<PAGE> 1
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
July 15, 1998
------------------------
(Date of Report)
NATIONAL CITY CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-10074 34-1111088
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission IRS Employer
of incorporation) File Number) Identification No.)
1900 East Ninth Street, Cleveland, Ohio 44114
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(216) 575-2000
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(Registrant's telephone number, including area code)
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Item 5. Other Events
------------
On July 15, 1998, the Registrant issued a News Release reporting
earnings for the second quarter and first six months of Fiscal Year 1998.
Reference is made to the News Release, dated July 15, 1998, a copy of
which is filed as Exhibit 99.1 to this Current Report on Form 8-K and is
incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
------------------------------------------------------------------
a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED: None
b) PRO FORMA FINANCIAL INFORMATION: None.
c) EXHIBITS:
--------
99.1 News Release, dated July 15, 1998 incorporated HEREIN by
reference.
<PAGE> 3
Signatures
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: July 15, 1998 By /s/ David L. Zoeller
--------------------
David L. Zoeller
Senior Vice President
and General Counsel
<PAGE> 1
Exhibit 99.1
FOR MORE INFORMATION CONTACT:
Thomas A. Richlovsky
Senior Vice President & Treasurer
(216) 575-2126
Julie I. Sabroff
Vice President, Investor Relations
(216) 575-2467
For Immediate Release
NATIONAL CITY CORPORATION REPORTS
---------------------------------
EARNINGS FOR SECOND QUARTER AND FIRST SIX MONTHS
------------------------------------------------
CLEVELAND, Ohio--July 15, 1998--National City Corporation (NYSE:NCC)
today reported second quarter earnings per share increased 19.3% to $.99,
compared to $.83 in the second quarter of 1997. Net income increased 22.0% to
$331.2 million, versus $271.4 million a year ago. Returns on average common
equity and average assets were 19.47% and 1.66%, respectively.
For the first six months of 1998, excluding merger and restructuring
expenses, diluted earnings per share increased 10.4% to $1.91, compared to $1.73
in 1997. On the same basis, net income increased 9.9% to $628.9 million, versus
$572.5 million for the same period last year. Excluding merger and restructuring
expenses, returns on average common equity and average assets were 19.07% and
1.63%, respectively. After-tax merger and restructuring expenses were $193.9
million or $.59 per diluted share for the first six-months of 1998, and $25.5
million or $.08 per diluted share for the same period in 1997.
(more)
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Financial data for all prior periods have been restated to reflect the
merger with First of America Bank Corporation, which was completed on March 31,
1998 and accounted for as a pooling-of-interests. The financial results of Fort
Wayne National Corporation, accounted for as a purchase, are included in the
results of operations subsequent to the date of acquisition, March 30, 1998.
The results for the second quarter and first half reflect solid loan
growth, increased revenue, maintenance of expenses relative to increased
business activity, and excellent credit quality. Average loans were up 10.5% to
$56.7 billion in the second quarter of 1998 compared to $51.3 billion in the
second quarter of 1997. Growth was led by a 14.7% increase in commercial loans.
Increased revenue was primarily driven by strong growth in the
fee-based businesses. Excluding securities gains, fees and other noninterest
income increased 33.0% in the second quarter of 1998 to $561.0 million, compared
to $421.7 million a year ago. For the first six months of 1998, fees and other
noninterest income grew 26.2% to $1,060.7 million versus $840.2 million for the
same period last year. Virtually all major categories of fee income contributed
to this growth, led by mortgage banking revenue.
In the second quarter of 1998, pre-tax securities gains totaled $19.7
million or $.04 per share, after-tax, compared to $31.2 million or $.06 per
share, after-tax, in the second quarter of 1997. For the first six months of
1998, pre-tax securities gains totaled $20.8 million or
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$.04 per share, after-tax, compared to $47.1 million or $.09 per share,
after-tax, for the same period in 1997.
Noninterest expenses, excluding merger and restructuring expenses, for
the second quarter and first six months of 1998 rose 12.0% and 10.1%,
respectively, over the same periods last year. Increased expenses reflect growth
in the fee-based businesses as well as the acquisition of Fort Wayne National
Corporation.
At June 30, 1998, nonperforming assets totaled $261 million, or .45% of
loans and foreclosed real estate, compared to .51% last year. Net charge-offs
for the first half were $95.4 million or .35% of loans, compared to .40% of
loans in 1997, and were fully covered by the provision for loan losses. The
allowance for loan losses was $976 million or 1.70% of loans at June 30, 1998.
Total assets at June 30, 1998 were $81.3 billion, a 10.4% increase from
last year, and stockholders' equity was $7.0 billion. Equity as a percentage of
assets was 8.64% at June 30, 1998, compared to 8.23% a year ago.
National City Corporation is an $81 billion diversified financial
services company headquartered in Cleveland, Ohio. National City operates banks
and other financial services subsidiaries principally in Ohio, Kentucky,
Indiana, Pennsylvania, Michigan and Illinois. National City can be found on the
World Wide Web at www.national-city.com.
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NATIONAL CITY CORPORATION
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Three Months
--------------------------------------------
Percent
1998 1997 Change
------------ ------------ ------------
<S> <C> <C> <C>
FOR THE PERIOD ENDING JUNE 30:
(Dollars in Millions Except Per Share Amounts)
Tax-equivalent net
interest income .......................... $ 739.9 $ 717.9 3%
Provision for loan losses .................. 43.0 54.6 (21)
Non-interest income (excluding
securities gains) ........................ 561.0 421.7 33
Securities gains ........................... 19.7 31.2 (37)
Non-interest expense (excluding
merger and restructuring expense) ........ 756.1 675.0 12
Merger and restructuring expense ........... -- 33.3 (100)
Net income ................................. 331.2 271.4 22
Net income before merger
and restructuring expense ............. 331.2 293.0 13
Net income per common share
Basic ................................... 1.01 .84 20
Diluted ................................. .99 .83 19
Diluted - adjusted* ..................... .99 .90 10
Dividends paid per common share ............ .46 .41 12
Average diluted shares ..................... 336,382,782 326,791,913 3
Financial Ratios*
-----------------
Return on average common equity ............ 19.47% 19.61%
Return on average assets ................... 1.66 1.64
Net interest margin ........................ 4.15 4.41
Overhead ratio ............................. 26.36 35.28
Efficiency ratio ........................... 58.12 59.23
Six Months
--------------------------------------------
Percent
1998 1997 Change
------------ ------------ ------------
<S> <C> <C> <C>
FOR THE PERIOD ENDING JUNE 30:
(Dollars in Millions Except Per Share Amounts)
Tax-equivalent net
interest income .......................... $ 1,448.2 $ 1,420.1 2%
Provision for loan losses .................. 99.3 113.3 (12)
Non-interest income (excluding
securities gains) ........................ 1,060.7 840.2 28
Securities gains ........................... 20.8 47.1 (56)
Non-interest expense (excluding
merger and restructuring expense) ........ 1,461.3 1,326.9 10
Merger and restructuring expense ........... 274.7 39.6 594
Net income ................................. 435.0 547.0 (20)
Net income before merger
and restructuring expense ............. 628.9 572.5 10
Net income per common share
Basic ................................... 1.34 1.68 (20)
Diluted ................................. 1.32 1.65 (20)
Diluted - adjusted* ..................... 1.91 1.73 10
Dividends paid per common share ............ .92 .82 12
Average diluted shares ..................... 329,543,875 330,741,135 --
Financial Ratios*
-----------------
Return on average common equity ............ 19.07% 18.82%
Return on average assets ................... 1.63 1.62
Net interest margin ........................ 4.16 4.40
Overhead ratio ............................. 27.66 34.27
Efficiency ratio ........................... 58.24 58.70
AT JUNE 30:
(Dollars in Thousands Except Per Share Amounts)
Assets ..................................... $ 81,257,868 $ 73,627,235 10%
Loans ...................................... 57,478,148 51,919,334 11
Deposits ................................... 54,831,989 52,390,475 5
Total stockholders' equity ................. 7,018,996 6,057,119 16
Common shares outstanding .................. 328,627,647 320,628,124 2
Book value per common share ................ $ 21.25 $ 18.89 12
Market value per common share .............. 71.00 52.50 35
</TABLE>
*Excluding after-tax merger and restructuring expenses of $21.6 million for the
second quarter of 1997, and $193.9 million and $25.5 million for the first six
months of 1998 and 1997, respectively.
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UNAUDITED
National City Corporation
Consolidated Statements of Income
(Dollars in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
------------------------ ------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest Income
Loans ...................................... $1,210,235 $1,118,794 $2,350,656 $2,199,596
Securities:
Taxable ................................... 207,228 202,718 413,640 399,109
Exempt from Federal income taxes .......... 14,562 11,071 26,162 21,984
Federal funds sold and security
resale agreements ........................ 8,293 5,105 14,299 10,213
Other short-term investments ............... 4,973 3,871 9,179 8,344
---------- ---------- ---------- ----------
Total interest income .................... 1,445,291 1,341,559 2,813,936 2,639,246
Interest Expense
Deposits ................................... 472,064 453,120 918,525 896,107
Federal funds borrowed and security
repurchase agreements ..................... 81,101 56,461 154,864 126,271
Borrowed funds ............................. 48,564 50,922 99,840 84,438
Long-term debt ............................. 113,439 73,316 212,609 132,211
---------- ---------- ---------- ----------
Total interest expense ................... 715,168 633,819 1,385,838 1,239,027
---------- ---------- ---------- ----------
Net interest income ...................... 730,123 707,740 1,428,098 1,400,219
Provision for Loan Losses .................. 43,033 54,580 99,300 113,277
---------- ---------- ---------- ----------
Net interest income after
provision for loan losses ............... 687,090 653,160 1,328,798 1,286,942
Noninterest Income
Item processing revenue .................... 117,686 91,402 230,226 176,893
Service charges on deposit accounts ........ 97,739 89,196 191,199 175,322
Trust fees ................................. 69,996 60,501 137,405 118,454
Card related fees .......................... 56,275 56,794 109,053 109,513
Mortgage banking revenue ................... 97,223 36,826 158,473 67,503
Other ...................................... 122,102 87,028 234,323 192,477
---------- ---------- ---------- ----------
Total fees and other income .............. 561,021 421,747 1,060,679 840,162
Securities gains ........................... 19,714 31,177 20,766 47,128
---------- ---------- ---------- ----------
Total noninterest income ................. 580,735 452,924 1,081,445 887,290
Noninterest Expense
Salaries and other personnel ............... 396,574 357,759 780,428 707,329
Equipment .................................. 51,471 51,305 103,199 102,074
Net occupancy .............................. 49,671 48,491 98,408 97,737
Assessments and taxes ...................... 12,097 16,101 23,786 31,396
Merger and restructuring ................... 0 33,300 274,698 39,640
Other ...................................... 246,257 201,337 455,439 388,350
---------- ---------- ---------- ----------
Total noninterest expense ................ 756,070 708,293 1,735,958 1,366,526
---------- ---------- ---------- ----------
Income before income taxes .................. 511,755 397,791 674,285 807,706
Income tax expense .......................... 180,511 126,361 239,319 260,709
---------- ---------- ---------- ----------
Net Income ............................... $ 331,244 $ 271,430 $ 434,966 $ 546,997
---------- ---------- ---------- ----------
Preferred dividends ...................... 1,099 0 1,099 0
---------- ---------- ---------- ----------
Net Income Applicable To
Common Stock ........................... $ 330,145 $ 271,430 $ 433,867 $ 546,997
========== ========== ========== ==========
Net Income Per Common Share:
Basic .................................... $1.01 $0.84 $1.34 $1.68
Diluted .................................. $ .99 $0.83 $1.32 $1.65
</TABLE>
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<PAGE> 6
UNAUDITED
National City Corporation
Consolidated Balance Sheets
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30 December 30 June 30
Assets 1998 1997 1997
----------- ----------- -----------
<S> <C> <C> <C>
Loans:
Commercial ............................... $26,802,586 $24,629,368 $23,642,260
Residential real estate .................. 12,258,365 11,236,774 11,508,215
Consumer ................................. 13,473,157 12,357,229 12,026,985
Credit card .............................. 1,830,355 2,047,769 2,044,307
Home equity .............................. 3,113,685 2,972,987 2,697,567
----------- ----------- -----------
Total loans ............................ 57,478,148 53,244,127 51,919,334
Allowance for loan losses .............. 976,469 941,874 965,429
----------- ----------- -----------
Net loans .............................. 56,501,679 52,302,253 50,953,905
Securities available for sale ............... 13,898,032 13,797,566 13,483,875
Fed funds sold and security
resale agreements ......................... 1,333,374 542,156 1,054,883
Short-term investments ...................... 80,220 84,204 206,064
Cash and demand balances due from banks ..... 4,111,415 4,319,309 3,847,218
Properties and equipment .................... 1,081,876 1,031,912 1,039,238
Customers' acceptance liability ............. 31,785 45,823 62,081
Accrued income and other assets ............. 4,219,487 3,655,858 2,979,971
----------- ----------- -----------
Total Assets .......................... $81,257,868 $75,779,081 $73,627,235
=========== =========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Demand deposits (noninterest bearing) ...... $10,750,524 $10,287,007 $10,234,597
NOW and money market accounts .............. 17,150,088 15,547,560 15,230,486
Savings accounts ........................... 4,855,384 4,781,806 5,189,582
Time deposits of individuals ............... 18,417,699 18,631,280 19,595,012
Other time deposits ........................ 2,484,797 1,633,282 1,563,312
Deposits in overseas offices ............... 1,173,497 1,736,419 577,486
----------- ----------- -----------
Total deposits ........................ 54,831,989 52,617,354 52,390,475
Federal funds borrowed and security
repurchase agreements ................... 6,069,853 4,810,953 3,739,576
Borrowed funds ............................. 4,330,313 4,264,556 4,542,427
Acceptances outstanding .................... 31,785 45,823 62,081
Accrued expenses and other liabilities ..... 1,378,230 1,584,941 1,420,969
Long-term debt ............................. 7,596,702 6,297,194 5,414,588
----------- ----------- -----------
Total Liabilities ..................... 74,238,872 69,620,821 67,570,116
Stockholders' Equity:
Preferred ................................. 36,592 0 0
Common .................................... 6,982,404 6,158,260 6,057,119
----------- ----------- -----------
Total Stockholders' Equity ................ 7,018,996 6,158,260 6,057,119
Total Liabilities and
Stockholders' Equity .................... $81,257,868 $75,779,081 $73,627,235
=========== =========== ===========
</TABLE>
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<PAGE> 7
UNAUDITED
National City Corporation
Consolidated Average Balance Sheets
(Dollars in Millions)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
--------------------- ---------------------
Assets 1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Earning Assets:
Loans:
Commercial .................................... $ 26,735 $ 23,303 $ 25,764 $ 22,977
Residential real estate ....................... 11,932 11,338 11,577 11,336
Consumer ...................................... 13,107 12,005 12,828 11,997
Credit card ................................... 1,861 2,081 1,903 2,130
Home equity ................................... 3,074 2,616 3,040 2,562
-------- -------- -------- --------
Total loans ................................ 56,709 51,343 55,112 51,002
Securities ...................................... 13,874 13,166 13,803 13,095
Federal funds sold and security
resale agreements ............................. 713 377 577 382
Other short-term investments .................... 118 207 117 214
-------- -------- -------- --------
Total earning assets (gross of allowance
for loan losses) ............................ 71,414 65,093 69,609 64,693
Allowance for loan losses ........................ (995) (974) (977) (970)
Market value appreciation of securities
available for sale ............................. 564 162 550 195
Cash and demand balances due from banks .......... 3,616 3,346 3,500 3,379
Properties and equipment ......................... 1,055 1,053 1,044 1,055
Customers' acceptance liability .................. 33 73 37 77
Accrued income and other assets .................. 4,240 2,825 3,853 2,892
-------- -------- -------- --------
Total Assets ............................... $ 79,927 $ 71,578 $ 77,616 $ 71,321
======== ======== ======== ========
Liabilities and Stockholders' Equity
Liabilities:
Demand deposits ................................. $ 10,053 $ 9,173 $ 9,734 $ 9,144
NOW and money market accounts ................... 17,040 15,372 16,371 15,359
Savings accounts ................................ 4,870 5,266 4,814 5,298
Time deposits of individuals .................... 18,640 19,533 18,606 19,568
Other time deposits ............................. 2,536 1,628 2,241 1,573
Deposits in overseas offices .................... 1,420 1,068 1,509 997
-------- -------- -------- --------
Total deposits ............................. 54,559 52,040 53,275 51,939
Federal funds borrowed and security
repurchase agreements ........................ 6,433 4,404 6,178 4,958
Borrowed funds .................................. 3,395 3,488 3,448 3,025
Long-term debt .................................. 7,235 4,485 6,753 4,087
Acceptances outstanding ......................... 33 73 37 77
Accrued expenses and other liabilities .......... 1,433 1,093 1,267 1,099
-------- -------- -------- --------
Total Liabilities .......................... 73,088 65,583 70,958 65,185
Stockholders' Equity:
Preferred ...................................... 37 0 19 0
Common ......................................... 6,802 5,995 6,639 6,136
-------- -------- -------- --------
Total Stockholders' Equity ................. 6,839 5,995 6,658 6,136
-------- -------- -------- --------
Total Liabilities and Stockholders' Equity . $ 79,927 $ 71,578 $ 77,616 $ 71,321
======== ======== ======== ========
</TABLE>
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<PAGE> 8
UNAUDITED
National City Corporation
Selected Financial Data
<TABLE>
<CAPTION>
Second Quarter Year-to-Date
----------------------- ---------------------------
(Dollars in Thousands) 1998 1997 1998 1997
-------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Net interest income FTE .......................... $739,915 $717,919 $1,448,191 $ 1,420,099
Net interest margin .............................. 4.15% 4.41% 4.16% 4.40%
Overhead Ratio (1) ............................... 26.36% 35.28% 27.66% 34.27%
Efficiency Ratio (1) ............................. 58.12% 59.23% 58.24% 58.70%
Net charge-offs to average loans ................. .30% .38% .35% .40%
Loan loss reserve to loans (period-end) .......... 1.70% 1.86%
Nonperforming assets to loans&OREO (period-end) .. .45% .51%
Net unrealized gain/(loss) on securities available
for sale (net of tax) included in stockholders'
equity (period-end) ............................. $354,022 $197,569
Book value per share related to market value
of securities .................................. $ 1.08 $ .62
<CAPTION>
Three Months Six Months
(Dollars in Thousands) Ended June 30 Ended June 30
----------------------- ---------------------------
1998 1997 1998 1997
-------- -------- ---------- -----------
<S> <C> <C> <C> <C>
Allowance for Loan Losses
Balance beginning of period ...................... $976,464 $960,040 $ 941,874 $ 958,739
Provision ........................................ 43,033 54,580 99,300 113,277
Reserves acquired (sold) ......................... 0 0 30,679 (4,906)
Charge-offs ...................................... 73,259 87,930 157,687 178,946
Recoveries ....................................... 30,231 38,739 62,303 77,265
-------- -------- ---------- -----------
Net charge-offs .................................. 43,028 49,191 95,384 101,681
-------- -------- ---------- -----------
Balance at end of period ......................... $976,469 $965,429 $ 976,469 $ 965,429
======== ======== ========== ===========
<CAPTION>
(Dollars in Millions) June 30 Dec 31 June 30
1998 1997 1997
-------- -------- -----------
<S> <C> <C> <C>
Nonperforming Assets
Nonaccrual and restructured loans ................ $ 228 $ 238 $ 230
Other real estate owned .......................... 33 35 37
-------- -------- -----------
Total nonperforming assets ....................... $ 261 $ 273 $ 267
======== ======== ===========
<CAPTION>
June 30 Dec 31 June 30
1998 1997 1997
-------- -------- -----------
<S> <C> <C> <C>
Capital Ratios (2)
Tier 1 Capital ................................... 8.92% 8.93% 9.49%
Total risk-based capital ......................... 12.91% 13.16% 13.79%
Leverage ......................................... 7.32% 7.58% 7.74%
Tangible common equity to tangible assets ........ 6.89% 7.11% 7.30%
</TABLE>
(1) Excluding merger and restructuring expenses.
(2) Calculations as of June 30, 1998 are based on preliminary data.
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