EX-99.1 2 ex99-1.htm EXHIBIT 99.1 ex99-1

Exhibit 99.1

      FOR MORE INFORMATION CONTACT:

     
Thomas A. Richlovsky
Senior Vice President & Treasurer
(216) 575-2126
 
Jeffrey C. Douglas
Vice President & Assistant Treasurer
(216) 222-9849
 
www.national-city.com
 
For Immediate Release

NATIONAL CITY REPORTS SECOND QUARTER EARNINGS

      CLEVELAND, Ohio—July 17, 2000—National City Corporation (NYSE: NCC) today reported second quarter net income of $342.4 million, or $.56 per diluted share, unchanged from the $.56 per diluted share earned in the second quarter of 1999. For the first half of 2000, net income was $663.7 million, or $1.09 per diluted share.

      Included in second quarter 2000 net income were two nonrecurring items, the combination of which increased pre-tax income by $15.8 million, or $.02 per share after tax. As part of a previously-announced balance sheet restructuring initiative intended to improve asset returns and capital position, reduce reliance upon purchased funding and lower sensitivity to rising interest rates, National City sold $2.0 billion of student loans to various third parties resulting in a pre-tax gain of $74.2 million, or $.08 per share after tax. The Corporation also recognized pre-tax losses of $58.4 million, or $.06 per share after tax on the sale and impairment of $4.0 billion of primarily lower yielding, fixed-rate investment securities. Excluding these two nonrecurring items, second quarter 2000 net income per diluted share was $.54, and returns on average common equity and average assets were 22.4% and 1.54%, respectively.

      Chairman and CEO David A. Daberko commented, “We are pleased with the progress made this quarter to strategically focus on technology, customer service, branding and balance sheet efficiency. Our core businesses performed well, and the fee-based businesses especially so. The quarter also showed evidence of growth in net interest income and stabilization of net interest margin compared to the first quarter. Most directly affecting our reported results were the balance sheet enrichment strategies initiated in the second quarter, which have reduced our reliance on purchased funding, improved our capital position and reduced our liability sensitivity.”

      Taxable-equivalent net interest income for the second quarter of 2000 was $749.0 million, up from $740.9 million in the 2000 first quarter, but down modestly from $758.2 million in last year’s second quarter. The 2000 second quarter margin of 3.80% was up slightly from 3.79% in the first quarter, but down from 4.04% in the 1999 second quarter. Higher-cost funding in a rising rate environment combined with the Corporation’s liability sensitivity and increasing competition in the loan markets acted to narrow net interest income and margin in the first half of 2000. Positive effects of balance sheet enrichment strategies introduced in the first half of 2000 began to be realized through net interest income improvement and net interest margin stabilization in the second quarter.

      Loan demand in National City’s markets continued to be strong. Average loans for the second quarter totaled $62.5 billion. Excluding the impact of the sales of student loans and certain low-spread adjustable-rate mortgage loans, average loans for the second quarter grew $2.0 billion over the first quarter of 2000 and represented an annualized growth rate of over 13%. Strong growth in commercial loans drove the second quarter increase while solid growth in the residential real estate, home equity, credit card and consumer loan portfolios also contributed to

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the overall increase. Average mortgage loans held for sale increased to $2.8 billion in the second quarter of 2000 from $2.1 billion last quarter, fueled by a 41% increase in origination volume.

      For the second quarter of 2000, fees and other income, excluding the effects of nonrecurring items and divested businesses, grew 15% to $600.1 million from $520.0 million for the same quarter last year and 8% over the $557.4 million reported in the first quarter of 2000. On this same basis, fees and other income for the first half of 2000 reached $1,157.5 million, up 12% from $1,035.0 million in the first half of 1999. Growth in mortgage banking revenue, deposit fees, item processing revenue, and trust and investment management fees led to the improvement in fees and other income. Purchase acquisitions in the second half of 1999 along with second quarter 2000 sales of mortgage servicing rights and low-spread adjustable-rate mortgage loans contributed to the growth in mortgage banking revenue. Partially offsetting the effects of these items on mortgage banking revenue was the decision to retain a portion of the Corporation’s higher-quality, nonconforming residential mortgage production during 2000 to benefit future periods, while foregoing gains on whole-loan sales in the current year. National City’s residential loan servicing portfolio grew to $52.5 billion at June 30, 2000, up 12% from $46.7 billion at year-end 1999 and up 27% from $41.3 billion a year ago.

      In the second quarter of 2000, pre-tax securities gains, primarily from equity securities and excluding nonrecurring items, totaled $15.6 million, or $.02 per share after tax, down from $25.2 million, or $.03 per share after tax, in the second quarter of 1999. On this same basis, for the first six months of 2000, pre-tax securities gains totaled $37.1 million, or $.04 per share after tax, down from $48.9 million, or $.05 per share after tax, for the same period last year.

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      Noninterest expense was $785.1 million in the second quarter of 2000, compared to $759.1 million for the first quarter and $757.3 million in the 1999 second quarter. The 1999 amount included $37.8 million in pre-tax charges pursuant to a plan to improve the cost-efficiency of branch office facilities, along with certain unrelated executive contract obligations. On a linked-quarter basis, higher expenses reflected a write-down of residual values on the Corporation’s auto lease portfolio, along with volume-driven expenses. Compared to the second quarter of 1999, noninterest expense rose due to the aforementioned auto lease residual value write-down, increased technology and marketing investment to support strategic growth initiatives, and expenses and intangibles amortization from the purchase acquisitions of companies whose costs were not included in the 1999 second quarter base. Partially offsetting these items were lower expenses related to the business lines sold by National Processing in the second quarter of 1999.

      Credit quality continued to be very strong in the second quarter. Net charge-offs totaled $68.7 million, or .44% of average loans, compared to $66.1 million, or .44% of average loans in the first quarter of 2000, and $59.9 million, or .42% of average loans in the second quarter of 1999. At June 30, 2000, the allowance for loan losses was $970.4 million, or 1.58% of loans. Nonperforming assets at June 30, 2000 were $339.3 million, or .55% of total loans and real estate owned, compared to $314.1 million at March 31, 2000 and $249.5 million at June 30, 1999. At June 30, 2000, real estate mortgage loans, which historically have had annual loss ratios of less than .06%, comprised nearly 55% of nonperforming assets.

      Total assets were $84.6 billion at June 30, 2000, and total stockholders’ equity was $6.1 billion. Equity as a percentage of assets was 7.25% at June 30, 2000, compared to 6.57% at year-end 1999.

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      Mr. Daberko’s comments contain forward-looking statements that involve significant risks and uncertainties, including changes in general economic and financial market conditions and the Corporation’s ability to execute its business plans. Although management believes the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially.

      National City Corporation is an $85 billion financial holding company headquartered in Cleveland, Ohio. National City operates banks and other financial services subsidiaries principally in Ohio, Michigan, Pennsylvania, Indiana, Kentucky and Illinois.

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UNAUDITED

National City Corporation
Financial Highlights
(Dollars in Millions, Except Per Share Amounts)

                                                                             
Six Months Ended
2000 1999 June 30,
2Q00/
Second First Fourth Third Second 2Q99
Quarter Quarter Quarter Quarter Quarter % Change 2000 1999 % Change
Tax-equivalent net interest income $ 749.0 $ 740.9 $ 756.4 $ 757.7 $ 758.2 (1.2 )% $ 1,489.9 $ 1,522.9 (2.2 )%
Provision for loan losses 68.7 66.3 66.6 55.5 59.6 15.4 135.0 127.6 5.8
Fees and other income - recurring 600.1 557.4 581.1 528.6 537.6 11.6 1,157.5 1,091.7 6.0
Securities gains before non- recurring items 15.6 21.5 37.1 20.3 25.2 (38.0 ) 37.1 48.9 (24.0 )
Noninterest expense - recurring 785.1 759.1 780.1 705.9 719.5 9.1 1,544.2 1,458.7 5.9
Net income before non - recurring items 332.1 321.3 344.9 356.5 354.9 (6.4 ) 653.4 702.8 (7.0 )
Nonrecurring items:
Pre-tax 15.8 — (1.8 ) — .3 — 15.8 37.1 —
After-tax 10.3 — (1.4 ) — (.4 ) — 10.3 2.7 —
 
Net income $ 342.4 $ 321.3 $ 343.5 $ 356.5 $ 354.5 (3.4 ) $ 663.7 $ 705.5 (5.9 )
Net income per common share:
Basic $ .56 $ .53 $ .56 $ .58 $ .56 — $ 1.09 $ 1.11 (1.8 )
Diluted .56 .53 .55 .57 .56 — 1.09 1.10 (0.9 )
Diluted — adjusted (1) .54 .53 .56 .57 .56 (3.6 ) 1.07 1.09 (1.8 )
Diluted — cash basis (1)(2) .57 .56 .59 .59 .59 (3.4 ) 1.13 1.15 (1.7 )
Dividends paid per common share .285 .285 .27 .27 .26 9.6 .57 .52 9.6
 
Performance Ratios (1):
Return on average common equity 22.43 % 22.45 % 22.93 % 23.79 % 22.99 % 22.44 % 21.93 %
Return on average assets 1.54 1.50 1.60 1.71 1.71 1.52 1.68
Net interest margin 3.80 3.79 3.87 4.03 4.04 3.79 4.03
Efficiency ratio 58.19 58.47 58.33 54.88 55.52 58.33 55.79
 
Assets $ 84,601 $ 86,895 $ 87,121 $ 85,058 $ 84,022 0.7 %
Loans 61,570 61,857 60,204 58,001 57,317 7.4
Securities 10,719 13,783 14,904 15,811 14,994 (28.5 )
Deposits 49,988 50,613 50,066 50,395 52,091 (4.0 )
Stockholders’ equity 6,133 5,918 5,728 5,914 5,867 4.5
Book value per common share 10.05 9.71 9.39 9.54 9.44 6.5
Market value per common share 17.06 20.63 23.69 26.69 32.75 (47.9 )
 
Nonrecurring Items Detail:
Gain on sale of student loans $ 74.2 $ — $ — $ — $ — $ 74.2 $ —
Loss on sale and impairment of certain securities (58.4 ) — — — — (58.4 ) —
Gain on sale of CEFT stock — — — — 32.1 — 32.1
Gain on sale of EPS — — — — — — 95.7
Gain on sale of SVS — — — — — — 6.1
NPI business line divestitures, net of minority interest — — (1.8 ) — 6.0 — (59.0 )
Facilities charge and executive contract obligations — — — — (37.8 ) — (37.8 )
Nonrecurring items pre-tax $ 15.8 $ — $ (1.8 ) $ — $ .3 $ 15.8 $ 37.1

(1)   Excludes nonrecurring items.
(2)   Excludes amortization of goodwill and other intangible assets.

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UNAUDITED

National City Corporation
Consolidated Statements of Income
(Dollars in Thousands, Except Per Share Amounts)

                                                               
Six Months Ended
2000 1999 June 30,
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter 2000 1999
Interest Income:
Loans $ 1,433,996 $ 1,342,266 $ 1,296,074 $ 1,224,469 $ 1,205,526 $ 2,776,262 $ 2,417,829
Securities:
Taxable 176,765 202,255 212,596 204,563 195,875 379,020 409,173
Exempt from Federal income taxes 10,914 11,171 13,091 11,245 13,465 22,085 23,664
Dividends 13,989 13,463 12,120 12,612 12,571 27,452 23,186
Federal funds sold and security resale agreements 6,802 6,958 8,290 8,656 9,903 13,760 20,916
Other short-term investments 4,008 3,906 4,949 3,189 2,925 7,914 5,987
Total interest income 1,646,474 1,580,019 1,547,120 1,464,734 1,440,265 3,226,493 2,900,755
 
Interest Expense:
Deposits 466,241 443,939 425,849 397,516 393,145 910,180 812,168
Federal funds borrowed and security repurchase agreements 85,727 102,568 101,114 87,901 79,352 188,295 179,046
Borrowed funds 77,782 43,281 41,159 37,632 36,957 121,063 65,441
Long-term debt and capital securities 276,069 257,775 231,534 194,206 181,867 533,844 339,021
Total interest expense 905,819 847,563 799,656 717,255 691,321 1,753,382 1,395,676
Net interest income 740,655 732,456 747,464 747,479 748,944 1,473,111 1,505,079
Provision for loan losses 68,691 66,326 66,622 55,476 59,542 135,017 127,576
Net interest income after provision for loan losses 671,964 666,130 680,842 692,003 689,402 1,338,094 1,377,503
 
Noninterest Income:
Item processing revenue 100,575 94,369 98,471 91,519 105,089 194,944 226,792
Service charges on deposits 108,073 106,313 108,321 107,430 104,834 214,386 204,697
Trust and investment management fees 90,054 83,624 82,229 81,097 80,683 173,678 162,530
Mortgage banking revenue 147,610 111,294 126,011 81,105 89,181 258,904 182,176
Card-related fees 45,312 43,646 48,725 48,383 49,259 88,958 94,569
Other 182,704 118,120 115,516 119,080 114,585 300,824 263,758
Total fees and other income 674,328 557,366 579,273 528,614 543,631 1,231,694 1,134,522
Securities gains (losses) (42,780 ) 21,533 37,095 20,353 57,224 (21,247 ) 80,912
Total noninterest income 631,548 578,899 616,368 548,967 600,855 1,210,447 1,215,434
 
Noninterest Expense:
Salaries, benefits and other personnel 401,309 406,871 400,416 367,638 389,585 808,180 790,349
Equipment 57,759 57,682 56,468 47,590 52,955 115,441 105,716
Net occupancy 51,816 52,668 49,772 48,944 49,234 104,484 103,361
Third-party services 48,546 45,148 49,723 49,304 48,551 93,694 94,121
Other 225,640 196,724 223,725 192,487 216,910 422,364 402,890
Total noninterest expense 785,070 759,093 780,104 705,963 757,235 1,544,163 1,496,437
Income before income tax expense 518,442 485,936 517,106 535,007 533,022 1,004,378 1,096,500
Income tax expense 176,055 164,593 173,590 178,545 178,534 340,648 390,993
Net income $ 342,387 $ 321,343 $ 343,516 $ 356,462 $ 354,488 $ 663,730 $ 705,507
Net Income Per Common Share:
Basic $ .56 $ .53 $ .56 $ .58 $ .56 $ 1.09 $ 1.11
Diluted .56 .53 .55 .57 .56 1.09 1.10

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UNAUDITED

National City Corporation
Consolidated Period-End Balance Sheets
(Dollars in Thousands)

                                                 
2000 1999
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
Assets
Loans:
Commercial $ 24,935,236 $ 23,714,907 $ 23,402,556 $ 22,426,781 $ 22,153,612
Real estate — commercial 6,265,055 6,062,272 6,012,016 6,207,547 6,277,934
Real estate — residential 9,419,808 9,625,271 8,777,422 8,360,180 8,388,380
Consumer 14,146,292 16,159,486 15,986,133 15,348,767 15,184,825
Credit card 2,601,931 2,404,230 2,339,658 2,199,984 2,050,842
Home equity 4,201,854 3,890,385 3,686,119 3,457,622 3,261,466
Total loans 61,570,176 61,856,551 60,203,904 58,000,881 57,317,059
Allowance for loan losses (970,362 ) (970,642 ) (970,463 ) (970,736 ) (970,229 )
Net loans 60,599,814 60,885,909 59,233,441 57,030,145 56,346,830
Mortgage loans held for sale 3,198,328 2,330,395 2,731,166 2,439,039 2,338,641
Securities available for sale, at fair value 10,719,285 13,783,119 14,904,343 15,811,453 14,993,616
Federal funds sold and security resale agreements 493,130 408,228 556,351 727,822 864,178
Other short-term investments 145,623 126,624 231,099 122,272 196,974
Cash and demand balances due from banks 3,262,268 3,229,032 3,480,756 3,346,593 3,807,336
Properties and equipment 1,098,053 1,116,332 1,127,980 1,105,220 1,103,912
Accrued income and other assets 5,084,132 5,015,754 4,856,363 4,475,009 4,370,986
Total Assets $ 84,600,633 $ 86,895,393 $ 87,121,499 $ 85,057,553 $ 84,022,473
Liabilities and Stockholders’ Equity
Liabilities:
Noninterest bearing deposits $ 11,384,267 $ 11,034,147 $ 11,182,681 $ 10,909,167 $ 11,624,345
NOW and money market accounts 16,291,791 16,488,169 16,561,494 16,677,065 16,845,872
Savings accounts 3,230,386 3,430,306 3,470,700 3,700,585 3,870,281
Time deposits of individuals 15,583,974 15,285,430 14,700,944 14,472,674 14,609,034
Other time deposits 2,874,460 2,764,812 2,897,166 3,016,770 2,822,235
Deposits in overseas offices 623,331 1,610,489 1,253,325 1,619,190 2,319,594
Total deposits 49,988,209 50,613,353 50,066,310 50,395,451 52,091,361
Federal funds borrowed and security repurchase agreements 4,012,113 6,307,165 5,182,506 6,625,101 6,979,837
Borrowed funds 6,974,817 5,540,814 9,772,611 5,707,438 4,495,831
Long-term debt 15,976,934 16,803,105 14,858,014 14,625,031 13,137,293
Corporation-obligated mandatorily redeemable capital securities of subsidiary trusts holding solely debentures of the Corporation 180,000 180,000 180,000 180,000 180,000
Accrued expenses and other liabilities 1,335,080 1,533,348 1,334,325 1,610,230 1,270,942
Total Liabilities 78,467,153 80,977,785 81,393,766 79,143,251 78,155,264
Stockholders’ Equity:
Preferred stock 29,982 29,982 30,233 30,474 30,513
Common stock 2,429,736 2,424,912 2,428,234 2,466,259 2,472,526
Capital surplus 812,671 798,986 782,960 776,587 757,326
Retained earnings 3,119,402 2,950,299 2,665,674 2,703,102 2,586,540
Accumulated other comprehensive income (loss) (258,311 ) (286,571 ) (179,368 ) (62,120 ) 20,304
Total Stockholders’ Equity 6,133,480 5,917,608 5,727,733 5,914,302 5,867,209
Total Liabilities and Stockholders’ Equity $ 84,600,633 $ 86,895,393 $ 87,121,499 $ 85,057,553 $ 84,022,473

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UNAUDITED

National City Corporation
Consolidated Average Balance Sheets
(Dollars in Millions)

                                                                 
Six Months Ended
2000 1999 June 30,
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter 2000 1999
Assets
Earning Assets:
Loans:
Commercial $ 24,379 $ 23,496 $ 22,988 $ 22,066 $ 22,228 $ 23,937 $ 22,190
Real estate — commercial 6,157 6,020 6,141 6,238 6,275 6,088 6,290
Real estate — residential 9,721 9,291 8,475 8,362 8,483 9,505 8,712
Consumer 15,722 16,130 15,617 15,052 15,130 15,928 15,040
Credit card 2,514 2,336 2,224 2,088 1,953 2,425 1,891
Home equity 4,044 3,770 3,561 3,336 3,188 3,907 3,172
Total loans 62,537 61,043 59,006 57,142 57,257 61,790 57,295
Mortgage loans held for sale 2,848 2,101 2,555 2,172 2,344 2,475 2,650
Securities available for sale, at cost 13,064 14,600 15,403 14,851 14,638 13,833 14,881
Federal funds sold and security resale agreements 432 481 608 666 850 456 898
Other short-term investments 146 154 190 140 149 150 148
Total earning assets 79,027 78,379 77,762 74,971 75,238 78,704 75,872
Allowance for loan losses (995 ) (996 ) (985 ) (990 ) (989 ) (995 ) (987 )
Fair value (depreciation) appreciation of securities available for sale (430 ) (408 ) (116 ) (8 ) 268 (419 ) 322
Cash and demand balances due from banks 3,116 3,140 3,376 3,306 3,506 3,128 3,785
Properties and equipment 1,114 1,127 1,121 1,108 1,158 1,121 1,169
Accrued income and other assets 4,939 4,709 4,442 4,304 4,188 4,822 4,278
Total Assets $ 86,771 $ 85,951 $ 85,600 $ 82,691 $ 83,369 $ 86,361 $ 84,439
Liabilities and Stockholders’ Equity
Liabilities:
Noninterest bearing deposits $ 10,934 $ 10,716 $ 11,278 $ 11,338 $ 11,542 $ 10,825 $ 11,610
NOW and money market accounts 16,477 16,443 16,580 16,742 16,997 16,460 16,949
Savings accounts 3,321 3,413 3,605 3,795 3,922 3,367 3,938
Time deposits of individuals 15,385 15,019 14,578 14,461 14,883 15,202 15,230
Other time deposits 2,881 2,825 3,141 2,908 2,857 2,853 3,083
Deposits in overseas offices 2,862 3,400 3,105 2,389 2,342 3,131 2,684
Total deposits 51,860 51,816 52,287 51,633 52,543 51,838 53,494
Federal funds borrowed and security repurchase agreements 6,053 7,723 8,244 7,703 7,377 6,889 8,187
Borrowed funds 5,056 3,126 2,893 2,808 2,977 4,090 2,908
Long-term debt and capital securities 16,636 16,259 15,081 13,532 13,305 16,448 12,309
Accrued expenses and other liabilities 1,190 1,249 1,105 1,046 951 1,219 1,054
Total Liabilities 80,795 80,173 79,610 76,722 77,153 80,484 77,952
Stockholders’ Equity:
Preferred 30 30 30 31 31 30 31
Common 5,946 5,748 5,960 5,938 6,185 5,847 6,456
Total Stockholders’ Equity 5,976 5,778 5,990 5,969 6,216 5,877 6,487
Total Liabilities and Stockholders’
Equity $ 86,771 $ 85,951 $ 85,600 $ 82,691 $ 83,369 $ 86,361 $ 84,439

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UNAUDITED

National City Corporation
Average Balances and Rates on a Tax Equivalent Basis
For the Three Months Ended June 30, 2000 and 1999
(Dollars in Millions)

                                                       
2000 1999
Tax Tax
Average Equivalent Average Average Equivalent Average
Balance Interest Rate Balance Interest Rate
Assets
Earning Assets:
Loans:
Commercial $ 24,379 $ 533.8 8.80 % $ 22,228 $ 423.4 7.64 %
Real estate — commercial 6,157 134.9 8.82 6,275 133.8 8.55
Real estate — residential (*) 12,569 251.5 8.01 10,827 202.5 7.48
Consumer 15,722 337.0 8.62 15,130 317.5 8.42
Credit card 2,514 86.3 13.81 1,953 65.5 13.45
Home equity 4,044 93.0 9.19 3,188 66.2 8.32
Total loans 65,385 1,436.5 8.82 59,601 1,208.9 8.13
Securities:
Taxable 12,267 191.2 6.24 13,761 208.4 6.06
Tax-exempt 797 16.2 8.13 877 19.3 8.80
Total securities 13,064 207.4 6.35 14,638 227.7 6.22
Short-term investments 578 10.9 7.51 999 12.9 5.15
Total earning assets 79,027 1,654.8 8.41 75,238 1,449.5 7.72
Allowance for loan losses (995 ) (989 )
Fair value (depreciation) appreciation of securities available for sale (430 ) 268
Noninterest earning assets 9,169 8,852
Total Assets $ 86,771 $ 83,369
Liabilities and Stockholders’ Equity
Liabilities:
NOW and money market accounts $ 16,477 $ 149.3 3.64 % $ 16,997 $ 126.7 2.99 %
Savings accounts 3,321 13.7 1.66 3,922 16.6 1.70
Time deposits of individuals 15,385 215.1 5.62 14,883 187.7 5.06
Other time deposits 2,881 43.9 6.13 2,857 34.4 4.84
Deposits in overseas offices 2,862 44.3 6.22 2,342 27.7 4.74
Federal funds borrowed 2,277 37.1 6.56 2,467 29.6 4.82
Security repurchase agreements 3,776 48.6 5.18 4,910 49.8 4.06
Borrowed funds 5,056 77.8 6.19 2,977 36.9 4.98
Long-term debt and capital securities 16,636 276.0 6.67 13,305 181.9 5.48
Total interest bearing liabilities 68,671 905.8 5.30 64,660 691.3 4.29
Noninterest bearing deposits 10,934 11,542
Accrued expenses and other liabilities 1,190 951
Total Liabilities 80,795 77,153
Total Stockholders’ Equity 5,976 6,216
Total Liabilities and Stockholders’
Equity $ 86,771 $ 83,369
Net interest income and interest spread $ 749.0 3.11 % $ 758.2 3.43 %
Net interest margin 3.80 % 4.04 %

(*)      Includes mortgage loans held for sale.

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UNAUDITED

National City Corporation
Average Balances and Rates on a Tax Equivalent Basis
For the Six Months Ended June 30, 2000 and 1999
(Dollars in Millions)

                                                       
2000 1999
Tax Tax
Average Equivalent Average Average Equivalent Average
Balance Interest Rate Balance Interest Rate
Assets
Earning Assets:
Loans:
Commercial $ 23,937 $ 1,023.9 8.60 % $ 22,190 $ 843.4 7.66 %
Real estate — commercial 6,088 265.6 8.77 6,290 267.4 8.57
Real estate — residential (*) 11,980 471.8 7.88 11,362 417.8 7.36
Consumer 15,928 679.8 8.58 15,040 630.8 8.46
Credit card 2,425 164.0 13.60 1,891 125.1 13.34
Home equity 3,907 176.4 9.03 3,172 138.2 8.76
Total loans 64,265 2,781.5 8.69 59,945 2,422.7 8.14
Securities:
Taxable 13,029 407.2 6.25 13,993 432.3 6.18
Tax-exempt 804 32.8 8.16 888 36.6 8.24
Total securities 13,833 440.0 6.36 14,881 468.9 6.31
Short-term investments 606 21.8 7.18 1,046 27.0 5.16
Total earning assets 78,704 3,243.3 8.27 75,872 2,918.6 7.74
Allowance for loan losses (995 ) (987 )
Fair value (depreciation) appreciation of securities available for sale (419 ) 322
Noninterest earning assets 9,071 9,232
Total Assets $ 86,361 $ 84,439
Liabilities and Stockholders’ Equity
Liabilities:
NOW and money market accounts $ 16,460 $ 289.3 3.53 % $ 16,949 $ 253.2 3.01 %
Savings accounts 3,367 27.9 1.67 3,938 33.5 1.71
Time deposits of individuals 15,202 416.1 5.50 15,230 387.8 5.14
Other time deposits 2,853 84.9 5.99 3,083 75.0 4.91
Deposits in overseas offices 3,131 92.0 5.91 2,684 62.7 4.71
Federal funds borrowed 2,960 91.0 6.18 3,215 77.4 4.86
Security repurchase agreements 3,929 97.3 4.98 4,972 101.7 4.12
Borrowed funds 4,090 121.1 5.95 2,908 65.4 4.54
Long-term debt and capital securities 16,448 533.8 6.52 12,309 339.0 5.55
Total interest bearing liabilities 68,440 1,753.4 5.15 65,288 1,395.7 4.31
Noninterest bearing deposits 10,825 11,610
Accrued expenses and other liabilities 1,219 1,054
Total Liabilities 80,484 77,952
Total Stockholders’ Equity 5,877 6,487
Total Liabilities and Stockholders’
Equity $ 86,361 $ 84,439
Net interest income and interest spread $ 1,489.9 3.12 % $ 1,522.9 3.43 %
Net interest margin 3.79 % 4.03 %

    (*) Includes mortgage loans held for sale.

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UNAUDITED

National City Corporation
Selected Financial Information

                                                             
Six Months Ended
2000 1999 June 30,
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter 2000 1999
(Dollars in Thousands)
Allowance for Loan Losses:
Balance at beginning of period $ 970,642 $ 970,463 $ 970,736 $ 970,229 $ 970,336 $ 970,463 $ 970,243
Provision 68,691 66,326 66,622 55,476 59,542 135,017 127,576
Allowance related to loans acquired (sold) (305 ) — (300 ) (16 ) 268 (305 ) 361
Charge-offs:
Commercial 25,085 24,141 19,635 16,741 32,018 49,226 45,041
Real estate — commercial 3,282 255 2,914 1,828 738 3,537 2,115
Real estate — residential 2,125 2,056 2,965 1,454 444 4,181 2,146
Consumer 40,917 45,212 46,962 42,381 40,019 86,129 95,690
Credit card 26,083 25,910 24,839 23,831 25,185 51,993 52,291
Home equity 2,036 1,124 1,566 1,339 2,032 3,160 4,041
Total charge-offs 99,528 98,698 98,881 87,574 100,436 198,226 201,324
Recoveries:
Commercial 3,714 5,691 4,426 4,834 6,937 9,405 10,456
Real estate — commercial 848 1,626 2,477 1,401 3,343 2,474 4,766
Real estate — residential 153 105 83 68 805 258 948
Consumer 19,074 18,495 19,208 19,940 22,910 37,569 44,347
Credit card 6,313 5,894 5,225 5,299 5,468 12,207 10,794
Home equity 760 740 867 1,079 1,056 1,500 2,062
Total recoveries 30,862 32,551 32,286 32,621 40,519 63,413 73,373
Net charge-offs 68,666 66,147 66,595 54,953 59,917 134,813 127,951
Balance at end of period $ 970,362 $ 970,642 $ 970,463 $ 970,736 $ 970,229 $ 970,362 $ 970,229
(Dollars in Millions) Nonperforming Assets:
Nonaccrual and restructured loans $ 313.7 $ 290.8 $ 269.2 $ 236.1 $ 222.8
Other real estate owned 25.6 23.3 19.9 23.9 26.7
Total nonperforming assets $ 339.3 $ 314.1 $ 289.1 $ 260.0 $ 249.5
Credit Quality Ratios:
Net charge-offs to average loans .44 % .44 % .45 % .38 % .42 % .44 % .45 %
Loan loss reserve to loans (period-end) 1.58 1.57 1.61 1.67 1.69
Nonperforming assets to loans and OREO (period-end) .55 .51 .48 .45 .44
Capital Ratios(*):
Tier 1 capital 7.24 % 6.97 % 6.61 % 6.89 % 7.14 %
Total risk-based capital 12.15 11.70 11.22 11.66 12.12
Leverage 6.28 6.05 5.72 6.07 6.06
Tangible common equity to tangible assets 5.81 5.38 5.12 5.52 5.78
 
Share Information:
Average basic shares 606,927,559 605,766,137 613,877,553 616,883,898 623,116,746 606,346,848 632,003,530
Average diluted shares 611,070,243 610,694,306 620,784,083 624,581,200 633,280,420 610,882,275 642,637,332
Common shares outstanding at end of period 607,433,924 606,227,792 607,058,364 616,564,714 618,131,386

(*)   Second quarter 2000 ratios are based on preliminary data.

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