<PAGE> 1
Filed Pursuant To Rule 424(b)(4)
Registration No. 333-71207
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 28, 1999)
$700,000,000
NATIONAL CITY CORPORATION
6 7/8% SUBORDINATED NOTES DUE MAY 15, 2019
------------------------
These notes bear interest at the rate of 6 7/8% per year. Interest on the
notes is payable on May 15 and November 15 of each year, beginning November 15,
1999. The notes will mature on May 15, 2019 and are not redeemable before that
date.
The notes will be unsecured subordinated obligations of National City
Corporation. The notes will be issued in registered form in denominations of
$1,000 and integral multiples of $1,000 in excess thereof.
The notes are not savings accounts or savings deposits. The notes are not
insured by the Federal Deposit Insurance Corporation or any governmental agency.
------------------------
<TABLE>
<CAPTION>
PER NOTE TOTAL
-------- -----
<S> <C> <C>
Public Offering Price(1).................................. 99.824% $698,768,000
Underwriting Discount..................................... .875% $6,125,000
Proceeds, before expenses, to National City Corporation... 98.949% $692,643,000
</TABLE>
(1) Plus accrued interest from May 4, 1999, if settlement occurs after that
date.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the notes or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The notes will be ready for delivery in book-entry form only through The
Depository Trust Company on or about May 4, 1999.
------------------------
MERRILL LYNCH & CO.
KEEFE, BRUYETTE & WOODS, INC.
NATCITY INVESTMENTS, INC.
PAINEWEBBER INCORPORATED
SALOMON SMITH BARNEY
------------------------
The date of this prospectus supplement is April 28, 1999.
<PAGE> 2
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Use of Proceeds............................................. S-3
Description of the Notes.................................... S-3
Underwriting................................................ S-6
</TABLE>
PROSPECTUS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More Information......................... 3
Incorporation of Information We File With the SEC........... 3
National City Corporation................................... 4
Use of Proceeds............................................. 6
Ratio of Earnings to Fixed Charges.......................... 6
Description of the Securities............................... 6
Senior Debt Securities...................................... 12
Subordinated Debt Securities................................ 12
United States Taxation...................................... 14
Limitations on Issuance of Bearer Securities................ 17
Plan of Distribution........................................ 18
Legal Opinions.............................................. 19
Experts..................................................... 19
</TABLE>
------------------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not, and the underwriters have not, authorized any other person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell the notes in any jurisdiction
where the offer or sale is not permitted. You should assume that the information
appearing in this prospectus supplement and the accompanying prospectus, as well
as information we previously filed with the Securities and Exchange Commission
and incorporated by reference, is accurate as of the date on the front cover of
this prospectus supplement only. Our business, financial condition, results of
operations and prospects may have changed since that date.
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<PAGE> 3
USE OF PROCEEDS
The net proceeds we receive from the sale of the notes offered under this
prospectus supplement and the accompanying prospectus will be added to our
general funds to be used for repurchases of our outstanding common stock, as
well as other general corporate purposes.
DESCRIPTION OF THE NOTES
The following description of the notes supplements the description of the
general terms of the Subordinated Debt Securities set forth under "Description
of the Securities" in the attached prospectus. You should read the prospectus
and this prospectus supplement together for a complete description of the notes.
Terms that are capitalized but not defined in this prospectus supplement have
been defined in the attached prospectus.
The notes are a series of Subordinated Debt Securities. The notes will be
issued under an indenture, to be dated as of April 30, 1999, between us and The
Bank of New York, a New York banking corporation, as trustee.
The notes will be issued in fully registered book-entry form without
coupons and in denominations of $1,000 and integral multiples of $1,000 in
excess thereof. We do not intend to apply for the listing of the notes on a
national securities exchange.
The notes are unsecured and subordinated in right of payment to all of our
current and future Senior Indebtedness. Senior Indebtedness is defined in the
accompanying prospectus under the heading "Subordinated Securities."
The notes will be limited to an aggregate principal amount of $700 million
and will bear interest at a rate of 6 7/8% per year. Interest is payable on May
15 and November 15 of each year, beginning on November 15, 1999, to the persons
in whose names the notes are registered as of the close of business on the May 1
immediately before each May 15 and the November 1 immediately before each
November 15. Interest on the notes at maturity will be payable to the person to
whom principal is payable. Interest will be computed on the basis of a 360-day
year composed of twelve 30-day months. Payments of principal and interest to
owners of the book-entry interests described below are expected to be made in
accordance with the procedures of The Depository Trust Company (the
"Depositary") and its participants. The notes mature on May 15, 2019 and are not
redeemable before that date.
Payment of principal of the notes can be accelerated only if certain events
of bankruptcy, insolvency or reorganization of us or any of our Principal
Constituent Banks occur. There will be no right of acceleration of the payment
of principal of the notes upon a default in the payment of principal or interest
on the notes or in the performance of any of our covenants or agreements
contained in the notes or in the indenture.
As of March 31, 1999, we had approximately $5.2 million in principal amount
of debt that would constitute Senior Indebtedness, and $1.925 billion in
principal amount of debt that would rank equally with the notes we are offering.
Since we are a holding company, our right, and accordingly the rights of
our creditors and stockholders, including the holders of the notes, to
participate in any distribution of assets of any of our subsidiaries upon its
liquidation, reorganization or similar proceeding is subject to the prior claims
of creditors of that subsidiary, except to the extent that our claims as a
creditor of the subsidiary may be recognized.
BOOK-ENTRY SYSTEM
The notes will be issued only in fully registered form, represented by one
or more global certificates (the "Global Securities") that will be deposited
with the Depositary and registered in the name of Cede & Co., as the nominee of
the Depositary.
Upon the issuance of a Global Security, the Depositary will credit, on its
book-entry registration and transfer system, the principal amount of notes
represented by the Global Security to the accounts of institutions that have
accounts with the Depositary, known as "participants." Ownership of beneficial
interests in the Global Security will be limited to participants or persons that
may hold interests through participants. Ownership of beneficial interests in a
Global Security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the Depositary or its nominee, in
the case of participants, or by participants or persons that
S-3
<PAGE> 4
hold through participants in the case of persons other than participants. The
laws of certain states require that certain purchasers of securities take
physical delivery of their securities as certificates issued in definitive form.
These laws may make it difficult to transfer beneficial interests in a Global
Security.
Principal and interest payments on the Global Security will be made to the
Depositary or its nominee, as the case may be, as the registered holder of the
security. We have been advised that the Depositary or its nominee, upon receipt
of any payment of principal or interest in respect of a Global Security, will
immediately credit participants' accounts with payments in amounts equal to
their respective beneficial interests in the principal amount of such Global
Security as shown on the records of the Depositary or its nominee. Payments by
participants, or by persons that hold interests for customers through
participants, to owners of beneficial interests in such Global Security held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers registered in "street name," and will be the responsibility of such
participants, or of such persons that hold interests for customers through
participants.
Each owner of a beneficial interest in a Global Security must ensure that
the person through whom its interest is held, such as a participant or other
person that holds interests through a participant, maintains accurate records of
their beneficial interest in the Global Security. The interests of participants,
which may be in the form of a custodial relationship, will be shown on records
maintained by the Depositary for that Global Security. The designation of the
Depositary or its nominee as custodian for participants and persons that hold
interests through participants, either as principal, nominee or custodian, will
be shown on the register maintained by the trustee.
Neither we nor the trustee will have any responsibility or liability for
any aspect of the records relating to, or for payments made on account of
beneficial ownership interests in, a Global Security or for maintaining,
supervising or reviewing any records relating to those beneficial ownership
interests.
If the Depositary notifies us that it is unwilling or unable to continue as
depositary for the Global Securities or if at any time the Depositary ceases to
be a clearing agency registered under the Securities and Exchange Act of 1934,
if so required by applicable law or regulation, and, in either case, we do not
appoint a successor depositary within 60 days, we will issue notes in
certificated form (the "Certificated Notes") in exchange for the Global
Securities. In addition, we may at any time and in our sole discretion decide
not to have any notes represented by Global Securities. In such event, we will
issue Certificated Notes in exchange for Global Securities. Furthermore, if an
event of default under the indenture occurs we will issue Certificated Notes in
exchange for Global Securities. The Certificated Notes issued in exchange for
those Global Securities shall be in the same minimum denominations and be of the
same aggregate principal amount and tenor as the portion of each Global Security
to be exchanged. Except as provided above, owners of beneficial interests in a
Global Security will not be entitled to receive physical delivery of
Certificated Notes and will not be considered the registered holders of the
notes for any purpose, including receiving payments of principal or interest.
We have been advised by the Depositary that it is a limited-purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. The Depositary was created to
hold securities of its participants and to facilitate the clearance and
settlement of securities transactions among its participants in such securities
through electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations, some of whom,
and/or their representatives, own the Depositary. Access to the Depositary's
book-entry system is also available to others, such as brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
The Depositary's management is aware that some computer applications,
systems, and the like for processing data that are dependent upon calendar
dates, including dates before, on, and after January 1, 2000, may encounter
"Year 2000 problems." The Depositary has informed its participants and other
members of the financial community that it has developed and is implementing a
program so that its computer systems, as the same relate to the timely payment
of distributions, including principal and interest payments, to securityholders,
book-entry deliveries, and settlement of trades within the Depositary continue
to function appropriately. This
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<PAGE> 5
program includes a technical assessment and a remediation plan, each of which is
complete. Additionally, the Depositary's plan includes a testing phase, which is
expected to be completed within appropriate time frames.
However, the Depositary's ability to perform properly its services is also
dependent upon other parties, including but not limited to issuers and their
agents, as well as the Depositary's direct and indirect participants, third
party vendors from whom the Depositary licenses software and hardware, and third
party vendors on whom the Depositary relies for information or the provision of
services, including telecommunications and electrical utility service providers,
among others. The Depositary has informed its participants and the financial
community that it is contacting (and will continue to contact) third party
vendors from whom the Depositary acquires services to: (i) impress upon them the
importance of such services being Year 2000 compliant; and (ii) determine the
extent of their efforts for Year 2000 remediation (and, as appropriate, testing)
of their services. In addition, the Depositary is in the process of developing
such contingency plans as it deems appropriate.
According to the Depositary, the foregoing information with respect to the
Depositary has been provided to its participants and the financial community for
informational purposes only and is not intended to serve as a representation,
warranty, or contract modification of any kind.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the notes will be made in immediately available funds.
Secondary trading in long-term notes of corporate issuers is generally settled
in clearinghouse or next-day funds. In contrast, the notes will trade in the
Depositary's Same-Day Funds Settlement System until maturity. Secondary market
trading activity in the notes will be required by the Depositary to settle in
same-day funds. Settlement in same-day funds may have an effect on the level of
trading activity in the notes.
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<PAGE> 6
UNDERWRITING
Subject to the terms and conditions of an underwriting agreement, as
supplemented by a terms agreement, between us and each underwriter named below,
we have agreed to sell to each underwriter, and each underwriter has severally
agreed to purchase from us, the principal amount of notes listed below next to
the name of such underwriter.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OF NOTES
UNDERWRITER ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................... $350,000,000
Keefe, Bruyette & Woods, Inc................................ 87,500,000
NatCity Investments, Inc.................................... 87,500,000
PaineWebber Incorporated.................................... 87,500,000
Salomon Smith Barney Inc. .................................. 87,500,000
------------
Total........................................... $700,000,000
============
</TABLE>
The underwriters propose initially to offer the notes to the public at the
public offering price set forth on the cover page of this prospectus supplement
and to certain dealers at such price less a concession not in excess of .5% of
the principal amount of the notes. The underwriters may allow, and such dealers
may reallow, a discount not in excess of .25% of the principal amount of the
notes to certain other dealers. After the initial public offering, the public
offering price, concession and discount may be changed.
We estimate that our total expenses for this offering will be approximately
$75,000.
We own 100% of the outstanding common stock of NatCity Investments, Inc.
("NatCity Investments"), an underwriter participating in the offering. Because
NatCity Investments is an affiliate of ours, the offering is being conducted in
accordance with the applicable provisions of Rule 2720 of the Conduct Rules
("Rule 2720") of the National Association of Securities Dealers, Inc. ("NASD").
In accordance with Rule 2720, no NASD member participating in the underwriting
is permitted to confirm sales to accounts over which it exercises discretionary
authority without prior specific approval of the customer.
The notes are a new issue of securities with no established trading market.
The underwriters have advised us that they intend to make a market in the notes.
The underwriters are not obligated to make a market in the notes and they may
discontinue market making at any time without notice. We cannot assure you that
a liquid trading market for the notes will develop.
In order to facilitate the offering of the notes, the underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the notes.
Until the distribution of the notes is completed, the rules of the
Commission may limit the ability of the underwriters and certain selling group
members to bid for and purchase the notes. As an exemption to these rules, the
underwriters are permitted to engage in certain transactions that stabilize the
price of the notes. Such transactions consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of the notes. If the
underwriters create a short position in the notes in connection with this
offering (i.e., if they sell more notes than are referred to on the cover page
of this prospectus supplement), the underwriters may reduce that short position
by purchasing notes in the open market. In general, purchases of a security for
the purpose of stabilization or to reduce a short position could cause the price
of the security to be higher than it might be in the absence of such purchases.
Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the notes. In addition, neither we nor
any of the underwriters makes any representation that the underwriters will
engage in such transactions or that such transactions, once commenced, will not
be discontinued without notice.
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We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933. We have also agreed to
contribute to the payments the underwriters may be required to make because of
those liabilities.
NatCity Investments may use this prospectus for offers and sales related to
market-making transactions in the notes. NatCity Investments may act as
principal or agent in these transactions, and the sales will be made at prices
related to prevailing market prices at the time of sale.
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PROSPECTUS
NATIONAL CITY CORPORATION
------------------------
$1,000,000,000
SENIOR DEBT SECURITIES
SUBORDINATED DEBT SECURITIES
------------------------
We will provide specific terms of these securities in supplements to this
prospectus. You should read this prospectus and any supplement carefully before
you invest.
The securities offered hereby are not savings accounts or savings deposits.
These securities are not insured by the Federal Deposit Insurance Corporation or
any governmental agency.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY
STATE SECURITIES COMMISSION. NONE OF THESE ORGANIZATIONS HAVE DETERMINED WHETHER
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS COMPLETE OR ACCURATE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is April 28, 1999
<PAGE> 9
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More Information......................... 3
Incorporation of Information We File With the SEC........... 3
National City Corporation................................... 4
Use of Proceeds............................................. 6
Ratio of Earnings to Fixed Charges.......................... 6
Description of the Securities............................... 6
Senior Debt Securities...................................... 12
Subordinated Debt Securities................................ 12
United States Taxation...................................... 14
Limitations on Issuance of Bearer Securities................ 17
Plan of Distribution........................................ 18
Legal Opinions.............................................. 19
Experts..................................................... 19
</TABLE>
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<PAGE> 10
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
any person to provide you with different information. If anyone else provides
you with different information, you should not rely on it. We are not making an
offer to sell these securities in any jurisdiction where such offer or sale is
not permitted.
You should not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of the document.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC"). You may
read and copy any document we file with the SEC at the SEC's Public Reference
Room, located at 450 Fifth Street, N.W., Washington, DC 20549. The SEC also
maintains public reference rooms in New York, New York and Chicago, Illinois.
You can call the SEC at 1-800-SEC-0330 for further information about the public
reference rooms. Our SEC filings are also available from the SEC's Web site at
http://www.sec.gov.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to incorporate information we file with the SEC by
reference into this prospectus. Important information will be disclosed to you
in the incorporated documents. We are incorporating the following documents by
reference into this prospectus, as well as any future filings we make under
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, until
this offering is completed:
- Annual Report on Form 10-K for the year ended December 31, 1998 and the
1998 Annual Report to Stockholders (but only to the extent that the
annual report is expressly incorporated by reference into the Form 10-K).
- Current Report on Form 8-K, filed on February 2, 1999.
- Current Report on Form 8-K, filed on April 16, 1999.
You may request a free copy of any filings referred to above (excluding
exhibits) by writing or telephoning us at:
National City Corporation
National City Center
1900 East Ninth Street
Cleveland, Ohio 44114-3484
Attention: Thomas A. Richlovsky,
Senior Vice President and Treasurer
216/575-2126
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<PAGE> 11
NATIONAL CITY CORPORATION
We are a multibank holding company and own all of the outstanding capital
stock of 7 commercial banks. We have a total of 1,301 banking offices in Ohio,
Michigan, Pennsylvania, Kentucky, Indiana and Illinois. As of December 31, 1998,
our consolidated total assets were $88.2 billion and our common stockholders'
equity was $6.98 billion. Based on asset size, we are the 11th largest
commercial banking organization in the United States.
Listed below are our principal banking subsidiaries:
National City Bank
National City Bank of Michigan/Illinois
National City Bank of Pennsylvania
National City Bank of Kentucky
National City Bank of Indiana
We offer a wide range of financial services through our subsidiaries. These
services include traditional commercial and retail bank services, consumer
finance, personal trust, investment management, brokerage services, investment
banking, institutional trust, mortgage services, credit card services, and
transaction processing.
On March 30, 1998, we acquired Fort Wayne National Corporation. We acquired
First of America Bank Corporation on March 31, 1998. We accounted for the Fort
Wayne National Corporation acquisition as a purchase and we accounted for the
First of America Bank Corporation acquisition as a pooling of interests. For
more detail on these acquisitions and their impact on our financial statements,
please review our Annual Report on Form 10-K for the year ended December 31,
1998.
We are a legal entity separate and distinct from our subsidiary banks and
other subsidiaries. A substantial portion of our cash revenue is received from
our subsidiary banks in the form of cash dividends. Federal law limits the
manner and amount of funding that our subsidiary banks may provide to us. The
bank subsidiaries are limited as to the dividends they are allowed to pay. The
type and amount of any security required to be pledged for any loans from our
subsidiary banks to us is dictated by Section 23A of the Federal Reserve Act.
In any given year, each of our subsidiary banks may not pay dividends in an
amount that exceeds (a) that bank's net profits for the current year plus (b)
its retained net profits for the preceding two calendar years. This limitation
on dividends may only be exceeded if the bank has received prior approval of the
Comptroller of the Currency. Because of this limitation, as of January 1, 1999,
our subsidiary banks could not have paid to us a dividend of more than $904.6
million without the approval of the Comptroller of the Currency. Each of our
subsidiary banks must meet various capital requirements. These capital
requirements may further limit the amount of dividends that a subsidiary bank
may pay to us. In addition, the Comptroller of the Currency has authority to
prohibit payment of a dividend by any of our subsidiary banks if the payment
constitutes what, in its opinion, is an unsafe and unsound banking practice.
The total of all loans each subsidiary bank may make to us cannot exceed
10% of the capital stock and surplus of that bank. All loans made to us must be
secured with collateral having a market value of at least 100% to 130% of the
amount of the loan. The required amount of collateral depends on the type of
assets that are pledged.
The Financial Institutions Reform, Recovery and Enforcement Act of 1989
imposes various liabilities on our subsidiary banks. Each of our subsidiary
banks is liable to the Federal Deposit Insurance Corporation (commonly referred
to as the FDIC) for any losses it may incur as a result of the failure or near
failure of any of our other subsidiary banks. Depositor claims of each of the
non-failing banks and general creditors of each of those banks would be paid
prior to any claims of the FDIC. In addition to the above requirements, the
Federal Reserve Board has a policy which requires us to act as a source of
financial strength to our subsidiary banks. This policy could require us to use
our funds and assets to support any of our subsidiary banks that might
experience financial trouble.
We and our banking subsidiaries are required to meet various capital
requirements. Failure to meet the minimum capital requirements can result in:
- our being denied the right to acquire existing companies or establish new
companies,
- our subsidiary banks being limited in their ability to pay dividends,
- our subsidiary banks being required to raise additional capital,
- an increase in the deposit insurance premiums payable to the FDIC and
- the potential loss of deposit insurance.
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<PAGE> 12
We and our subsidiary banks have consistently maintained capital levels at
or above the "well capitalized" level. The "well capitalized" standard is the
highest regulatory standard.
The monetary policies and regulation imposed on us and our subsidiary banks
have a significant effect on our operating results. We cannot predict the impact
that future monetary policy or bank regulation will have on us.
------------------------
We are a Delaware corporation and our executive offices are located at
National City Center, 1900 East Ninth Street, Cleveland, Ohio 44114-3484. Our
telephone number is 216/575-2000.
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<PAGE> 13
USE OF PROCEEDS
The net proceeds we receive from the sale of the securities offered under
this prospectus and any supplement will be added to our general funds to be used
for general corporate purposes, including investments in or advances to existing
or future subsidiaries. If we decide to use any proceeds for a different
purpose, we will specify that purpose in the appropriate prospectus supplement.
RATIO OF EARNINGS TO FIXED CHARGES
The following are the consolidated ratios of earnings to fixed charges for
each of the years in the five-year period ended December 31, 1998.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding Interest on Deposits....................... 2.60x 3.14x 3.26x 2.73x 3.68x
Including Interest on Deposits....................... 1.57 1.64 1.58 1.45 1.62
</TABLE>
For the purpose of calculating the ratio of earnings to fixed charges, we
have divided income before income taxes plus fixed charges by fixed charges.
Fixed charges, excluding interest on deposits, consist of:
- interest on federal funds purchased,
- interest on security repurchase agreements,
- interest on other borrowed funds,
- interest on long-term debt, and
- that portion of rental expense which is deemed to be representative of
the interest factor.
Fixed charges, including interest on deposits, consist of the above items
plus interest on deposits.
DESCRIPTION OF THE SECURITIES
The securities we are offering will constitute either Senior Debt
Securities or Subordinated Debt Securities. The Senior Debt Securities and the
Subordinated Debt Securities will be issued under separate indentures between us
and The Bank of New York, as trustee. Pursuant to the Trust Indenture Act of
1939, as amended, the trustee will have a "conflicting interest" if the
securities issued under either indenture are in default. If this occurs, the
trustee may be required to resign its trusteeship under the defaulted indenture
and we would appoint a successor trustee. A copy of the form of each indenture
has been filed as an exhibit to the registration statement of which this
prospectus forms a part.
The following summaries of certain provisions of the indentures are not
complete. You should read all of the provisions of the indentures, including the
definitions of certain terms. These summaries set forth certain general terms
and provisions of the securities to which any prospectus supplement may relate.
The particular terms of the securities offered by any prospectus supplement and
the applicability of the general provisions will be described in the appropriate
prospectus supplement. Unless otherwise indicated, parenthetical section
references refer to each of the indentures.
Since we are a holding company, our right, and accordingly, the right of
our creditors and stockholders, including the holders of the securities offered
by this prospectus and any prospectus supplement, to participate in any
distribution of assets of any of our subsidiaries upon its liquidation,
reorganization or similar proceeding is subject to the prior claims of creditors
of that subsidiary, except to the extent that our claims as a creditor of the
subsidiary may be recognized.
Neither indenture contains any terms which would protect the holders of the
securities in the event of a recapitalization, a change of control, a highly
leveraged transaction or a restructuring involving us that results in a
downgrade of our public debt rating.
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TERMS OF THE SECURITIES
The securities will be not be secured by any of our assets. Neither the
indentures nor the securities will limit or otherwise restrict the amounts of
other indebtedness which we may incur, or the amount of other securities that we
may issue. The indentures do not limit the principal amount of any particular
series of securities. All of the securities issued under each of the indentures
will rank equally and ratably with any additional securities issued under the
same indenture. The Senior Debt Securities will rank equally with all of our
other unsecured and non-subordinated indebtedness. The Subordinated Debt
Securities will be subordinated as described below under "Subordinated Debt
Securities."
Each prospectus supplement will specify the particular terms of the
securities offered. These terms may include:
- the title of the securities,
- any limit on the aggregate principal amount of the securities,
- the priority of payment of the securities,
- the issue price or prices (which may be expressed as a percentage of the
aggregate principal amount) of the securities,
- the date or dates, or the method of determining the dates, on which the
securities will mature,
- the interest rate or rates of the securities, or the method of
determining those rates,
- the interest payment dates, the dates on which payment of any interest
will begin and the regular record dates,
- whether the securities will be issuable in temporary or permanent global
form and, if so, the identity of the depositary for such global security,
or the manner in which any interest payable on a temporary or permanent
global security will be paid,
- any sinking fund or similar provision applicable to the securities,
- any mandatory or optional redemption provisions applicable to the
securities,
- the denomination or denominations in which securities are authorized to
be issued,
- whether any of the securities will be issued in bearer form and, if so,
any limitations on issuance of such bearer securities (including exchange
for registered securities of the same series),
- information with respect to book-entry procedures,
- whether any of the securities will be issued as Original Issue Discount
Securities,
- each office or agency where securities may be presented for registration
of transfer or exchange,
- the method of determining the amount of any payments on the securities
which are linked to an index,
- if other than U.S. dollars, the currency or currencies in which payments
on the securities will be payable, and whether the holder may elect
payment to be made in a different currency,
- if other than the trustee, the identity of the registrar and/or paying
agent,
- any defeasance of certain obligations by the company pertaining to the
series of securities,
- whether and on what terms we will pay additional amounts to holders that
are not U.S. persons in respect of any tax, assessment or governmental
charge withheld or deducted, and if so, whether we will have the option
to redeem such securities rather than pay such additional amounts (and
the terms of any such option), and
- any other specific terms of the securities.
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Some of the securities may be issued as original issue discount securities
(the "Original Issue Discount Securities"). Original Issue Discount Securities
bear no interest or bear interest at below-market rates and will be sold at a
discount below their stated principal amount. The prospectus supplement will
also contain any special tax, accounting or other information relating to
Original Issue Discount Securities or relating to certain other kinds of
securities that may be offered, including securities linked to an index.
ACCELERATION OF MATURITY
If an event of default in connection with any outstanding series of
securities occurs and is continuing, the trustee or the holders of at least 25%
in principal amount of the outstanding securities of that series may declare the
principal amount due and payable immediately. If the securities of that series
are Original Issue Discount Securities, the holders of at least 25% in principal
amount of those securities may declare the portion of the principal amount
specified in the terms of that series of securities to be due and payable
immediately. In either case, a written notice must be given to us, and to the
trustee, if notice is given by the holders instead of the trustee. Subject to
certain conditions, the declaration of acceleration may be revoked, and past
defaults (except uncured payment defaults and certain other specified defaults)
may be waived, by the holders of a majority of the principal amount of
securities of that series.
You should refer to the prospectus supplement relating to each series of
securities which are Original Issue Discount Securities for the particular
provisions relating to acceleration of the maturity upon the occurrence and
continuation of an event of default.
REGISTRATION AND TRANSFER
Unless otherwise indicated in the applicable prospectus supplement, each
series of the offered securities will be issued in registered form only, without
coupons. The indentures will also allow us to issue the securities in bearer
form only, or in both registered and bearer form. Any securities issued in
bearer form will have interest coupons attached, unless they are issued as zero
coupon securities. Securities in bearer form will not be offered, sold, resold
or delivered in connection with their original issuance in the United States or
to any United States person other than to offices of certain United States
financial institutions located outside the United States.
Unless otherwise indicated in the applicable prospectus supplement, the
securities we are offering will be issued in denominations of $1,000 or an
integral multiple of $1,000. No service charge will be made for any transfer or
exchange of the securities, but we may require payment of an amount sufficient
to cover any tax or other governmental charge payable in connection with a
transfer or exchange.
PAYMENT AND PAYING AGENT
We will pay principal, interest and any premium on fully registered
securities in the designated currency or currency unit at the office of a
designated paying agent. At our option, payment of interest on fully registered
securities may also be made by check mailed to the persons in whose names the
securities are registered on the days specified in the indentures or any
prospectus supplement. (Section 307)
We will pay principal, interest and any premium on bearer securities in the
designated currency or currency unit at the office of a designated paying agent
or agents outside of the United States. Payments will be made at the offices of
the paying agent in the United States only if the designated currency is US
dollars and payment outside of the United States is illegal or effectively
precluded. If any amount payable on any security or coupon remains unclaimed at
the end of two years after such amount became due and payable, the Paying Agent
will release any unclaimed amounts, and the holder of the security or coupon
will look only to us for payment.
The designated paying agent in the United States for the securities we are
offering is The Bank of New York, located at 101 Barclay Street, New York, New
York 10286.
GLOBAL SECURITIES
The securities of a series may be issued in whole or in part in the form of
one or more global certificates ("Global Securities") that will be deposited
with a depositary that we will identify in a prospectus supplement.
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Global Securities may be issued in either registered or bearer form and in
either temporary or permanent form. All Global Securities in bearer form will be
deposited with a depositary outside the United States. Unless and until it is
exchanged in whole or in part for individual certificates evidencing securities
in definitive form represented thereby, a Global Security may not be transferred
except as a whole by the depositary to a nominee of that depositary or by a
nominee of that depositary to a depositary or another nominee of that
depositary.
The specific terms of the depositary arrangements for each series of
securities will be described in the applicable prospectus supplement.
RESTRICTIVE COVENANTS
The Senior Indenture contains a covenant that, except as otherwise provided
below, we will not sell, assign, pledge, transfer or otherwise dispose of, or
permit the issuance of, or permit a subsidiary to sell, assign, pledge, transfer
or otherwise dispose of, any shares of capital stock of any subsidiary or any
securities convertible into capital stock of any subsidiary which is:
- a Principal Constituent Bank, or
- a subsidiary which owns shares of capital stock, or any securities
convertible into capital stock, of a Principal Constituent Bank.
However, this covenant does not prohibit:
(a) any dispositions made by us or any subsidiary:
(1) acting in a fiduciary capacity for any person other than us
or any subsidiary, or
(2) to us or any of our wholly owned subsidiaries, or
(b) the merger or consolidation of a Principal Constituent Bank
with and into a Constituent Bank, or the merger or consolidation of any
Principal Constituent Bank with and into any other Principal Constituent
Bank.
This covenant does not prohibit sales, assignments, pledges, transfers,
issuances or other dispositions of shares of capital stock of a Principal
Constituent Bank referred to in (a) or (b) above where:
- the sales, assignments, pledges, transfers, issuances or other
dispositions are made, in the minimum amount required by law, to any
person for the purpose of the qualification of such person to serve as a
director, or
- the sales, assignments, pledges, transfers, issuances or other
dispositions are made in compliance with an order of a court or a
regulatory authority of competent jurisdiction or as a condition imposed
by any such court or authority to our acquisition, directly or
indirectly, of any other corporation or entity, or
- in the case of (1) a disposition or issuance of shares of capital stock,
or any securities convertible into capital stock, of a Principal
Constituent Bank, or (2) sales of capital stock or any securities
convertible into capital stock of any wholly owned subsidiary:
(a) the sales, assignments, pledges, transfers, issuances or other
dispositions are for fair market value (as determined by our Board of
Directors and the Board of Directors of the subsidiary disposing of such
shares or securities, and evidenced by a resolution of our Board of
Directors), and
(b) after giving effect to such disposition and to any potential
dilution (if the shares or securities are convertible into capital stock),
we and our directly or indirectly wholly owned subsidiaries will own
directly not less than 80% of the Voting Stock of such Principal
Constituent Bank or subsidiary, or
- a Principal Constituent Bank sells additional shares of capital stock to
its stockholders at any price, so long as immediately after such sale we
own, directly or indirectly, at least as great a percentage of the Voting
Stock of such Principal Constituent Bank as we owned before the sale of
the additional shares.
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A Constituent Bank is defined as a subsidiary which meets the definition of
a Bank in the indentures. A Principal Constituent Bank is a Constituent Bank
with consolidated assets constituting 15% or more of our consolidated assets. At
the date of this prospectus, National City Bank, National City Bank of
Pennsylvania National City Bank of Indiana and National City Bank of
Michigan/Illinois are the only Principal Constituent Banks. (Senior Indenture,
Section 1006)
The Senior Indenture prohibits us from acquiring capital stock of any
corporation or acquiring substantially all the assets and liabilities of any
corporation, unless, immediately after such acquisition, we would be in full
compliance with the Senior Indenture. (Senior Indenture, Section 1008) In
addition, the Senior Indenture prohibits us from creating or permitting any
liens upon any shares of capital stock of any Constituent Bank to secure any
indebtedness without securing the Senior Debt Securities equally and ratably
with all indebtedness secured by those liens. (Senior Indenture, Section 1007)
MODIFICATION AND WAIVER
Each indenture provides that modifications and amendments may be made by us
and the trustee with the consent of the holders of a majority in principal
amount of the outstanding securities of each series affected by the amendment or
modification. However, no modification or amendment may, without the consent of
each holder affected:
- change the stated maturity date of the principal of, or any installment
of interest on, any security,
- reduce the principal amount, any rate of interest, or any additional
amounts in respect of any security, or reduce the amount of any premium
payable upon the redemption of any security,
- change the place of payment, currency or currencies in which any security
or any premium or interest thereon is payable,
- impair the right to institute suit for the enforcement of any payment on
or after the stated maturity date of any security or, in the case of
redemption, on or after the redemption date,
- reduce the percentage of securities required to consent to any
modification, amendment or waiver under the indenture,
- modify, except under limited circumstances, any provision of the
applicable indenture relating to modification and amendment of the
indenture, waiver of compliance with conditions and defaults thereunder
or the right of a majority of holders to take action under the applicable
indenture,
- in the case of the Subordinated Indenture, alter the provisions regarding
subordination of the Subordinated Debt Securities in any way that would
be adverse to the holders of those securities,
- reduce the principal amount of Original Issue Discount Securities which
could be declared due and payable upon an acceleration of their maturity,
or
- change our obligation to pay any additional amounts. (Section 902)
The holders of a majority in principal amount of the outstanding securities
of any series may waive compliance by us and the trustee with certain provisions
of the indentures. (Senior Indenture, Section 1011; Subordinated Indenture,
Section 1008) The holders of a majority in principal amount of the outstanding
securities of any series may waive any past default under the applicable
indenture with respect to that series, except a default in the payment of the
principal, or any premium, interest, or additional amounts payable on security
of that series or in respect of a covenant or provision which under the terms of
the applicable indenture cannot be modified or amended, without the consent of
each affected holder. (Section 513)
With the trustee, we may modify and amend either indenture without the
consent of any holder for any of the following purposes:
- to name a successor entity to National City Corporation,
- to add to our covenants for the benefit of the holders of all or any
series of securities,
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- to add to the events of default,
- to add to, delete from or revise the conditions, limitations and
restrictions on the authorized amount, terms or purposes of issue,
authentication and delivery of securities as set forth in the applicable
indenture,
- to establish the form or terms of securities of any series and any
related coupons,
- to provide for the acceptance of appointment by a successor trustee,
- to cure any ambiguity, defect or inconsistency in the applicable
indenture, provided that such action is not inconsistent with the
provisions of that indenture and does not materially adversely affect the
interests of the applicable holders, or
- to modify, eliminate or add to the provisions of either indenture to
conform our or the trustee's obligations under the applicable indenture
to the Trust Indenture Act of 1939, as amended. (Section 901)
CALCULATION OF OUTSTANDING DEBT SECURITIES
To calculate whether the holders of a sufficient principal amount of the
outstanding securities have given any request, demand, authorization, direction,
notice, consent or waiver under either indenture:
- In the case of Original Issue Discount Securities, the principal amount
that may be included in the calculation is the amount of principal that
would be declared to be due and payable upon a declaration of
acceleration according to the terms of that Original Issue Discount
Security as of the date of the calculation.
- Any securities owned by us, or owned by any other obligor of the
securities or any affiliate of ours or any other obligor, should be
disregarded and deemed not to be outstanding for purposes of the
calculation. (Section 101)
ADDITIONAL PROVISIONS
Other than the duty to act with the required standard of care during an
event of default, the trustee is not obligated to exercise any of its rights or
powers under the applicable indenture at the request or direction of any of the
holders of the securities, unless the holders have offered the trustee
reasonable indemnification. (Section 602) Each indenture provides that the
holders of a majority in principal amount of outstanding securities of any
series may, in certain circumstances, direct the time, method and place of
conducting any proceeding for any remedy available to the trustee, or exercising
any trust or other power conferred on the trustee. (Section 512)
No holder of a security of any series will have the right to institute any
proceeding for any remedy under the applicable indenture, unless:
- the holder has provided the trustee with written notice of a continuing
event of default regarding the holder's series of securities,
- the holders of at least 25% in principal amount of the outstanding
securities of a series have made a written request, and offered indemnity
satisfactory to the trustee, to the trustee to institute a proceeding for
remedy,
- the trustee has failed to institute the proceeding within 60 days after
its receipt of such notice, request and offer of indemnity, and
- the trustee has not received a direction during such 60 day period
inconsistent with such request from the holders of a majority in
principal amount of the outstanding securities of that series. (Section
507)
However, the holder of any security will have an absolute and unconditional
right to receive payment of the principal, any premium, any interest or any
additional amounts in respect of such security on or after the due dates
expressed in such security and to institute suit for the enforcement of any such
payment. (Section 508)
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We are required to file annually with the trustee a certificate of no
default, or specifying any default that exists. (Section 1005)
REGARDING THE TRUSTEE
We and our subsidiaries maintain deposit accounts and conduct various
banking transactions with the trustee. The trustee and its subsidiaries maintain
deposit accounts and conduct various banking transactions with us and our
subsidiaries.
SENIOR DEBT SECURITIES
The Senior Debt Securities will be unsecured and will rank equally among
themselves and with all of our other unsecured and non-subordinated debt.
EVENTS OF DEFAULT
The following will be events of default under the Senior Indenture with
respect to the Senior Debt Securities of a series:
- failure to pay any interest or any additional amounts on any Senior Debt
Security of that series when due, and continuance of such default for 30
days,
- failure to pay principal of, or any premium on, any Senior Debt Security
of that series when due,
- failure to deposit any sinking fund payment for a Senior Debt Security of
that series when due,
- failure to perform any of our other covenants or warranties in the Senior
Indenture or Senior Debt Securities (other than a covenant or warranty
included in that indenture solely for the benefit of a different series
of Senior Debt Securities), which has continued for 90 days after written
notice as provided in the Senior Indenture,
- acceleration of indebtedness in a principal amount greater than
$25,000,000 for money borrowed by us or any Principal Constituent Bank
under the terms of the instrument under which such debt is issued or
secured, and the acceleration is not annulled, or the indebtedness is not
discharged, within 30 days after written notice is given according to the
Senior Indenture,
- certain events in bankruptcy, insolvency or reorganization of us or any
Principal Constituent Bank, and
- any other event of default regarding that series of Senior Debt
Securities. (Section 501)
SUBORDINATED DEBT SECURITIES
The Subordinated Debt Securities will be unsecured and will be subordinate
and junior in right of payment, to the extent and in the manner set forth below,
to the prior payment in full of all Senior Indebtedness. (Subordinated
Indenture, Article Fifteen) The term "Senior Indebtedness" is defined below.
SUBORDINATION
If any of the following circumstances has occurred, payment in full of all
principal, premium and interest must be made or provided for with respect to all
outstanding Senior Indebtedness before we can make any payment or distribution
of principal, any premium, any additional amounts or interest on the
Subordinated Debt Securities:
- any insolvency, bankruptcy, receivership, liquidation,
reorganization or other similar proceeding relating to us or to our
property has been commenced,
- any voluntary or involuntary liquidation, dissolution or other
winding up relating to us has been commenced, whether or not such
event involves our insolvency or bankruptcy,
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- any Subordinated Debt Security of any series is declared or
otherwise becomes due and payable before its maturity date because
of any event of default under the Subordinated Indenture, provided
that such declaration has not been rescinded or annulled as provided
in the Subordinated Indenture, or
- any default with respect to Senior Indebtedness which permits its
holders to accelerate the maturity of the Senior Indebtedness has
occurred and is continuing, and either (a) notice of such default
has been given to us and to the trustee and judicial proceedings are
commenced in respect of such default within 180 days after notice in
the case of a default in the payment of principal or interest, or
within 90 days after notice in the case of any other default, or (b)
any judicial proceeding is pending with respect to any such default.
(Subordinated Indenture, Article Fifteen)
The term "Senior Indebtedness" means:
- the principal and any premium or interest for money borrowed or
purchased by us,
- the principal and any premium or interest for money borrowed or
purchased by another person and guaranteed by us,
- any deferred obligation for the payment of the purchase price of
property or assets evidenced by a note or similar agreement,
- an obligation arising from direct credit substitutes, and
- any obligation associated with derivative products such as interest
and foreign exchange rate contracts, commodity contracts and similar
arrangements,
in each case, whether outstanding on the date the Subordinated Indenture became
effective, or created, assumed or incurred after that date.
The definition of Senior Indebtedness excludes any indebtedness that:
- expressly states that it is junior to, or ranks equally in right of
payment with, the Subordinated Debt Securities, or
- is identified as junior to, or equal in right of payment with, the
Subordinated Debt Securities in any resolution of our Board of
Directors or in any supplemental indenture. (Subordinated Indenture,
Section 101)
As of March 31, 1999, we had approximately $5.2 million in principal amount
of debt which would constitute Senior Indebtedness, and $1.925 billion in
principal amount of debt which would rank equally with the Subordinated Debt
Securities.
EVENTS OF DEFAULT
Events of default under the Subordinated Indenture are limited to certain
events of bankruptcy, insolvency or reorganization of us or any Principal
Constituent Bank.
There is no right of acceleration of the payment of principal of a series
of Subordinated Debt Securities upon a default in the payment of principal or
interest, nor upon a default in the performance of any covenant or agreement in
the Subordinated Debt Securities of a particular series or in the Subordinated
Indenture. In the event of a default in the payment of interest or principal,
the holders of Senior Indebtedness will be entitled to be paid in full before
any payment can be made to holders of Subordinated Debt Securities. However, a
holder of a Subordinated Debt Security (or the trustee under the Subordinated
Indenture on behalf of all of the holders of the affected series) may, subject
to certain limitations and conditions, seek to enforce overdue payments of
interest or principal of the Subordinated Debt Securities.
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UNITED STATES TAXATION
The following summary of the principal United States federal income tax
consequences of the ownership of the securities is based on the Internal Revenue
Code of 1986, as amended (the "Code"), existing and proposed United States
Treasury Regulations (the "Treasury Regulations"), and existing administrative
and judicial precedent, all as in effect as of the date hereof, all of which are
subject to change at any time, possibly with retroactive effect. The legal
conclusions in this discussion under the caption "United States Taxation" are
not binding upon the Internal Revenue Service (the "IRS") or any other
administrative or judicial agency, authority or tribunal.
This summary deals only with securities held as capital assets by their
initial purchasers and does not deal with purchasers that do not acquire their
securities as part of the initial distribution or with special classes of
holders, such as dealers in securities or currencies, financial institutions,
tax-exempt organizations, insurance companies, controlled foreign corporations
or persons holding securities as part of a straddle, hedge, conversion
transaction or other integrated investment. It also does not address securities
held by persons who are not Holders (as defined below) or held by persons whose
functional currency is not the U.S. dollar.
Prospective purchasers of securities should consult their own tax advisors
concerning the application of the United States federal income tax laws to their
particular situations, as well as tax consequences under state or local, or
foreign, tax laws.
UNITED STATES HOLDERS ONLY
As used herein, the term "Holder" means a holder of a security who or that
is:
- a citizen or resident of the United States,
- a corporation or partnership (including an entity treated as a
corporation or partnership for United States federal income tax purposes)
created or organized in or under the laws of the United States, any State
thereof or the District of Columbia,
- an estate, the income of which is subject to United States federal income
taxation regardless of its source, or
- a trust, if a U.S. court is able to exercise primary supervision over the
administration of the trust and one or more U.S. persons have the
authority to control all substantial decisions of the trust.
PAYMENTS OF INTEREST
Interest (including qualified stated interest, as defined under "Original
Issue Discount Securities" below) paid on a security will generally be taxable
to a Holder as ordinary interest income at the time it accrues or is received
(whether actually or constructively) in accordance with the Holder's method of
accounting for federal tax purposes. Special rules governing the treatment of
interest on Original Issue Discount Securities are described below.
ORIGINAL ISSUE DISCOUNT SECURITIES
General. A security with an issue price that is less than its stated
redemption price at maturity will generally be considered to have been issued at
an original issue discount ("OID") for federal income tax purposes (an "Original
Issue Discount Security"). The "issue price" of an issue of securities for cash
will be the first price at which a substantial amount of such securities is sold
to the public (excluding sales to bond houses, brokers, underwriters, and the
like). The "stated redemption price at maturity" of a security will equal the
sum of all payments to be made thereunder, other than payments of qualified
stated interest (as defined below). As a result, a security generally will have
OID if it provides for payments of interest other than qualified stated
interest. "Qualified stated interest" is stated interest that is unconditionally
payable in cash or in property (other than debt instruments of the issuer) at
least annually at a single fixed rate that appropriately takes into account the
length of the interval between payments.
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If the difference between a security's stated redemption price at maturity
and its issue price is less than 1/4 of 1 percent of the stated redemption price
at maturity multiplied by the number of complete years to maturity, then the
security will not be considered to have OID, but will be considered to have de
minimis OID. If the excess of a security's stated redemption price at maturity
over its issue price is de minimis then, unless a Holder elects to treat de
minimis OID in the manner described above in respect of OID, a Holder will be
required to recognize capital gain with respect to such de minimis OID as stated
principal payments on the security are made. The amount of such gain with
respect to each such principal payment will equal the product of the total
amount of the security's de minimis OID and a fraction, the numerator of which
is the amount of the principal payment made and the denominator of which is the
total stated principal amount of the Security.
Holders of Original Issue Discount Securities having a maturity of more
than one year from their date of issue are required to include OID in income
calculated on a constant yield method without regard to when the cash payments
attributable to such income are received. The amount of OID includible in income
by a Holder of an Original Issue Discount Security is the sum of the daily
portions of OID for each day during the taxable year or portion of the taxable
year in which it holds such Original Issue Discount Security. The daily portion
is determined by allocating to each day in any accrual period a pro rata portion
of the OID allocable to that accrual period. An "accrual period" is each period
between payment dates (including, if shorter, the period from the issue date to
the first interest payment date and the period from the last interest payment
date to the maturity date), although an accrual period may be of any length and
the accrual periods may vary in length over the term of an Original Issue
Discount Security, provided that each accrual period is no longer than one year
and each scheduled payment of principal or interest occurs either on the first
or final day of an accrual period. The amount of OID allocable to an accrual
period is the excess of (a) the product of the Original Issue Discount
Security's adjusted issue price at the beginning of such accrual period and its
yield to maturity (determined on the basis of a constant interest rate and
compounded at the end of each accrual period and properly adjusted for the
length of the accrual period) over (b) the amount of qualified stated interest
allocable to the accrual period. The "adjusted issue price" of the Original
Issue Discount Security at the beginning of any accrual period is the issue
price of such Original Issue Discount Security, plus the amount of accrued OID
for all prior accrual periods, minus any amount of prior payments on the
Original Issue Discount Security that were not qualified stated interest
payments.
Under the foregoing rules, Holders will generally have to include in income
increasingly greater amounts of OID in successive accrual periods.
Variable Rate Original Issue Discount Securities. It is possible that
securities that (a) bear interest initially at a fixed rate followed by a
variable rate that is not approximately the same as the initial fixed rate on
the date of issue or (b) bear interest at a variable rate that is not a single
qualified floating rate or objective rate would be subject to the OID rules
regardless of the price at which such securities are issued. Accordingly,
Holders (including cash basis Holders) may be required to report income in
respect of such securities before the receipt of cash payments attributable
thereto under the rules described above. The applicable prospectus supplement
will contain a discussion of any additional relevant United States federal
income tax consequences with respect to an issuance of variable rate Original
Issue Discount Securities.
Acquisition Premium. A Holder who purchases an Original Issue Discount
Security for an amount that is greater than its adjusted issue price as of the
purchase date and less than or equal to the sum of all amounts payable on the
Original Issue Discount Security after the purchase date other than payments of
qualified stated interest, will be considered to have purchased the Original
Issue Discount Security at an "acquisition premium." Under the acquisition
premium rules, the amount of OID that such Holder must include in its gross
income with respect to such Original Issue Discount Security for any taxable
year (or portion thereof) in which the Holder holds the Original Issue Discount
Security will be reduced (but not below zero) by the portion of the acquisition
premium properly allocable to such year.
Optional Redemption. For purposes of determining OID, if National City
Corporation has an option to redeem a security prior to its stated maturity,
such option will be presumed to be exercised if and on such dates that, by
utilizing any date on which such security may be redeemed as the maturity date
and the amount payable on such date in accordance with the terms of such
security (the "redemption price") as the stated redemption
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price at maturity, the yield on the security would be minimized. If such option
is not in fact exercised when presumed to be exercised, the security would be
treated as if it were redeemed, and a new security were issued, on the presumed
exercise date for an amount equal to the redemption price.
Acceleration of Maturity. The applicable prospectus supplement will contain
a discussion of any additional relevant United States federal income tax
consequences relating to an acceleration of the maturity of an Original Issue
Discount Security.
Short-Term Debt Securities. In general, an individual or other cash method
Holder of a security that matures one year or less from its date of issuance (a
"Short-Term Discount Security") is not required to accrue OID for United States
federal income tax purposes unless it elects to do so. Accrual method Holders
and certain other holders, including banks, regulated investment companies and
dealers in securities, are required to accrue OID on Short-Term Discount
Securities on a straight-line basis unless an election is made to accrue the OID
under the constant yield method (based on daily compounding). In the case of a
Holder not required and not electing to include OID in income currently, any
gain realized on the sale, exchange or retirement of the Short-Term Discount
Security will be ordinary income to the extent of the OID accrued on a
straight-line basis through the date of sale, exchange or retirement. Holders
who are not required to and do not elect to accrue OID on Short-Term Discount
Securities will be required to defer deductions for interest on borrowings
allocable to Short-Term Discount Securities in an amount not exceeding the
deferred income until the deferred income is realized.
Reporting. National City Corporation is required to report to the IRS the
amount of OID accrued on Original Issue Discount Securities held of record by
Holders other than certain exempt holders, such as corporations and tax-exempt
organizations. The amount required to be reported by National City Corporation
may not be equal to the amount of OID required to be reported as taxable income
by a Holder of such Original Issue Discount Securities.
DEBT SECURITIES PURCHASED AT A MARKET DISCOUNT OR PREMIUM
Market Discount. If a Holder (a) purchases a security for an amount that is
less than its issue price, and (b) the security's stated redemption price at
maturity exceeds the Holder's purchase price by more than a de minimis amount,
the amount of the difference will be treated as "market discount." In the case
of an Original Issue Discount Security, market discount exists if (x) the
Holder's purchase price is less than such security's issue price, and (y) the
security's revised issue price exceeds the Holder's purchase price by more than
a de minimis amount. The de minimis test used for this purpose is the same de
minimis standard described above under "Original Issue Discount Securities."
Under the market discount rules, a Holder will be required to treat any
partial principal payment (or, in the case of an Original Issue Discount
Security, any payment that does not constitute qualified stated interest) on, or
any gain realized on the sale, exchange, retirement or other disposition of, a
security as ordinary income to the extent of the lesser of (a) the amount of
such payment or realized gain or (b) the market discount that has not previously
been included in income and is treated as having accrued on such security at the
time of such payment or disposition. Market discount will be considered to
accrue ratably during the period from the date of acquisition to the maturity
date of the security, unless the Holder elects to accrue market discount over
such period on a constant yield method. The amount of accrued market discount
will be reduced by the amount of any partial principal payment (or, in the case
of an Original Issue Discount Security, any payment that does not constitute
qualified stated interest) included in gross income under the market discount
rules.
A Holder may be required to defer the deduction of all or a portion of the
interest paid or accrued on any indebtedness incurred or maintained to purchase
or carry a security with market discount until the maturity of the security or
its earlier disposition in a taxable transaction. The amount so deferred is that
portion of any interest expense on such indebtedness, net of the interest
(including OID) includible in gross income, but only to the extent of the
allocable portion of the accrued market discount.
A Holder may elect to include market discount in income currently as it
accrues (either ratably or on a constant yield method using semiannual
compounding), in which case the rules described above regarding the
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treatment as ordinary income of gain upon the disposition of the security and
upon the receipt of certain cash payments and regarding the deferral of interest
deductions will not apply. Generally, such currently included market discount is
treated as ordinary income for United States federal income tax purposes.
Amortizable Bond Premium. A Holder that purchases a security for an amount
in excess of the amount payable at maturity will be considered to have purchased
such security at a premium equal to such excess and may elect to amortize such
premium using a constant yield method over the term of the security. Any such
election will apply to all bonds (other than bonds the interest on which is
excludible from gross income) acquired by the Holder on or after the first day
of the first taxable year to which such election applies, and is irrevocable
without the consent of the IRS.
PURCHASE, SALE, EXCHANGE AND RETIREMENT OF THE DEBT SECURITIES
A Holder's adjusted tax basis in a security will be its U.S. dollar cost,
increased by the amount of any OID or accrued market discount included in the
Holder's income with respect to the security and reduced by the amount of any
amortizable bond premium, by principal payments received by the Holder and, in
the case of Original Issue Discount Securities, by the amount of any interest
payments on the security that are not qualified stated interest payments. A
Holder will recognize gain or loss on the sale, exchange or retirement of a
Security equal to the difference between the amount realized on the sale,
exchange or retirement and the Holder's adjusted tax basis in the security.
Except to the extent described under "Short-Term Debt Securities" and "Debt
Securities Purchased at a Market Discount or Premium" above, gain or loss
recognized on the sale, exchange or retirement of a security will be capital
gain or loss and will be long-term capital gain or loss if the security was held
for more than one year.
BACKUP WITHHOLDING AND INFORMATION REPORTING
A Holder may be subject to backup withholding at a rate of 31% on, and
information reporting with respect to, payments of principal, premium or
interest (including OID, if any) on, and the proceeds of disposition of, a
security. Backup withholding will apply only if the Holder (a) fails to furnish
its Taxpayer Identification Number ("TIN") which, for an individual, would be
his or her Social Security Number, (b) furnishes an incorrect TIN, (c) is
notified by the IRS that it has failed to properly report payments of interest
and dividends or (d) under certain circumstances, fails to certify, under
penalty of perjury, that it has furnished a correct TIN and that it has not been
notified by the IRS that it is subject to backup withholding for failure to
report interest and dividend payments. Backup withholding will not apply with
respect to payments made to certain exempt recipients, such as corporations and
tax-exempt organizations. Holders should consult their tax advisers regarding
their qualification for exemption from backup withholding and the procedure for
obtaining such an exemption.
The amount of any backup withholding from a payment to a Holder will be
allowed as a credit against such Holder's United States federal income tax
liability and may entitle such Holder to a refund of federal income tax,
provided that the required information is furnished to the IRS.
Recently, the Treasury Department issued new regulations (the "New
Regulations") which make certain modifications to the backup withholding and
information reporting rules described above. The New Regulations attempt to
unify certification requirements and modify reliance standards. The New
Regulations will generally be effective for payments made after December 31,
1999, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
To avoid potential adverse United States federal tax consequences to
holders of the securities, Bearer Securities, including securities in permanent
global form that are either Bearer Securities or exchangeable for Bearer
Securities, may not be offered or sold during the restricted period (as defined
in Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)) within the United States
or to United States persons (each as defined below) other than to an office of a
financial institution (as defined in Treasury Regulations Section
1.165-12(c)(1)(v)) which is located outside the United States. That office must
be purchasing for its own account or for resale or for the
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account of certain customers, and must provide a certificate stating that it
agrees to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of
the Internal Revenue Code and the Treasury Regulations thereunder, or to certain
other persons described in Treasury Regulations Section 1.163-5(c)(2)(
i)(D)(1)(iii)(B).
Bearer Securities may not be delivered in connection with their sale during
the restricted period within the United States. Any distributor (as defined in
Treasury Regulations Section 1.163-5(c)(2)(i)(D)(4)) participating in the
offering or sale of Bearer Securities must certify that:
- it will not offer or sell during the restricted period any Bearer
Securities within the United States or to United States persons (other than
the persons described above),
- it will not deliver any Bearer Securities during the restricted
period within the United States, and
- it has in effect procedures reasonably designed to ensure that its
employees and agents who are directly engaged in selling the Bearer
Securities are aware of the restrictions on offers and sales described
above.
No Bearer Security, other than a temporary global security may be
delivered, nor may interest be paid on any Bearer Security until we receive:
- a Depositary Tax Certification in the case of temporary global
securities, or
- an Owner Tax Certification in all other cases.
Bearer Securities will bear a legend similar to the following: "Any United
States person who holds this obligation will be subject to limitations under the
United States income tax laws, including the limitations provided in Sections
165(j) and 1287(a) of the Internal Revenue Code."
Purchasers of Bearer Securities may be affected by certain United States
tax laws. Such laws will be discussed in the applicable prospectus supplement.
As used in this section "United States person" means any citizen or
resident of the United States, any corporation or partnership or (including an
entity treated as a corporation or partnership for United States federal income
tax purposes) created or organized in or under the laws of the United States,
any State thereof or the District of Columbia, any estate the income of which is
subject to United States federal income taxation regardless of its source, and a
trust if both (i) a U.S. court is able to exercise primary supervision over the
administration of the trust and (ii) one or more United States persons have the
authority to control all substantial decisions of the trust, and "United States"
means the United States of America, including all of its states, the District of
Columbia and its possessions.
PLAN OF DISTRIBUTION
We may sell the securities:
- through underwriters,
- through agents, or
- directly to a limited number of institutional purchasers or to a single
purchaser.
The applicable prospectus supplement will set forth the terms of the
offering of the securities, including the following:
- the name or names of any underwriters,
- the purchase price and the proceeds we will receive from such sale,
- any underwriting discounts and other items constituting underwriters'
compensation,
- any discounts or concessions allowed or reallowed or paid to dealers, and
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<PAGE> 26
- any securities exchanges on which the securities of such series may be
listed.
If underwriters are used in the sale, the securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
securities may be either offered to the public through underwriting syndicates
represented by managing underwriters or by underwriters without a syndicate. The
obligations of the underwriters to purchase securities will be subject to
certain conditions precedent and the underwriters will be obligated to purchase
all the securities of a series if any are purchased. Any initial public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time.
Securities may be sold directly by us or through agents designated by us
from time to time. Any agent involved in the offer or sale of the securities in
respect of which this prospectus is delivered will be named and any commissions
payable by us to such agent will be described in the prospectus supplement.
Unless otherwise indicated in the prospectus supplement, any agent will be
acting on a best efforts basis for the period of its appointment.
We may authorize agents or underwriters to solicit offers by certain types
of institutions to purchase securities from us at the public offering price set
forth in the prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. The
conditions to these contracts and the commissions payable for solicitation of
such contracts will be set forth in the applicable prospectus supplement.
Agents and underwriters may be entitled to indemnification by us against
certain civil liabilities, including liabilities under the Securities Act of
1933, or to contribution with respect to payments which the agents or
underwriters may be required to make relating to such liabilities. Agents and
underwriters may be customers of, engage in transactions with, or perform
services for, us in the ordinary course of business.
Each series of securities will be a new issue of securities with no
established trading market. Any underwriter may make a market in such
securities, but will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for any securities.
Certain of the underwriters and their associates may be customers of,
engage in transactions with, and perform services for us, in the ordinary course
of business.
LEGAL OPINIONS
Certain legal matters, including the validity of the securities, will be
passed upon by the National City Corporation Law Department, and for any
underwriters or agents by Brown & Wood LLP, One World Trade Center, New York,
New York 10048.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-K for the year
ended December 31, 1998, as set forth in their report, which is incorporated in
this prospectus by reference which, as to the years 1997 and 1996, is based in
part on the report of KPMG LLP, independent auditors. Our consolidated financial
statements are incorporated by reference in reliance on their report, given on
their authority as experts in accounting and auditing.
The consolidated financial statements of First of America Bank Corporation
("FOA") in FOA's annual report on Form 10-K as of December 31, 1997, and for
each of the years in the two-year period ended December 31, 1997, have been
incorporated herein by reference and in this prospectus in reliance upon the
report of KPMG LLP, independent certified public accountants, incorporated by
reference, and upon the authority of said firm as experts in accounting and
auditing.
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$700,000,000
NATIONAL CITY CORPORATION
6 7/8% SUBORDINATED NOTES DUE MAY 15, 2019
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
KEEFE, BRUYETTE & WOODS, INC.
NATCITY INVESTMENTS, INC.
PAINEWEBBER INCORPORATED
SALOMON SMITH BARNEY
APRIL 28, 1999
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