<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
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 shares outstanding of each of the issuer's classes of
Common Stock as of April 24, 1995
Common stock, $4.00 Par Value -- 146,630,366
<PAGE> 2
[NATIONAL CITY LOGO]
QUARTER ENDED MARCH 31, 1995
FINANCIAL REPORT
AND FORM 10-Q
<PAGE> 3
[NATIONAL CITY LOGO]
FINANCIAL REPORT AND FORM 10-Q
QUARTER ENDED MARCH 31, 1995
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I -- FINANCIAL INFORMATION
Financial Highlights.............................................................. 3
Financial Statements (Item 1):
Consolidated Statements of Income............................................ 4
Consolidated Balance Sheets.................................................. 5
Consolidated Statements of Cash Flows........................................ 6
Consolidated Statements of Changes in Stockholders' Equity................... 7
Notes to Financial Statements................................................ 7
Management's Discussion and Analysis (Item 2)..................................... 11
Daily Average Balances/Net Interest Income/Rates.................................. 16
PART II -- OTHER INFORMATION
Changes in Securities (Item 2)
Refer to Reports on Form 8-K below.
Exhibits and Reports on Form 8-K (Item 6)
Exhibit 27:
Financial Data Schedule
Reports on Form 8-K:
February 27, 1995: Board of Directors authorized the purchase, in the open
market or otherwise, of up to 2.5 million additional shares of the
Corporation's issued and outstanding common stock subject to a total
purchase limit of $75 million.
Signature......................................................................... 19
</TABLE>
2
<PAGE> 4
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Three Months Ended
March 31
- -----------------------------------------------------------------------------------------------------
Percent
1995 1994 Change
<S> <C> <C> <C>
EARNINGS (IN THOUSANDS):
- ------------------------
Net interest income -- fully taxable equivalent....... $327,410 $309,407 6%
Provision for loan losses............................. 22,590 20,442 11
Fees and other income................................. 207,859 203,808 2
Security gains........................................ 1,396 5,893 (76)
Noninterest expense................................... 347,404 340,938 2
Net income............................................ 111,031 103,807 7
Net income applicable to common stock................. 107,311 99,930 7
PERFORMANCE RATIOS:
- -------------------
Net interest margin................................... 4.59% 4.61%
Overhead ratio........................................ 42.62 44.32
Efficiency ratio...................................... 64.90 66.43
Return on average assets.............................. 1.39 1.39
Return on average common equity....................... 17.98 16.11
Return on average total equity........................ 17.28 15.52
PER SHARE MEASURES:
- -------------------
Net income per common share........................... $ .72 $ .63 14%
Dividends paid per common share....................... .32 .29 10
Book value per common share........................... 16.97 15.87 7
Market value per share (close):
Common........................................... 26.63 26.63 --
Preferred........................................ 64.13 67.50 (5)
AVERAGE BALANCES (IN MILLIONS):
- -------------------------------
Assets................................................ $ 32,290 $ 30,325 6%
Loans................................................. 23,481 21,077 11
Securities............................................ 4,461 4,923 (9)
Earning assets........................................ 28,612 26,971 6
Deposits.............................................. 24,372 22,588 8
Common stockholders' equity........................... 2,420 2,517 (4)
Total stockholders' equity............................ 2,606 2,713 (4)
AT PERIOD END:
- --------------
Total equity to assets................................ 8.19% 8.68%
Tier 1 capital ratio.................................. 8.95 9.65
Total risk-based capital ratio........................ 12.18 13.35
Leverage ratio........................................ 7.59 7.79
Common shares outstanding............................. 146,570,786 151,072,522 (3)
Full-time equivalent employees........................ 20,315 19,771 3
ASSET QUALITY:
- --------------
Net charge-offs to loans (annualized)................. .33% .27%
Loan loss reserve to loans............................ 1.97 2.12
Nonperforming assets to loans & OREO.................. .57 .86
</TABLE>
3
<PAGE> 5
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
(Dollars in Thousands Except Per Share Amounts) March 31
- ------------------------------------------------------------------------------------------------------
1995 1994
<S> <C> <C>
INTEREST INCOME
Loans:
Taxable............................................................ $ 507,970 $ 404,676
Exempt from Federal income taxes................................... 3,908 3,525
Securities:
Taxable............................................................ 57,081 48,825
Exempt from Federal income taxes................................... 10,134 9,089
Federal funds sold and security resale agreements.................... 7,960 3,577
Eurodollar time deposits in banks.................................... -- 2,398
Other short-term investments......................................... 1,380 1,783
----------- -----------
Total interest income............................................ 588,433 473,873
INTEREST EXPENSE
Deposits............................................................. 204,617 132,422
Federal funds borrowed and security repurchase agreements............ 29,182 19,637
Borrowed funds....................................................... 20,002 11,332
Corporate long-term debt............................................. 13,375 8,337
----------- -----------
Total interest expense........................................... 267,176 171,728
----------- -----------
Net interest income.............................................. 321,257 302,145
PROVISION FOR LOAN LOSSES.............................................. 22,590 20,442
----------- -----------
Net interest income after provision for loan losses.............. 298,667 281,703
NONINTEREST INCOME
Item processing revenues............................................. 75,726 72,195
Service charges on deposit accounts.................................. 38,133 37,357
Trust fees........................................................... 33,455 33,163
Credit card fees..................................................... 17,162 19,810
Mortgage banking revenue............................................. 20,358 14,153
Other................................................................ 23,025 27,130
----------- -----------
Total fees and other income...................................... 207,859 203,808
Security gains....................................................... 1,396 5,893
----------- -----------
Total noninterest income......................................... 209,255 209,701
NONINTEREST EXPENSE
Salaries and employee benefits....................................... 164,385 161,296
Equipment............................................................ 23,847 23,235
Net occupancy........................................................ 22,891 22,910
Assessments and taxes................................................ 20,207 20,185
Other................................................................ 116,074 113,312
----------- -----------
Total noninterest expense........................................ 347,404 340,938
----------- -----------
Income before income taxes............................................. 160,518 150,466
Income tax expense..................................................... 49,487 46,659
----------- -----------
NET INCOME............................................................. $ 111,031 $ 103,807
========== ==========
NET INCOME APPLICABLE TO COMMON STOCK.................................. $ 107,311 $ 99,930
========== ==========
NET INCOME PER COMMON SHARE............................................ $.72 $.63
Average Common Shares Outstanding...................................... 148,837,218 158,277,962
</TABLE>
See notes to financial statements.
4
<PAGE> 6
CONSOLIDATED BALANCE SHEETS
<TABLE>
(Dollars in Thousands)
- --------------------------------------------------------------------------------------------------
<CAPTION>
MARCH 31 December 31 March 31
1995 1994 1994
<S> <C> <C> <C>
ASSETS
Loans:
Commercial.................................... $ 9,211,089 $ 8,667,539 $ 8,558,565
International................................. 53,153 52,356 49,259
Real estate construction...................... 438,578 421,505 450,746
Lease financing............................... 215,934 216,499 220,435
Real estate mortgage -- nonresidential........ 2,446,537 2,473,329 2,290,024
Real estate mortgage -- residential........... 4,403,403 4,123,084 3,528,395
Mortgage loans held for sale.................. 55,220 42,064 344,034
Consumer...................................... 4,950,172 4,781,759 4,262,675
Revolving credit.............................. 2,270,951 2,256,640 1,552,525
----------- ------------ -----------
Total loans.............................. 24,045,037 23,034,775 21,256,658
Allowance for loan losses................ 474,838 469,019 450,112
----------- ------------ -----------
Net loans................................ 23,570,199 22,565,756 20,806,546
Securities held to maturity (market value
$1,100,991, $1,156,811 and $1,578,372,
respectively)................................. 1,098,219 1,176,115 1,551,907
Securities available for sale, at market......... 3,373,402 3,218,940 3,125,953
Federal funds sold and security resale
agreements.................................... 445,115 672,945 565,940
Trading account assets........................... 30,391 7,940 13,549
Other short-term money market investments........ 69,643 96,615 81,997
Cash and demand balances due from banks.......... 2,086,211 2,401,728 1,939,026
Properties and equipment......................... 393,352 389,980 390,382
Customers' acceptance liability.................. 101,474 102,005 60,599
Accrued income and other assets.................. 1,473,016 1,481,984 1,325,415
----------- ------------ -----------
TOTAL ASSETS............................. $32,641,022 $32,114,008 $29,861,314
============ ============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Demand deposits (noninterest bearing)............ $ 4,755,404 $ 5,331,789 $ 4,952,684
Savings and NOW accounts......................... 4,473,467 4,599,988 5,214,242
Insured money market accounts.................... 4,637,302 4,964,741 5,313,030
Time deposits of individuals..................... 8,511,470 7,298,056 6,119,226
Other time deposits.............................. 502,616 472,023 522,463
Deposits in overseas offices..................... 1,802,716 1,805,323 551,411
----------- ------------ -----------
Total deposits........................... 24,682,975 24,471,920 22,673,056
Federal funds borrowed and security repurchase
agreements.................................... 2,540,191 2,608,801 2,054,397
Borrowed funds................................... 1,393,130 1,104,989 1,282,072
Acceptances outstanding.......................... 101,474 102,005 60,599
Accrued expenses and other liabilities........... 505,982 481,570 443,183
Corporate long-term debt......................... 743,390 743,669 757,136
----------- ------------ -----------
TOTAL LIABILITIES........................ 29,967,142 29,512,954 27,270,443
Stockholders' Equity:
Preferred stock.................................. 186,040 187,540 193,865
Common stock..................................... 2,487,840 2,413,514 2,397,006
----------- ------------ -----------
TOTAL STOCKHOLDERS' EQUITY............... 2,673,880 2,601,054 2,590,871
----------- ------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY................................. $32,641,022 $32,114,008 $29,861,314
============ ============= ============
</TABLE>
See notes to financial statements.
5
<PAGE> 7
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Dollars in Thousands) Three Months Ended March 31
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
1995 1994
OPERATING ACTIVITIES
Net income...................................................... $ 111,031 $ 103,807
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses.................................. 22,590 20,442
Depreciation and amortization of goodwill and
intangibles............................................... 26,675 30,262
Security gains............................................. (1,396) (5,893)
Net change in trading account assets....................... (22,451) 136,747
Other gains, net........................................... (5,718) --
Originations and purchases of mortgage loans held for
sale...................................................... (52,224) (527,356)
Proceeds from the sale of mortgage loans held for sale..... 40,327 712,509
Net change in interest receivable.......................... (44,089) (2,092)
Net change in interest payable............................. 59,990 5,667
Net change in other assets................................. 35,684 42,935
Net change in other liabilities............................ (40,641) 57,909
----------- -----------
Net Cash Provided (Used) by Operating Activities........ 129,778 574,937
LENDING AND INVESTING ACTIVITIES
Net change in short-term investments............................ 283,194 506,483
Purchases of securities......................................... (209,261) (514,744)
Proceeds from sales of securities............................... 71,845 525,757
Proceeds from maturities and prepayments of securities.......... 162,690 448,061
Net change in loans............................................. (849,715) (169,412)
Net change in properties and equipment.......................... (15,804) (18,330)
Acquisitions.................................................... 8,539 --
----------- -----------
Net Cash Provided (Used) by Lending and Investing
Activities........................................... (548,512) 777,815
DEPOSIT AND FINANCING ACTIVITIES
Net change in Federal funds borrowed and security repurchase
agreements................................................... (68,610) (1,028,424)
Net change in borrowed funds.................................... 288,141 81,061
Net change in demand, savings, NOW, insured money market
accounts, and deposits in overseas offices................... (1,032,952) (307,002)
Net change in time deposits..................................... 1,043,362 (82,963)
Proceeds from issuance of long-term debt........................ -- 247,080
Repayment of long-term debt..................................... (372) (1,816)
Dividends paid, net of tax benefit of ESOP shares............... (51,282) (49,696)
Issuances of common stock....................................... 4,903 4,996
Repurchase of common and preferred stock........................ (83,313) (215,051)
ESOP trust repayment............................................ 3,340 4,201
----------- -----------
Net Cash Provided (Used) by Deposit and Financing
Activities........................................... 103,217 (1,347,614)
----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents............ (315,517) 5,138
Cash and Cash Equivalents, January 1............................ 2,401,728 1,933,888
----------- -----------
Cash and Cash Equivalents, March 31............................. $ 2,086,211 $ 1,939,026
============ ============
SUPPLEMENTAL DISCLOSURES
Interest paid................................................... $ 208,000 $ 166,000
Income taxes paid............................................... 623 39,000
Shares issued in purchase acquisitions.......................... 46,206 --
</TABLE>
See notes to financial statements.
6
<PAGE> 8
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Unallocated
Shares
(Dollars in Thousands Except Per Preferred Common Capital Retained Held by
Share Amounts) Stock Stock Surplus Earnings ESOP Trust
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance January 1, 1994.................... $198,310 $635,119 $105,140 $1,841,144 $(16,446)
Net income............................... 103,807
Common dividends paid, $.29 per share.... (45,870)
Preferred dividends paid, $1.00 per
depositary share....................... (3,966)
Issuance of 278,275 common shares under
corporate stock and dividend
reinvestment plans..................... 1,113 3,883
Purchase of 7,985,364 common shares and
30,000 depositary shares of preferred
stock.................................. (4,445) (31,942) (16,574) (162,090)
Shares distributed by ESOP trust and tax
benefit on dividends................... 140 4,201
Change in unrealized market value
adjustment on securities available for
sale, net of tax....................... (20,653)
------------ ------------ ------------ ------------ ------------
Balance March 31, 1994..................... $193,865 $604,290 $ 92,449 $1,712,512 $(12,245)
============ ============ ============ ============ ============
Balance January 1, 1995.................... $187,540 $590,223 $100,051 $1,732,258 $ (9,018)
Net income............................... 111,031
Common dividends paid, $.32 per share.... (47,706)
Preferred dividends paid, $1.00 per
depositary share....................... (3,751)
Issuance of 262,028 common shares under
corporate stock and dividend
reinvestment plans..................... 1,048 3,855
Issuance of 1,785,726 common shares
pursuant to acquisition................ 7,143 39,063
Purchase of 3,032,600 common shares and
30,000 depositary shares of preferred
stock.................................. (1,500) (12,130) (6,730) (62,953)
Shares distributed by ESOP trust and tax
benefit on dividends................... 175 3,340
Change in unrealized market value
adjustment on securities available for
sale, net of tax....................... 41,941
------------ ------------ ------------ ------------ ------------
Balance March 31, 1995..................... $186,040 $586,284 $136,239 $1,770,995 $ (5,678)
============ ============ ============ ============ ============
<CAPTION>
(Dollars in Thousands Except Per
Share Amounts) Total
- ---------------------------------------------------------
<S> <C>
Balance January 1, 1994.................... $2,763,267
Net income............................... 103,807
Common dividends paid, $.29 per share.... (45,870)
Preferred dividends paid, $1.00 per
depositary share....................... (3,966)
Issuance of 278,275 common shares under
corporate stock and dividend
reinvestment plans..................... 4,996
Purchase of 7,985,364 common shares and
30,000 depositary shares of preferred
stock.................................. (215,051)
Shares distributed by ESOP trust and tax
benefit on dividends................... 4,341
Change in unrealized market value
adjustment on securities available for
sale, net of tax....................... (20,653)
------------
Balance March 31, 1994..................... $2,590,871
============
Balance January 1, 1995.................... $2,601,054
Net income............................... 111,031
Common dividends paid, $.32 per share.... (47,706)
Preferred dividends paid, $1.00 per
depositary share....................... (3,751)
Issuance of 262,028 common shares under
corporate stock and dividend
reinvestment plans..................... 4,903
Issuance of 1,785,726 common shares
pursuant to acquisition................ 46,206
Purchase of 3,032,600 common shares and
30,000 depositary shares of preferred
stock.................................. (83,313)
Shares distributed by ESOP trust and tax
benefit on dividends................... 3,515
Change in unrealized market value
adjustment on securities available for
sale, net of tax....................... 41,941
------------
Balance March 31, 1995..................... $2,673,880
============
</TABLE>
See notes to financial statements.
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 January 1, 1995, the Corporation acquired Central Indiana Bancorp, a
$243 million asset thrift holding company based in Kokomo, Indiana. Central
Indiana Bancorp shareholders received approximately 1.8 million shares of the
Corporation's common stock, for a total transaction value of approximately $46
million. The transaction was accounted for as a purchase. Total goodwill
7
<PAGE> 9
recorded was $10 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. LOANS
On January 1, 1995, the Corporation adopted SFAS No. 114 "Accounting By
Creditors For Impairment of a Loan". Under this new accounting standard, the
1995 allowance for losses related to loans that were identified for evaluation
in accordance with SFAS No. 114 were based on the fair value of the collateral
for certain collateral dependent loans and/or discounted cash flows using the
loan's initial effective interest rate. The adoption of the new accounting
standard did not have a material effect on the financial position or results of
operations of the Corporation.
The following table presents the activity in the allowance for loan losses:
<TABLE>
<CAPTION>
Three Months Ended
March 31
-------------------------
(In Thousands) 1995 1994
<S> <C> <C>
- ------------------------------------------------------------
Balance at beginning of year........ $ 469,019 $ 443,412
Provision........................... 22,590 20,442
Reserves acquired (sold)............ 2,220 422
Charge-offs:
Commercial........................ 8,952 8,690
Real estate -- construction....... 244 265
Real estate -- commercial......... 541 1,508
Real estate -- residential........ 208 511
Revolving credit.................. 14,178 8,259
Consumer.......................... 8,712 8,850
----------- -----------
Total charge-offs................. 32,835 28,083
Recoveries:
Commercial........................ 3,584 3,902
Real estate -- construction....... 56 963
Real estate -- commercial......... 950 199
Real estate -- residential........ 154 131
Revolving credit.................. 3,221 2,743
Consumer.......................... 5,879 5,981
----------- -----------
Total recoveries.................. 13,844 13,919
----------- -----------
Net Charge-offs..................... 18,991 14,164
----------- -----------
Balance at end of period............ $ 474,838 $ 450,112
=========== ===========
</TABLE>
The allowance for credit losses is maintained at a level believed adequate
to absorb estimated probable credit losses. Both the provision and allowance for
loan losses are based upon an analysis of individual credits, adverse situations
that could affect a borrower's ability to repay (including the timing of future
payments), prior and current loss experience, overall growth in the portfolio,
current economic conditions, and other factors. This evaluation is inherently
subjective as it requires material estimates, including the amounts and timing
of future cash flows expected to be received on impaired loans, that could be
susceptible to change.
Table 6 on page 13 provides detail regarding nonperforming loans. At March
31, 1995, the recorded investment in loans that were considered to be impaired
under SFAS No. 114 was $58 million, all of which are included in nonperforming
assets. The related credit allowance allocated to these loans was $14 million.
The contractual interest due and actual interest recorded on impaired loans, as
well as total nonperforming assets, was not significant.
5. SECURITIES
The following is a summary of securities held to maturity and available for
sale:
<TABLE>
<CAPTION>
MARCH 31, 1995
----------------------------------------------
Unrealized Unrealized Market
(In Thousands) Cost Gains Losses Value
<S> <C> <C> <C> <C>
- ------------------------------------------------------------
Held to maturity:
U.S. Treasury and
Federal agency
debentures...... $ 34,137 $ -- $ 693 $ 33,444
Mortgage-backed
securities...... 623,848 2,002 20,342 605,508
States and
political
subdivisions.... 385,388 26,104 4,200 407,292
Other............. 54,846 74 173 54,747
---------- ---------- ---------- ----------
Total held to
maturity...... 1,098,219 28,180 25,408 1,100,991
Available for
sale:
U.S. Treasury and
Federal agency
debentures...... 1,334,098 5,454 24,877 1,314,675
Mortgage-backed
securities...... 1,787,186 6,560 28,980 1,764,766
States and
political
subdivisions.... 30,830 278 28 31,080
Other............. 238,072 38,991 14,182 262,881
---------- ---------- ---------- ----------
Total available
for sale...... 3,390,186 51,283 68,067 3,373,402
---------- ---------- ---------- ----------
Total
securities.... $4,488,405 $ 79,463 $ 93,475 $4,474,393
========== ========== ========== ==========
</TABLE>
8
<PAGE> 10
<TABLE>
<CAPTION>
March 31, 1994
--------------------------------------------
Unrealized Unrealized Market
(In Thousands) Cost Gains Losses Value
<S> <C> <C> <C> <C>
- ------------------------------------------------------------
Held to maturity:
U.S. Treasury and
Federal agency
debentures....... $ 237,292 $ 415 $ 291 $ 237,416
Mortgage-backed
securities....... 646,034 4,775 12,668 638,141
States and
political
subdivisions..... 558,014 46,250 12,529 591,735
Other.............. 110,567 589 76 111,080
---------- -------- ------- ----------
Total held to
maturity....... 1,551,907 52,029 25,564 1,578,372
Available for sale:
U.S. Treasury and
Federal agency
debentures....... 1,036,099 13,834 15,018 1,034,915
Mortgage-backed
securities....... 1,851,224 5,354 8,155 1,848,423
States and
political
subdivisions..... 31,961 772 -- 32,733
Other.............. 184,646 29,796 4,560 209,882
---------- -------- ------- ----------
Total available
for sale....... 3,103,930 49,756 27,733 3,125,953
---------- -------- ------- ----------
Total
securities..... $4,655,837 $101,785 $53,297 $4,704,325
========== ========= ======== ==========
</TABLE>
For the three months ended March 31, 1995 and 1994, gross gains of $1.5
million and $7.8 million, and gross losses of $.1 million and $1.9 million were
realized, respectively.
At March 31, 1995, the unrealized depreciation in securities available for
sale included in retained earnings totalled $(10.9) million, net of tax,
compared to unrealized appreciation of $14.3 million, net of tax, at March 31,
1994. The Corporation's securities portfolio consists mainly of financial
instruments that pay back par value upon maturity. Market value fluctuations
occur over the lives of the instruments due to changes in market interest rates.
Management has concluded that current declines in value are temporary and,
accordingly, no valuation adjustments have been included as a charge to
earnings.
For the three months ended March 31, 1995 and 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>
- ------------------------------------------------------------
MARCH 31, 1995:
Purchases of securities.... $ 190,286 $ 18,975 $209,261
Proceeds from sale of
securities............... 71,845 -- 71,845
Proceeds from maturities of
securities............... 64,749 97,941 162,690
March 31, 1994:
Purchases of securities.... $ 506,393 $ 8,351 $514,744
Proceeds from sale of
securities............... 525,757 -- 525,757
Proceeds from maturities of
securities............... 207,206 240,855 448,061
</TABLE>
As of March 31, 1995, 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.
6. BORROWED FUNDS
<TABLE>
<CAPTION>
MARCH 31 Dec 31 March 31
(In Thousands) 1995 1994 1994
<S> <C> <C> <C>
- ------------------------------------------------------------
U.S. Treasury demand notes
and Federal funds
borrowed-term........... $ 271,599 $ 159,949 $ 405,465
Notes payable to Student
Loan Marketing
Association............. 300,000 300,000 243,400
Military banking
liabilities............. 190,668 215,951 187,471
Other..................... 74,688 49,754 66,457
---------- ---------- ----------
Bank subsidiaries....... 836,955 725,654 902,793
Commercial paper.......... 556,120 379,276 379,222
Other..................... 55 59 57
---------- ---------- ----------
Other subsidiaries...... 556,175 379,335 379,279
---------- ---------- ----------
Total............. $1,393,130 $1,104,989 $1,282,072
========== ========== ==========
</TABLE>
7. CORPORATE LONG-TERM DEBT
<TABLE>
<CAPTION>
MARCH 31 Dec 31 March 31
(In Thousands) 1995 1994 1994
<S> <C> <C> <C>
- ------------------------------------------------------------
6 5/8% Subordinated Notes due
2004........................ $250,000 $250,000 $250,000
Less discount............... (1,155) (1,187) (1,284)
8 3/8% Notes due 1996......... 100,000 100,000 100,000
Less discount............... (74) (94) (154)
Floating Rate Sub. Notes due
1997......................... 75,000 75,000 75,000
Less discount............... (34) (39) (53)
9 7/8% Sub. Notes due 1999.... 65,000 65,000 65,000
Less discount............... (210) (222) (257)
Floating Rate Notes due 1997.. 50,000 50,000 50,000
Less discount............... (54) (59) (74)
Other......................... 3,252 3,377 16,937
-------- -------- --------
Total parent company........ 541,725 541,776 555,115
6 1/2% Subordinated Notes due
2003........................ 200,000 200,000 200,000
Less discount............... (605) (624) (681)
Other......................... 2,270 2,517 2,702
-------- -------- --------
Total subsidiaries.......... 201,665 201,893 202,021
-------- -------- --------
Total................. $743,390 $743,669 $757,136
========= ========= =========
</TABLE>
9
<PAGE> 11
A credit agreement 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. The Corporation pays an annual
fee of 1/8 percent on the amount of the line. There were no borrowings
outstanding under this agreement at March 31, 1995.
8. STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
MARCH 31 Dec 31 March 31
(Outstanding Shares) 1995 1994 1994
<S> <C> <C> <C>
- -------------------------------------------------
Preferred Stock, no par
value, authorized
5,000,000 shares...... 744,160 750,160 775,460
Common Stock, $4.00 par
value, authorized
350,000,000 shares.... 146,570,786 147,555,632 151,072,522
</TABLE>
9. INCOME TAX EXPENSE
The composition of income tax expense follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31
-------------------------
(In Thousands) 1995 1994
<S> <C> <C>
- ------------------------------------------------------------
Applicable to income exclusive of
security transactions........... $48,998 $44,537
Applicable to security
transactions.................... 489 2,122
----------- -----------
Total..................... $49,487 $46,659
=========== ===========
</TABLE>
The effective tax rate was approximately 30.8% and 31.0% for the quarters
ended March 31, 1995 and 1994, respectively.
10. REGULATORY DIVIDENDS
A significant source of liquidity for the Parent company is dividends from
subsidiaries. Dividends paid by the subsidiary banks are subject to various
legal and regulatory restrictions. At March 31, 1995, bank subsidiaries may pay
the Parent company, without prior regulatory approval, approximately $120
million of dividends. During the first quarter 1995, no dividends were declared
and $119 million of previously declared dividends were paid to the Parent
company.
11. EARNINGS PER SHARE
The calculation of net income per common share follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31
(Dollars In Thousands Except Per -------------------------
Share Amounts) 1995 1994
<S> <C> <C>
- -----------------------------------------------------------
PRIMARY:
Net income..................... $111,031 $103,807
Less preferred dividend
requirements................. 3,720 3,877
----------- -----------
Net income applicable to common
stock........................ $107,311 $ 99,930
=========== ===========
Average common shares
outstanding.................. 148,837,218 158,277,962
=========== ===========
Net income per common share.... $.72 $.63
=========== ===========
ASSUMING FULL DILUTION:
Net income..................... $111,031 $103,807
=========== ===========
Average common shares
outstanding.................. 148,837,218 158,277,962
Stock option adjustment........ 67,700 65,407
Preferred stock adjustment..... 8,870,387 9,243,483
----------- -----------
Average common shares
outstanding, as adjusted..... 157,775,305 167,586,852
=========== ===========
Pro forma fully diluted net
income per common share...... $.70 $.62
=========== ===========
</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 the 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 assumed conversion of 8% Cumulative
Convertible Preferred Stock.
10
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS
EARNINGS SUMMARY
Net income for the quarter ended March 31, 1995 was $111.0 million, an
increase of 7% over the $103.8 million earned in the first quarter 1994. Net
income per common share was $.72 for the first quarter 1995 compared with $.63
for the corresponding quarter last year.
Return on average common equity was 17.98% for the three months ended March
31, 1995 compared with 16.11% for the same quarter in 1994. Return on average
assets was 1.39% for the first three months of both 1995 and 1994.
Net income for the quarter increased from a year ago due primarily to
higher net interest income that resulted from loan growth. Fee income was up
slightly versus first quarter last year and the provision for loan losses
increased $2.1 million over the same period. Noninterest expenses increased 2.0%
during the first quarter 1995 compared with the same quarter a year ago.
After-tax security gains were insignificant in the first quarter 1995,
compared with $.02 per share for the first quarter 1994.
TABLE 1: UNIT PROFITABILITY
<TABLE>
<CAPTION>
THREE MONTHS ENDED Three months ended
MARCH 31, 1995 March 31, 1994
---------------------------------- ----------------------------------
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..... $50.8 1.98% 19.84% $45.9 1.74% 16.86%
Retail banking........ 58.4 1.21 22.79 42.6 .90 18.04
National credit
card................ 1.7 .85 8.18 2.7 1.99 11.54
Investment/funding.... (3.8 ) (.16) (5.63) 12.2 .63 13.06
Trust................. 8.1 21.93 25.84 9.0 24.63 26.58
Item processing....... 4.3 5.52 11.91 3.1 4.19 9.50
Mortgage banking...... 3.2 14.75 39.10 (1.1 ) (6.42) (17.13)
Corporate............. (11.7 ) -- -- (10.6 ) -- --
------ ------
Consolidated
total........... $111.0 1.39% 17.98% $103.8 1.39% 16.11%
======= =======
</TABLE>
(1) Return on revenue in the case of fee-based businesses.
TABLE 2: BANKING UNIT PERFORMANCE BY MARKET
<TABLE>
<CAPTION>
FIRST QUARTER 1995
--------------------------------------------- First Quarter 1994
---------------------------------------------
CORPORATE BANKING RETAIL BANKING Corporate Banking Retail Banking
-------------------- -------------------- -------------------- --------------------
(Dollars in NET RETURN ON NET RETURN ON Net Return on Net Return on
millions) INCOME ASSETS INCOME ASSETS Income Assets Income Assets
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
Cleveland........... $18.9 2.20% $14.5 1.42% $17.5 2.09% $11.3 1.10%
Columbus............ 9.4 1.96 8.3 .88 8.0 1.90 6.7 .74
Indiana............. 3.6 1.54 14.2 1.47 3.6 1.51 10.3 1.18
Kentucky............ 8.7 1.65 8.1 1.09 10.0 1.62 5.2 .69
Akron............... 3.6 1.98 7.1 1.19 1.7 .78 4.2 .63
Dayton.............. 3.6 1.94 4.0 1.19 3.0 1.68 3.2 .96
Toledo.............. 3.0 2.34 2.2 1.04 2.1 1.75 1.7 .93
------ ------ ------ ------
Total.............. $50.8 1.98% $58.4 1.21% $45.9 1.74% $42.6 .90%
======== ======== ======== ========
</TABLE>
UNIT PROFITABILITY
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. Cost allocations
for centrally provided services are included in the reported amounts
approximating the pro-rata cost to the units for the use of those services.
Equity has been allocated among the business units to reflect well-capitalized
levels as defined by bank regulatory agencies. Corporate and retailnd retail
banking businesses' earnings improved for the banking net income results
include actual interest earned and paid on higher transactions with customers,
with adjustments for matched-maturity, internalon funds transfer charges and
credits for loans and deposits. Investment securities and all gains and losses
associated with interest rate risk are reported in the investment/funding unit.
The corporate and retail banking businesses' earnings improved for the
first three months of 1995 compared with the firt quarter 1994 due to higher
net interest income that resulted from loan growth as well as wider spreads on
tranaction accounts.
The decline in national credit card net income was due primarily to a
higher loan loss provision.
The increased profitablity in the item processing subsidiary was due to
increased volume and expense control measures. The lower return on equity in
the item processing business relative to the other functional units
11
<PAGE> 13
TABLE 3: CONTRIBUTION OF INTEREST RATE DERIVATIVE PORTFOLIO
<TABLE>
<CAPTION>
Three months ended
March 31
-----------------------------
(In millions) 1995 1994
<S> <C> <C>
- --------------------------------------------------------------------------------------
Interest adjustment to loans......................... $ (2.4) $ 17.8
Interest adjustment to securities.................... (.9) (4.8)
----------- -----------
Interest adjustment to earning assets.............. (3.3) 13.0
Interest adjustment to deposits...................... (4.3) (5.3)
----------- -----------
Effect on net interest income...................... $ 1.0 $ 18.3
=========== ===========
</TABLE>
NOTE: Amounts in brackets represent reductions of the related interest income
or expense line, as applicable.
TABLE 4: FULL-TIME EQUIVALENT STAFFING AND
OVERHEAD PERFORMANCE MEASURES
<TABLE>
<CAPTION>
MARCH 31, 1995 March 31, 1994
-------------------------------------- --------------------------------------
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..................... 11,437 43.24% 53.51% 11,641 47.12 58.18
National credit card......... 579 54.20 59.80 476 50.69 57.70
Investment/funding........... 283 12.66 -- 263 (13.94) 47.85
Trust........................ 1,054 -- 66.24 1,038 -- 62.14
Item processing.............. 5,599 -- 89.85 4,718 -- 92.04
Mortgage servicing........... 709 -- 75.81 864 -- 110.69
Corporate.................... 654 -- -- 771 -- --
---------- ----------
Consolidated total........ 20,315 42.62% 64.90% 19,771 44.32% 66.43%
=========== ============
</TABLE>
reflects a higher equity allocation to this business as if it were an
independent organization.
The increase in mortgage servicing net income was due to gains on the sale
of mortgage servicing in 1995.
The decrease in investment/funding net income was due to higher gains on
the sale of securities in the first quarter 1994, a reduced contribution from
the interest rate derivative portfolio (see Table 3) and increased use of
purchased funds to support loan growth.
The decrease in the corporate contribution is due primarily to higher
interest expense on corporate debt.
EARNING ASSETS AND
INTEREST-BEARING LIABILITIES
Average earning assets totalled $28,612 million for the quarter ended March
31, 1995, an increase of $583 million from the quarter ended December 31, 1994
and $1,641 million from the quarter ended March 31, 1994. The increase over the
first and fourth quarters of last year was due to loan growth and the
acquisition of Central Indiana Bancorp which accounts for
$166 million.
Average core deposits increased $655 million in the first quarter from the
fourth quarter 1994 due to the acquisition of Central Indiana Bancorp and
increased certificate of deposit balances. The increases were partially offset
by runoff in savings and money market balances. Purchased deposit balances also
increased due to efforts to obtain cost-effective funding in the existing
interest rate environment to support the growth in assets.
NET INTEREST INCOME
On a fully taxable equivalent basis, net interest income
increased to $327.5 million in the first quarter 1995 compared with $309.4
million for the corresponding quarter in 1994.
The tax equivalent net interest margin was 4.59% in the quarter ended March
31, 1995 compared with 4.61% a year ago and 4.63% for the quarter ended December
31, 1994. The lower net interest margin was due primarily to the increased use
of purchased funding to support the growth in earning assets.
Management attempts to prevent adverse swings in net interest income
resulting from interest rate movements by placing conservative limits on
interest rate risk. Interest rate risk is monitored through static gap,
simulation and duration analyses.
At March 31, 1995, the Corporation remained in a slightly
liability-sensitive position. The cumulative one year gap was (5.0%) of
adjusted earning assets at March 31, 1995, versus (7.4%) at December 31, 1994.
The earnings simulation model projects that net income would decrease by 2.2%
if rates rose two percentage points over the next year, compared to an increase
of .8% at year end 1994. The Corporations 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 cash flows by an amount equal to .95% of
total assets, compared to 1.0% at December 31, 1994. During the first quarter
1995, the Corporation entered into $1,214 million in notional amount of
interest rate swap agreements. The net unrealized losses in the derivative
portfolio were $65 mil-
12
<PAGE> 14
TABLE 5: ANNUALIZED NET CHARGE-OFFS AS A PERCENTAGE OF
AVERAGE LOANS
<TABLE>
<CAPTION>
First Quarter
1995 1994
<S> <C> <C>
----------------------------------------------------------------------------
Commercial................................................ .24 % .22%
Real estate -- construction............................... .18 (.64)
Real estate -- commercial................................. (.07) .23
Real estate -- residential................................ .01 .04
Revolving credit.......................................... 3.35 1.44
Consumer.................................................. .20 .27
Total net charge-offs to average loans.................... .33 .27
</TABLE>
TABLE 6: NONPERFORMING ASSETS
<TABLE>
<CAPTION>
MARCH 31 December 31 March 31
(In Millions) 1995 1994 1994
<S> <C> <C> <C>
----------------------------------------------------------------------------
Commercial:
Nonaccrual.......................... $ 68.8 $ 58.8 $ 70.1
Restructured........................ .1 -- 1.0
--------- ------------ ---------
Total commercial.................. 68.9 58.8 71.1
Real estate related:
Nonaccrual.......................... 46.8 48.8 59.6
Restructured........................ 4.3 4.4 4.5
--------- ------------ ---------
Total real estate related......... 51.1 53.2 64.1
--------- ------------ ---------
Total nonperforming loans......... 120.0 112.0 135.2
Other real estate owned (OREO)........ 17.7 16.5 49.1
--------- ------------ ---------
Nonperforming assets.................. $ 137.7 $128.5 $ 184.3
========== ============= ==========
Loans 90 days past-due accruing
interest............................ $ 37.1 $ 27.9 $ 31.1
========== ============= ==========
</TABLE>
TABLE 7: CAPITAL AND CAPITAL/ASSET RATIOS
<TABLE>
<CAPTION>
MARCH 31, 1995 Dec 31, 1994 March 31, 1994
(In Millions) AMOUNT RATIO Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------
Total equity1............. $2,673.9 8.19 % $2,601.1 8.10 % $2,590.9 8.68 %
Common equity1............ 2,487.8 7.61 2,413.5 7.52 2,397.0 8.03
Tangible common equity2... 2,106.8 6.52 2,026.4 6.39 2,021.0 6.85
Tier 1 capital3........... 2,432.3 8.95 2,442.2 8.45 2,341.0 9.65
Total risk-based
capital4................ 3,308.2 12.18 3,374.8 11.68 3,238.9 13.35
Leverage ratio5........... 2,432.3 7.59 2,442.2 7.82 2,341.0 7.79
</TABLE>
--------------------
1 Computed in accordance with generally accepted accounting principles,
including the unrealized market value adjustment of securities available
for sale.
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 unrealized market
value adjustment of securities available for sale; computed as a ratio to
risk-adjusted assets, as defined.
4 Tier 1 capital plus qualifying loan loss allowance and subordinated debt;
computed as a ratio to risk-adjusted assets, as defined.
5 Tier 1 capital; computed as a ratio to average total assets less certain
intangibles.
lion at March 31, 1995, compared to $199 million at December 31, 1994.
FEES AND OTHER INCOME
Fee income was $207.9 million for the quarter ended March 31, 1995 versus
$203.8 million for the first quarter 1994. The increase in fee income was due
primarily to increased item processing volume and a $7.1 million gain on the
sale of mortgage servicing. Offsetting these increases was a decline in credit
card fees from the unwinding of a securitization. The fees associated with the
credit card securitization were offset by net interest income as the related
loan balances returned to the balance sheet.
There was no significant nonrecurring income in the first quarter 1994.
NONINTEREST EXPENSES
Noninterest expenses were $347.4 million for the quarter ended March 31,
1995 compared with $340.9 million a year ago, an increase of 2.0%. Excluding
the effects of the Central Indiana Bancorp acquisition, expenses increased 1.6%
over the first quarter 1994. There were no significant unusual expenses in the
first quarter 1995 or 1994.
The efficiency ratio, defined as noninterest expense as a percentage of fee
income plus fully taxable net interest income, was 64.90% for the first quarter
1995 compared with 66.43% a year ago.
The overhead ratio, defined as noninterest expenses less fee income as a
percentage of fully-taxable net interest income, was 42.62% for the first
quarter 1995 compared with 44.32% a year ago.
Table 4 shows full-time equivalent staff and the efficiency
13
<PAGE> 15
and overhead ratios within the Corporation's major units.
Total staff at March 31, 1995 increased slightly from a year ago due mainly
to business growth.
ASSET QUALITY
The allowance for loan losses was $474.8 million at March 31, 1995
representing 1.97% of loans outstanding at quarter-end. This loan loss reserve
ratio compared with 2.04% at year-end 1994 and 2.12% at March 31, 1994.
The provision for loan losses of $22.6 million for the first quar-
ter increased from $20.4 million in the first quarter 1994.
Net charge-offs for the first quarter 1995 were $19.0 million compared with
$14.2 million for the first three months of 1994.
Table 5 shows net charge-offs as a percentage of average loans by portfolio
type.
Table 6 summarizes nonperforming assets and related data.
Nonperforming assets of $138 million at March 31, 1995 increased by $9
million from the fourth quarter 1994.
Nonperforming assets as a percentage of loans and OREO were .57% at March
31, 1995 compared with .86% a year ago and .56% at December 31, 1994.
CAPITAL
Table 7 reflects various measures of capital at quarter-end. Book value
per common share at March 31, 1995 was $16.97 compared with $15.87 at March 31,
1994 and $16.36 at December 31, 1994. The book value per common share at March
31, 1995, December 31, 1994, and March 31, 1994 included $(.07), $(.34), and
$.09, respectively, related to the market value appreciation/(depreciation) of
securities available for sale.
In the first three months of 1995, approximately 3 million shares of common
stock were repurchased in the open market. At March 31, 1995 the Corporation had
authorization to acquire an additional 6.3 million common shares.
14
<PAGE> 16
(This page left intentionally blank)
15
<PAGE> 17
DAILY AVERAGE BALANCE SHEETS/NET INTEREST INCOME/RATES
<TABLE>
<CAPTION>
(Dollars In Millions) Daily Average Balance
- ----------------------------------------------------------------------------------------------------------
1995 1994
------- ----------------------------------------
FIRST Fourth Third Second First
QUARTER Quarter Quarter Quarter Quarter
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
ASSETS
Earning Assets:
Loans:
Commercial...................................... $ 9,528 $ 9,225 $ 9,062 $ 9,148 $ 9,105
Real estate mortgage............................ 6,817 6,565 6,392 6,228 6,192
Consumer........................................ 7,136 6,800 6,361 5,983 5,780
------- ------- ------- ------- -------
Total loans................................... 23,481 22,590 21,815 21,359 21,077
Securities:
Taxable......................................... 3,805 3,976 3,977 3,903 4,164
Tax-exempt...................................... 656 718 746 788 759
------- ------- ------- ------- -------
Total securities.............................. 4,461 4,694 4,723 4,691 4,923
Federal funds sold................................ 74 87 76 52 46
Security resale agreements........................ 485 499 399 569 412
Eurodollar time deposits in banks................. -- -- 1 66 366
Short-term money market investments............... 111 159 174 106 147
------- ------- ------- ------- -------
Total earning assets/
Total interest income/rates................ 28,612 28,029 27,188 26,843 26,971
Market value appreciation (depreciation) of
securities available for sale..................... (56) (56) (14) 4 46
Allowance for loan losses........................... (477) (475) (467) (457) (450)
Cash and demand balances due from banks............. 2,287 2,133 2,012 2,029 2,033
Properties and equipment............................ 395 390 390 391 390
Customers' acceptance liability..................... 106 86 68 58 64
Accrued income and other assets..................... 1,423 1,359 1,333 1,278 1,271
------- ------- ------- ------- -------
Total assets.................................. $32,290 $31,466 $30,510 $30,146 $30,325
======= ======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Savings and NOW accounts.......................... $ 4,543 $ 4,661 $ 4,872 $ 5,169 $ 5,174
Insured money market accounts..................... 4,762 5,058 5,129 5,239 5,313
Time deposits of individuals...................... 8,040 6,708 6,449 6,209 6,146
Other time deposits............................... 480 495 448 488 487
Deposits in overseas offices...................... 1,937 1,612 1,125 716 640
Federal funds borrowed............................ 1,136 1,280 1,218 1,352 1,588
Security repurchase agreements.................... 1,465 1,281 1,235 1,127 1,079
Borrowed funds.................................... 1,411 1,593 1,497 1,301 1,266
Corporate long-term debt.......................... 743 746 750 757 592
------- ------- ------- ------- -------
Total interest bearing liabilities/
Total interest expense/rates............... 24,517 23,434 22,723 22,358 22,285
Non-interest bearing deposits..................... 4,610 4,873 4,713 4,779 4,828
Acceptances outstanding........................... 106 86 68 58 64
Accrued expenses and other liabilities............ 451 464 405 396 435
------- ------- ------- ------- -------
Total liabilities............................. 29,684 28,857 27,909 27,591 27,612
Stockholders' equity.......................... 2,606 2,609 2,601 2,555 2,713
------- ------- ------- ------- -------
Total liabilities and stockholders' equity.... $32,290 $31,466 $30,510 $30,146 $30,325
======= ======= ======= ======= =======
Net interest income.................................................................................
Interest spread.....................................................................................
Contribution of non-interest bearing sources of funds...............................................
Net interest margin.................................................................................
</TABLE>
16
<PAGE> 18
<TABLE>
<CAPTION>
(Dollars in Millions) Quarterly Interest
- -----------------------------------------------------------------------------------------------------------------------
1995 1994
------- -------------------------------------------
FIRST Fourth Third Second First
QUARTER Quarter Quarter Quarter Quarter
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
ASSETS
Earning Assets:
Loans:
Commercial.............................................. $201.7 $190.4 $178.0 $175.4 $164.6
Real estate mortgage.................................... 137.8 130.7 124.4 118.9 116.5
Consumer................................................ 174.7 162.9 148.9 135.7 129.1
------- ------- ------- ------- -------
Total loans........................................... 514.2 484.0 451.3 430.0 410.2
Securities:
Taxable................................................. 57.1 55.2 51.8 48.7 48.8
Tax-exempt.............................................. 14.0 14.6 15.3 15.7 14.3
------- ------- ------- ------- -------
Total securities...................................... 71.1 69.8 67.1 64.4 63.1
Federal funds sold........................................ 1.1 1.2 .9 .5 .3
Security resale agreements................................ 6.8 6.6 4.5 5.6 3.3
Eurodollar time deposits in banks......................... -- .01 -- .6 2.4
Short-term money market investments....................... 1.4 1.2 1.2 1.2 1.8
------- ------- ------- ------- -------
Total earning assets/
Total interest income/rates........................ $594.6 $562.9 $525.0 $502.3 $481.1
Market value appreciation (depreciation) of
securities available for sale.............................
Allowance for loan losses...................................
Cash and demand balances due from banks.....................
Properties and equipment....................................
Customers' acceptance liability.............................
Accrued income and other assets.............................
Total assets..........................................
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Savings and NOW accounts.................................. $ 30.3 $ 30.9 $ 31.7 $ 33.2 $ 33.0
Insured money market accounts............................. 31.6 31.2 29.9 28.4 27.5
Time deposits of individuals.............................. 108.7 82.1 72.6 66.2 63.9
Other time deposits....................................... 6.3 5.7 4.5 4.1 3.9
Deposits in overseas offices.............................. 27.7 20.8 12.6 6.6 4.1
Federal funds borrowed.................................... 14.3 17.6 13.9 13.6 12.4
Security repurchase agreements............................ 14.8 15.1 12.2 9.2 7.2
Borrowed funds............................................ 20.0 20.1 17.0 13.3 11.3
Corporate long-term debt.................................. 13.4 14.0 13.2 13.7 8.4
------- ------- ------- ------- -------
Total interest bearing liabilities/
Total interest expense/rates....................... 267.1 237.5 207.6 188.3 171.7
Non-interest bearing deposits............................. ------- ------- ------- ------- -------
Acceptances outstanding...................................
Accrued expenses and other liabilities....................
Total liabilities.....................................
Stockholders' equity..................................
Total liabilities and stockholders' equity............
Net interest income................................... $327.5 $325.4 $317.4 $314.0 $309.4
======= ======= ======= ======= =======
Interest spread..................................................................................................
Contribution of non-interest bearing sources of funds............................................................
Net interest margin..............................................................................................
<CAPTION>
(Dollars in Millions) Average Annualized Rate
- -----------------------------------------------------------------------------------------------------------------------
1995 1994
------- -------------------------------------------
FIRST Fourth Third Second First
QUARTER Quarter Quarter Quarter Quarter
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
ASSETS
Earning Assets:
Loans:
Commercial.............................................. 8.58% 8.19% 7.80% 7.69% 7.33%
Real estate mortgage.................................... 8.09 7.97 7.78 7.63 7.53
Consumer................................................ 9.88 9.53 9.31 9.09 9.02
Total loans........................................... 8.83 8.53 8.23 8.07 7.85
Securities:
Taxable................................................. 6.02 5.54 5.19 4.99 4.71
Tax-exempt.............................................. 8.52 8.12 8.18 7.97 7.52
Total securities...................................... 6.39 5.94 5.66 5.49 5.14
Federal funds sold........................................ 6.14 5.25 4.86 4.14 2.82
Security resale agreements................................ 5.72 5.24 4.51 3.93 3.21
Eurodollar time deposits in banks......................... -- -- 2.93 3.51 2.66
Short-term money market investments....................... 5.00 3.09 2.85 4.56 4.92
Total earning assets/
Total interest income/rates........................ 8.38% 8.00% 7.69% 7.50% 7.19%
Market value appreciation (depreciation) of
securities available for sale.............................
Allowance for loan losses...................................
Cash and demand balances due from banks.....................
Properties and equipment....................................
Customers' acceptance liability.............................
Accrued income and other assets.............................
Total assets..........................................
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Savings and NOW accounts.................................. 2.71% 2.63% 2.59% 2.58% 2.58%
Insured money market accounts............................. 2.70 2.45 2.31 2.17 2.10
Time deposits of individuals.............................. 5.48 4.85 4.47 4.27 4.21
Other time deposits....................................... 5.25 4.61 4.00 3.53 3.23
Deposits in overseas offices.............................. 5.79 5.13 4.44 3.68 2.62
Federal funds borrowed.................................... 5.10 5.45 4.54 4.02 3.18
Security repurchase agreements............................ 4.12 4.69 3.91 3.28 2.71
Borrowed funds............................................ 5.74 5.12 4.15 4.09 3.63
Corporate long-term debt.................................. 7.30 7.42 6.98 7.28 5.71
Total interest bearing liabilities/
Total interest expense/rates....................... 4.42% 4.03% 3.60% 3.38% 3.12%
Non-interest bearing deposits.............................
Acceptances outstanding...................................
Accrued expenses and other liabilities....................
Total liabilities.....................................
Stockholders' equity..................................
Total liabilities and stockholders' equity............
Net interest income...................................
Interest spread....................................... 3.96% 3.97% 4.09% 4.12% 4.07%
Contribution of non-interest bearing sources of funds. .63 .66 .59 .56 .54
------- ------- ------- ------- -------
Net interest margin................................... 4.59% 4.63% 4.68% 4.68% 4.61%
======= ======= ======= ======= =======
</TABLE>
17
<PAGE> 19
CORPORATE INVESTOR INFORMATION
CORPORATE HEADQUARTERS
National City Center
1900 East Ninth Street
Cleveland, Ohio 44114-3484
(216) 575-2000
TRANSFER AGENT AND REGISTRAR
National City Bank
Corporate Trust Department
1900 East Ninth Street
Cleveland, Ohio 44114-3484
1-800-622-6757
INVESTOR INFORMATION
Janis E. Lyons, Vice President
Corporate Investor Relations
Department 2145
P.O. Box 5756
Cleveland, Ohio 44101-0756
1-800-622-4204
COMMON STOCK LISTING
National City Corporation common stock is traded on the New York Stock
Exchange under the symbol NCC. The stock is abbreviated in financial
publications as NTLCITY.
PREFERRED STOCK LISTING
National City Corporation 8% Cumulative Convertible Preferred Stock
depositary shares are traded on the New York Stock Exchange under the
symbol NCC PR. The preferred stock is abbreviated as NTLCITY PF in
financial publications.
DIVIDEND REINVESTMENT AND STOCK
PURCHASE PLAN
Common stockholders participating in the plan receive a three percent
discount from market price when they reinvest their National City dividends
in additional shares. Participants can also make optional cash purchases of
common stock at a three percent discount from market price and pay no
brokerage commissions. To obtain our Plan prospectus and authorization
card, write or call:
National City Bank
Corporate Trust Department
Dividend Reinvestment Plan
P.O. Box 92301
Cleveland, Ohio 44193-0900
1-800-622-6757
DEBT RATINGS
<TABLE>
<CAPTION>
STANDARD DUFF & THOMSON
MOODY'S & POOR'S PHELPS BANKWATCH
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
National City Corporation........................ A/B
Commercial paper (short-term debt)............. P-1 A-1 D-1+ TBW1
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 Logo]
FORM 10-Q -- MARCH 31, 1995
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL CITY CORPORATION
Date: April 28, 1995
/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 Logo]
<TABLE>
<S> <C>
National City Center Bulk Rate
1900 East Ninth Street U.S. Postage
Cleveland, Ohio 44114-3484 PAID
National City
Corporation
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 2,086,211
<INT-BEARING-DEPOSITS> 69,643
<FED-FUNDS-SOLD> 445,115
<TRADING-ASSETS> 30,391
<INVESTMENTS-HELD-FOR-SALE> 3,373,402
<INVESTMENTS-CARRYING> 1,098,219
<INVESTMENTS-MARKET> 1,100,991
<LOANS> 24,045,037
<ALLOWANCE> 474,838
<TOTAL-ASSETS> 32,641,022
<DEPOSITS> 24,682,975
<SHORT-TERM> 3,933,321
<LIABILITIES-OTHER> 607,456
<LONG-TERM> 743,390
<COMMON> 586,284
0
186,040
<OTHER-SE> 1,901,556
<TOTAL-LIABILITIES-AND-EQUITY> 32,641,022
<INTEREST-LOAN> 511,878
<INTEREST-INVEST> 67,215
<INTEREST-OTHER> 9,340
<INTEREST-TOTAL> 588,433
<INTEREST-DEPOSIT> 204,617
<INTEREST-EXPENSE> 267,176
<INTEREST-INCOME-NET> 321,257
<LOAN-LOSSES> 22,590
<SECURITIES-GAINS> 1,396
<EXPENSE-OTHER> 347,404
<INCOME-PRETAX> 160,518
<INCOME-PRE-EXTRAORDINARY> 160,518
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 111,031
<EPS-PRIMARY> .72
<EPS-DILUTED> .70
<YIELD-ACTUAL> 4.59
<LOANS-NON> 115,600
<LOANS-PAST> 37,100
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 469,019
<CHARGE-OFFS> 32,835
<RECOVERIES> 13,844
<ALLOWANCE-CLOSE> 474,838
<ALLOWANCE-DOMESTIC> 474,838
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
