory
authority or judicial order.
Except as limited by Section 8.3, the Committee shall have full power and
authority to interpret, construe and administer the Plan and all Award
Agreements and its interpretations and construction hereof, and actions
hereunder, including the timing, form, amount or recipient of any payment to be
made hereunder, and its decisions shall be binding and conclusive on all persons
for all purposes.
The Committee may name assistants who may be, but need not be, members of
the Committee. Such assistants shall serve at the pleasure of the Committee, and
shall perform such functions as are provided for herein and such other functions
as may be assigned by the Committee.
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No member of the Committee or any assistant shall be liable to any person
for any action taken or omitted in connection with the interpretation and
administration of this Plan or any Award Agreement unless attributable to his or
her own willful misconduct or lack of good faith.
The Committee shall amend the 1991 and 1992 Director Award Agreements to
make the amendment to Subsection 5.4(a) made in April, 1993 retroactive to such
Award Agreements.
8.2 MEMBERSHIP. No member of the Committee shall be an Employee of the
Corporation or of any of its subsidiaries.
8.3 ACTION WITH RESPECT TO DIRECTOR AWARDS. Except as provided for in
Section 9.1, neither the Board nor the Committee shall not take any action with
respect to any Award made under Article 5 unless such action is expressly
authorized by this Plan, the Board or the appropriate Award Agreement. The Board
of Directors of the Corporation may interpret any such Award and administer the
same provided that (i) the Director whose Award is being interpreted shall not
participate in any discussion or voting with respect to such interpretation;
(ii) the issue must not be unique to Awards to Directors; and (iii) no
interpretation shall amend or alter any express provision hereof except as
permitted by section 9.1.
ARTICLE 9.
AMENDMENT OR TERMINATION
9.1 AMENDMENT. The Board of Directors may amend any provision of this
Plan or any agreement thereunder at any time; provided, however, that without
the approval of the holders of a majority of outstanding voting stock of the
Corporation no amendment may be made that would increase the maximum number of
shares to be granted under the Plan either in aggregate or individually, modify
any provision of Article 5 except where the amendments would not (A) materially
increase the benefits under the Plan; (B) materially increase the number of
securities which may be issued under the Plan; or (C) materially modify the
requirements as to eligibility for participation in the Plan, or extend the term
during which Awards may be granted under the Plan. In no event, however, shall
Article 5 hereof be amended more than once every six months, other than to
comport with changes in the Internal Revenue Code, the Employee Retirement
Income Security Act, or the rules thereunder. The Board of Directors shall also
have the right to terminate the Plan or Article 5 hereof at any time. If the
Plan is terminated, Awards previously made shall nevertheless continue in
accordance with the provisions of the Plan and Award Agreement as in effect
prior to its termination, including the provisions relating to the authority of
the Committee to administer and interpret the Plan. Except with the consent of
the Participant, no amendment, suspension or termination shall impair the rights
of any Participant in any Restricted Stock granted in an Award to such
Participant under the Plan.
9.2 OMISSION. The Committee may for any period of time refrain from
designating any Participants or may refrain from making any Awards, but such
action shall not be deemed a termination of the Plan. No employee shall have any
claim or right to be granted Awards under the Plan.
ARTICLE 10.
MISCELLANEOUS
10.1 EXPENSE. All expenses and costs in connection with the operation of
the Plan shall be borne by the Corporation.
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10.2 CHANGE OF CONTROL. In the event that:
(a) any "group" or "person" (as defined in Sections 13(d) and 14(d) of
The Securities Exchange Act of 1934), other than the Corporation and/or its
Subsidiaries considered as a group or person, directly or indirectly
becomes the beneficial owner of securities of the Corporation representing
a majority or more of the outstanding voting securities of the Corporation;
or
(b) a merger of the Corporation into another company occurs wherein
the Corporation is not the surviving entity,
then, in any such event, all Plan Restrictions shall lapse and be of no further
force or effect and the Corporation shall cause all outstanding Restricted Stock
to be exchanged for Common Stock free of the Legend and of Plan Restrictions.
10.3 WITHHOLDING TAXES. The Corporation shall be entitled to take
appropriate measures to withhold from the shares of Common Stock becoming free
of Plan Restrictions or to otherwise obtain from the Participant sufficient sums
for the amount the Corporation deems necessary to satisfy any applicable
Federal, state and local income tax withholding obligations or to make other
appropriate arrangements with Participants to satisfy such obligations.
10.4 LAWS GOVERNING. This Plan shall be construed in accordance with and
governed by the laws of the State of Ohio.
10.5 PLAN BINDING ON CORPORATION, EMPLOYEES AND THEIR SUCCESSORS. This
Plan shall be binding upon and inure to the benefit of the Corporation, its
successors and assigns and each Participant and his or her beneficiaries, heirs,
executors, administrators and legal representatives.
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