EX-99.2 4 dex992.htm SUPPLEMENTAL FINANCIAL TABLE supplemental financial table

Exhibit 99.2

NATIONAL COMMERCE FINANCIAL CORPORATION

Quarterly Financial Results

Second Quarter 2003

 

     Page

    

Highlights

   2   

Current Quarter Financial Highlights

         

–       Second Quarter 2003 vs First Quarter 2003

         

–       Second Quarter 2003 vs Second Quarter 2002

     3   

Five Quarter Financial Highlights

     4   

Year to Date Financial Highlights

Income Statement

   5   

Current Quarter Consolidated Statement of Income

         

–       Second Quarter 2003 vs First Quarter 2003

         

–       Second Quarter 2003 vs Second Quarter 2002

     6   

Five Quarter Consolidated Statements of Income

     7   

Year to Date Consolidated Statements of Income

     8   

Current Quarter Operating Segment Statement of Income

         

–       Second Quarter 2003 vs First Quarter 2003

         

–       Second Quarter 2003 vs Second Quarter 2002

     9   

Five Quarter Operating Segment Statements of Income

     10   

Year to Date Operating Segment Statements of Income

Balance Sheet

   11   

Current Quarter Average Balance Sheet

         

–       Second Quarter 2003 vs First Quarter 2003

         

–       Second Quarter 2003 vs Second Quarter 2002

     12   

Five Quarter Average Balance Sheets

     13   

Year to Date Average Balance Sheets

     14   

Current Quarter End of Period Balance Sheet

         

–       Second Quarter 2003 vs First Quarter 2003

         

–       Second Quarter 2003 vs Second Quarter 2002

     15   

Five Quarter End of Period Balance Sheets

     16   

Year to Date Rollforward of Stockholders’ Equity

Asset Quality

   17   

Current Quarter Asset Quality Analysis

         

–       Second Quarter 2003 vs First Quarter 2003

         

–       Second Quarter 2003 vs Second Quarter 2002

     18   

Five Quarter Asset Quality Analysis

     19   

Year to Date Asset Quality Analysis

Net Interest Margin

   20   

Five Quarter Average Balance Sheets and Net Interest Income Analysis

     21   

Year to Date Average Balance Sheets and Net Interest Income Analysis

 

Page 1


NATIONAL COMMERCE FINANCIAL CORPORATION

Current Quarter Financial Highlights

(In Thousands Except Share and Per Share Data)

 

     Three Months Ended

  

% Change

Fav/(Unfav)


    Three Months Ended

  

% Change

Fav/(Unfav)


 
     6/30/2003

    3/31/2003

     6/30/2003

    6/30/2002

  

Earnings and Earnings Per Share

                                    

Revenues (TE)

   $ 312,798     293,671    6.5     312,798     285,892    9.4  
    


 
        

 
      

Net income

   $ 71,507     64,090    11.6     71,507     80,868    (11.6 )

First Mercantile litigation, net of tax

     677     12,775    (94.7 )   677     —      —    

Employment contract terminations, net of tax

     9,170     —      —       9,170     —      —    
    


 
        

 
      

Operating earnings

     81,354     76,865    5.8     81,354     80,868    .6  

Amortization of core deposit, net of tax

     9,561     9,933    (3.7 )   9,561     11,052    (13.5 )
    


 
        

 
      

Operating cash earnings

   $ 90,915     86,798    4.7     90,915     91,920    (1.1 )
    


 
        

 
      

Average basic shares outstanding

     204,628,675     205,270,721          204,628,675     206,368,053       

Average diluted shares outstanding

     205,700,819     206,755,698          205,700,819     208,978,097       

Basic EPS

   $ .35     .31    12.9     .35     .39    (10.3 )

Diluted EPS

     .35     .31    12.9     .35     .39    (10.3 )

Basic EPS—Operating

     .40     .37    8.1     .40     .39    2.6  

Diluted EPS—Operating

     .40     .37    8.1     .40     .39    2.6  

Basic EPS—Operating Cash

     .44     .42    4.8     .44     .45    (2.2 )

Diluted EPS—Operating Cash

     .44     .42    4.8     .44     .44    —    

Key Performance Ratios

                                    

Net interest margin

     3.86 %   3.98          3.86     4.33       

Efficiency ratio

     61.39     64.45          61.39     54.25       

Operating cash efficiency ratio

     50.12     50.69          50.12     46.47       

Banking operating cash efficiency ratio

     45.98     47.08          45.98     42.74       

Return on average assets

     1.29     1.22          1.29     1.60       

Return on average equity

     10.61     9.64          10.61     12.82       

Cash return on average tangible assets

     1.75     1.76          1.75     1.95       

Cash return on average tangible equity

     25.90     25.33          25.90     31.28       

Asset Quality Ratios

                                    

Loan loss allowance to total loans

     1.30 %   1.33          1.30     1.30       

Net loans charged-off (annualized) to average loans

     .28     .24          .28     .24       

Nonperforming assets to loans plus foreclosed real

                                    

estate and other repossessed assets

     .51     .55          .51     .53       

Loan loss allowance to net charge-offs (annualized)

     4.69 x   5.23          4.69     5.53       

Loan loss allowance to nonperforming loans

     4.94     4.96          4.94     5.30       

Selected Average Balances

                                    

Assets

   $ 22,173,395     21,292,442    4.1     22,173,395     20,233,304    9.6  

Loans

     12,614,546     12,789,028    (1.4 )   12,614,546     12,335,537    2.3  

Core deposits

     13,056,980     12,734,843    2.5     13,056,980     12,405,823    5.2  

Stockholders' equity

     2,702,937     2,695,846    .3     2,702,937     2,529,919    6.8  

Selected Period End Balances

                                    

Assets

   $ 22,679,991     21,721,985    4.4     22,679,991     20,812,168    9.0  

Loans

     12,909,893     12,288,866    5.1     12,909,893     12,470,030    3.5  

Core deposits

     13,382,416     13,121,371    2.0     13,382,416     12,487,536    7.2  

Stockholders' equity

     2,720,435     2,696,014    .9     2,720,435     2,596,386    4.8  

Shares outstanding

     204,384,778     205,009,566          204,384,778     206,417,264       

Number of banking offices

     482     483          482     466       

Number of ATMs

     556     559          556     554       

Number of full-time equivalent employees (FTE)

     5,582     5,564          5,582     5,469       

Capital Ratios

                                    

Period-end tangible equity to period-end tangible assets

     6.70 %   6.85          6.70     6.44       

Risk-based capital ratios:

                                    

Tier 1 capital

     11.23 E   10.50          11.23 E   10.49       

Total capital

     12.38 E   11.57          12.38 E   11.69       

Leverage ratio

     7.81 E   8.01          7.81 E   7.76       

 

E—Estimated

 

 

Page 2


NATIONAL COMMERCE FINANCIAL CORPORATION

Five Quarter Financial Highlights

(In Thousands Except Share and Per Share Data)

 

     Three Months Ended

     6/30/2003

    3/31/2003

   12/31/2002

   9/30/2002

   6/30/2002

Earnings and Earnings Per Share

                           

Revenues (TE)

   $ 312,798     293,671    300,137    296,670    285,892
    


 
  
  
  

Net income

   $ 71,507     64,090    84,866    82,977    80,868

First Mercantile litigation, net of tax

     677     12,775    —      —      —  

Employment contract terminations, net of tax

     9,170     —      —      —      —  
    


 
  
  
  

Operating earnings

     81,354     76,865    84,866    82,977    80,868

Amortization of core deposit, net of tax

     9,561     9,933    10,306    10,679    11,052
    


 
  
  
  

Operating cash earnings

   $ 90,915     86,798    95,172    93,656    91,920
    


 
  
  
  

Average Basic Shares Outstanding

     204,628,675     205,270,721    205,360,814    206,258,720    206,368,053

Average Diluted Shares Outstanding

     205,700,819     206,755,698    206,994,530    208,328,301    208,978,097

Basic EPS

   $ .35     .31    .41    .40    .39

Diluted EPS

     .35     .31    .41    .40    .39

Basic EPS—Operating

     .40     .37    .41    .40    .39

Diluted EPS—Operating

     .40     .37    .41    .40    .39

Basic EPS—Operating Cash

     .44     .42    .46    .45    .45

Diluted EPS—Operating Cash

     .44     .42    .46    .45    .44

Key Performance Ratios

                           

Net interest margin

     3.86 %   3.98    4.20    4.27    4.33

Efficiency ratio

     61.39     64.45    55.25    54.16    54.25

Operating cash efficiency ratio

     50.12     50.69    48.34    46.90    46.47

Banking operating cash efficiency ratio

     45.98     47.08    43.79    42.73    42.74

Return on average assets

     1.29     1.22    1.60    1.59    1.60

Return on average equity

     10.61     9.64    12.70    12.63    12.82

Cash return on average tangible assets

     1.75     1.76    1.92    1.92    1.95

Cash return on average tangible equity

     25.90     25.33    28.37    29.22    31.28

Asset Quality Ratios

                           

Loan loss allowance to total loans

     1.30 %   1.33    1.26    1.28    1.30

Net loans charged-off (annualized) to average loans

     .28     .24    .22    .29    .24

Nonperforming assets to loans plus foreclosed real estate and other repossessed assets

     .51     .55    .51    .50    .53

Loan loss allowance to net charge-offs (annualized)

     4.69 x     5.23    5.78    4.44    5.53

Loan loss allowance to nonperforming loans

     4.94     4.96    5.30    5.51    5.30

Selected Average Balances

                           

Assets

   $ 22,173,395     21,292,442    20,981,013    20,639,674    20,233,304

Loans

     12,614,546     12,789,028    12,803,821    12,600,075    12,335,537

Core deposits

     13,056,980     12,734,843    12,586,572    12,358,788    12,405,823

Stockholders’ equity

     2,702,937     2,695,846    2,650,155    2,606,497    2,529,919

Selected Period End Balances

                           

Assets

   $ 22,679,991     21,721,985    21,472,116    20,943,731    20,812,168

Loans

     12,909,893     12,288,866    12,923,940    12,740,563    12,470,030

Core deposits

     13,382,416     13,121,371    12,771,186    12,566,599    12,487,536

Stockholders’ equity

     2,720,435     2,696,014    2,682,432    2,639,513    2,596,386

Shares outstanding

     204,384,778     205,009,566    205,408,183    205,767,938    206,417,264

Number of banking offices

     482     483    479    472    466

Number of ATMs

     556     559    554    550    554

Number of full-time equivalent employees (FTE)

     5,582     5,564    5,548    5,402    5,469

Capital Ratios

                           

Period-end tangible equity to period-end tangible assets

     6.70 %   6.85    6.79    6.69    6.44

Risk-based capital ratios:

                           

Tier 1 capital

     11.23 E   10.50    10.87    10.55    10.49

Total capital

     12.38 E   11.57    12.00    11.74    11.69

Leverage ratio

     7.81 E   8.01    7.91    7.85    7.76

E—Estimated

                           

 

Page 3


NATIONAL COMMERCE FINANCIAL CORPORATION

Year to Date Financial Highlights

(In Thousands Except Share and Per Share Data)

 

     Six Months Ended

  

$ Change

Fav/(Unfav)


   

% Change

Fav/(Unfav)


 
     6/30/2003

    6/30/2002

    

Earnings and Earnings Per Share

                         

Revenues (TE)

   $ 606,469     557,246    49,223     8.8  
    


 
  

     

Net income

   $ 135,597     155,767    (20,170 )   (12.9 )

Conversion/merger expenses, net of tax

     —       3,211    (3,211 )   (100.0 )

First Mercantile litigation, net of tax

     13,452     —      13,452     —    

Employment contract terminations, net of tax

     9,170     —      9,170     —    
    


 
  

     

Operating earnings

     158,219     158,978    (759 )   (.5 )

Amortization of core deposit, net of tax

     19,494     21,672    (2,178 )   (10.0 )
    


 
  

     

Operating cash earnings

   $ 177,713     180,650    (2,937 )   (1.6 )
    


 
  

     

Average Basic Shares Outstanding

     204,947,925     206,058,688             

Average Diluted Shares Outstanding

     206,225,344     208,634,557             

Basic EPS

   $ .66     .76    (.10 )   (13.2 )

Diluted EPS

     .66     .75    (.09 )   (12.0 )

Basic EPS—Operating

     .77     .77    .00     —    

Diluted EPS—Operating

     .77     .76    .01     1.3  

Basic EPS—Operating Cash

     .87     .88    (.01 )   (1.1 )

Diluted EPS—Operating Cash

     .86     .87    (.01 )   (1.1 )

Key Performance Ratios

                         

Net interest margin

     3.92 %   4.36             

Efficiency ratio

     62.87     55.25             

Operating cash efficiency ratio

     50.39     46.50             

Banking operating cash efficiency ratio

     46.52     42.55             

Return on average assets

     1.26     1.58             

Return on average equity

     10.13     12.52             

Cash return on average tangible assets

     1.75     1.96             

Cash return on average tangible equity

     25.62     30.55             

Asset Quality Ratios

                         

Loan loss allowance to total loans

     1.30 %   1.30             

Net loans charged-off to average loans

     .26     .25             

Loan loss allowance to net charge-offs

     5.00 x   5.30             

Selected Average Balances

                         

Assets

   $ 21,735,352     19,892,485    1,842,867     9.3  

Loans

     12,701,305     12,222,822    478,483     3.9  

Core deposits

     12,896,801     12,071,386    825,415     6.8  

Stockholders’ equity

     2,699,411     2,508,867    190,544     7.6  

 

Page 4


NATIONAL COMMERCE FINANCIAL CORPORATION

Current Quarter Consolidated Statements of Income

(In Thousands Except Share and Per Share Data)

 

     Three Months Ended

   % Change
Fav/(Unfav)


    Three Months Ended

  

% Change

Fav/(Unfav)


 
     6/30/2003

   3/31/2003

     6/30/2003

   6/30/2002

  

Income Statement

                                  

Loan income (TE)

   $ 190,239    199,861    (4.8 )   190,239    218,856    (13.1 )

Securities income (TE)

     81,215    70,263    15.6     81,215    73,168    11.0  

Other interest income (TE)

     357    192    85.9     357    270    32.2  
    

  
        
  
      

Total interest income (TE)

     271,811    270,316    .6     271,811    292,294    (7.0 )
    

  
        
  
      

Savings/NOW and money market expense

     11,006    11,957    8.0     11,006    18,527    40.6  

Jumbo and brokered CD expense

     7,378    7,189    (2.6 )   7,378    8,290    11.0  

Consumer time deposit expense

     36,800    38,142    3.5     36,800    45,046    18.3  
    

  
        
  
      

Interest expense on deposits

     55,184    57,288    3.7     55,184    71,863    23.2  

Short-term borrowed funds expense

     4,698    4,368    (7.6 )   4,698    4,461    (5.3 )

FHLB advances expense

     21,397    22,118    3.3     21,397    22,626    5.4  

Trust preferred securities and long-term debt expense

     2,133    2,160    1.3     2,133    2,474    13.8  
    

  
        
  
      

Total interest expense

     83,412    85,934    2.9     83,412    101,424    17.8  
    

  
        
  
      

Net interest income (TE)

     188,399    184,382    2.2     188,399    190,870    (1.3 )

Taxable equivalent adjustment

     7,218    6,940    (4.0 )   7,218    7,628    5.4  
    

  
        
  
      

Net interest income

     181,181    177,442    2.1     181,181    183,242    (1.1 )

Provision for loan losses

     13,376    7,684    (74.1 )   13,376    8,713    (53.5 )
    

  
        
  
      

Net interest income after provision

     167,805    169,758    (1.2 )   167,805    174,529    (3.9 )
    

  
        
  
      

Service charges on deposits

     43,500    41,250    5.5     43,500    40,301    7.9  

Other service charges and fees

     9,721    9,341    4.1     9,721    9,696    .3  

Broker/dealer revenue

     28,152    21,081    33.5     28,152    17,650    59.5  

Asset management

     13,356    12,382    7.9     13,356    13,488    (1.0 )

Mortgage banking income

     17,092    13,880    23.1     17,092    2,972    475.1  

Equity earnings from First Market Bank

     1,071    926    15.7     1,071    773    38.6  

Other

     9,047    7,965    13.6     9,047    8,448    7.1  

Investment securities gains, net

     2,460    2,464    (.2 )   2,460    1,694    45.2  
    

  
        
  
      

Total noninterest income

     124,399    109,289    13.8     124,399    95,022    30.9  
    

  
        
  
      

Personnel

     83,117    81,679    (1.8 )   83,117    68,373    (21.6 )

Occupancy

     13,292    12,904    (3.0 )   13,292    12,209    (8.9 )

Equipment

     7,992    7,405    (7.9 )   7,992    6,800    (17.5 )

Core deposit amortization

     15,673    16,284    3.8     15,673    18,118    13.5  

Other

     52,362    46,872    (11.7 )   52,362    45,462    (15.2 )

First Mercantile litigation

     1,041    19,654    94.7     1,041    —      —    

Employment contract terminations

     14,108    —      —       14,108    —      —    
    

  
        
  
      

Total noninterest expense

     187,585    184,798    (1.5 )   187,585    150,962    (24.3 )
    

  
        
  
      

Income before income taxes

     104,619    94,249    11.0     104,619    118,589    (11.8 )

Income taxes

     33,112    30,159    (9.8 )   33,112    37,721    12.2  
    

  
        
  
      

Net income

     71,507    64,090    11.6     71,507    80,868    (11.6 )

First Mercantile litigation, net of tax

     677    12,775    (94.7 )   677    —      —    

Employment contract terminations, net of tax

     9,170    —      —       9,170    —      —    
    

  
        
  
      

Operating earnings

     81,354    76,865    5.8     81,354    80,868    .6  

Amortization of core deposit, net of tax

     9,561    9,933    (3.7 )   9,561    11,052    (13.5 )
    

  
        
  
      

Operating cash earnings

   $ 90,915    86,798    4.7     90,915    91,920    (1.1 )
    

  
        
  
      

Average Common Shares Outstanding

                                  

Basic

     204,628,675    205,270,721          204,628,675    206,368,053       

Diluted

     205,700,819    206,755,698          205,700,819    208,978,097       

Earnings and Dividends Per Share

                                  

Basic

   $ .35    .31    12.9     .35    .39    (10.3 )

Diluted

     .35    .31    12.9     .35    .39    (10.3 )

Basic operating

     .40    .37    8.1     .40    .39    2.6  

Diluted operating

     .40    .37    8.1     .40    .39    2.6  

Basic operating cash

     .44    .42    4.8     .44    .45    (2.2 )

Diluted operating cash

     .44    .42    4.8     .44    .44    —    

Cash dividends

     .17    .17    —       .17    .15    13.3  

 

Page 5


NATIONAL COMMERCE FINANCIAL CORPORATION

Five Quarter Consolidated Statements of Income

(In Thousands Except Share and Per Share Data)

 

     Three Months Ended

     6/30/2003

   3/31/2003

   12/31/2002

   9/30/2002

   6/30/2002

Income Statement

                          

Loan income (TE)

   $ 190,239    199,861    214,799    217,482    218,856

Securities income (TE)

     81,215    70,263    71,601    73,283    73,168

Other interest income (TE)

     357    192    199    217    270
    

  
  
  
  

Total interest income (TE)

     271,811    270,316    286,599    290,982    292,294
    

  
  
  
  

Savings/NOW and money market expense

     11,006    11,957    14,036    15,605    18,527

Jumbo and brokered CD expense

     7,378    7,189    8,281    8,611    8,290

Consumer time deposit expense

     36,800    38,142    40,878    41,651    45,046
    

  
  
  
  

Interest expense on deposits

     55,184    57,288    63,195    65,867    71,863

Short-term borrowed funds expense

     4,698    4,368    4,463    5,393    4,461

FHLB advances expense

     21,397    22,118    23,667    24,010    22,626

Trust preferred securities and long-term debt expense

     2,133    2,160    2,458    2,410    2,474
    

  
  
  
  

Total interest expense

     83,412    85,934    93,783    97,680    101,424
    

  
  
  
  

Net interest income (TE)

     188,399    184,382    192,816    193,302    190,870

Taxable equivalent adjustment

     7,218    6,940    6,993    7,442    7,628
    

  
  
  
  

Net interest income

     181,181    177,442    185,823    185,860    183,242

Provision for loan losses

     13,376    7,684    7,127    10,990    8,713
    

  
  
  
  

Net interest income after provision

     167,805    169,758    178,696    174,870    174,529
    

  
  
  
  

Service charges on deposits

     43,500    41,250    43,884    41,391    40,301

Other service charges and fees

     9,721    9,341    9,736    9,971    9,696

Broker/dealer revenue

     28,152    21,081    22,982    19,600    17,650

Asset management

     13,356    12,382    11,743    12,785    13,488

Mortgage banking income

     17,092    13,880    6,896    5,350    2,972

Equity earnings from First Market Bank

     1,071    926    1,084    1,074    773

Other

     9,047    7,965    8,968    8,137    8,448

Investment securities gains, net

     2,460    2,464    2,028    5,060    1,694
    

  
  
  
  

Total noninterest income

     124,399    109,289    107,321    103,368    95,022
    

  
  
  
  

Personnel

     83,117    81,679    75,630    71,149    68,373

Occupancy

     13,292    12,904    12,866    12,434    12,209

Equipment

     7,992    7,405    7,707    7,454    6,800

Core deposit amortization

     15,673    16,284    16,895    17,507    18,118

Other

     52,362    46,872    48,873    48,114    45,462

First Mercantile litigation

     1,041    19,654    —      —      —  

Employment contract terminations

     14,108    —      —      —      —  
    

  
  
  
  

Total noninterest expense

     187,585    184,798    161,971    156,658    150,962
    

  
  
  
  

Income before income taxes

     104,619    94,249    124,046    121,580    118,589

Income taxes

     33,112    30,159    39,180    38,603    37,721
    

  
  
  
  

Net income

     71,507    64,090    84,866    82,977    80,868

First Mercantile litigation, net of tax

     677    12,775    —      —      —  

Employment contract terminations, net of tax

     9,170    —      —      —      —  
    

  
  
  
  

Operating earnings

     81,354    76,865    84,866    82,977    80,868

Amortization of core deposit, net of tax

     9,561    9,933    10,306    10,679    11,052
    

  
  
  
  

Operating cash earnings

   $ 90,915    86,798    95,172    93,656    91,920
    

  
  
  
  

Average Common Shares Outstanding

                          

Basic

     204,628,675    205,270,721    205,360,814    206,258,720    206,368,053

Diluted

     205,700,819    206,755,698    206,994,530    208,328,301    208,978,097

Earnings and Dividends Per Share

                          

Basic

   $ .35    .31    .41    .40    .39

Diluted

     .35    .31    .41    .40    .39

Basic operating

     .40    .37    .41    .40    .39

Diluted operating

     .40    .37    .41    .40    .39

Basic operating cash

     .44    .42    .46    .45    .45

Diluted operating cash

     .44    .42    .46    .45    .44

Cash dividends

     .17    .17    .17    .17    .15

 

Page 6


NATIONAL COMMERCE FINANCIAL CORPORATION

Year to Date Consolidated Statements of Income

(In Thousands Except Share and Per Share Data)

 

     Six Months Ended

  

$ Change

Fav/(Unfav)


   

% Change

Fav/(Unfav)


 
     6/30/2003

   6/30/2002

    

Income Statement

                        

Loan income (TE)

   $ 390,100    439,677    (49,577 )   (11.3 )

Securities income (TE)

     151,478    142,111    9,367     6.6  

Other interest income (TE)

     549    587    (38 )   (6.5 )
    

  
  

     

Total interest income (TE)

     542,127    582,375    (40,248 )   (6.9 )
    

  
  

     

Savings/NOW and money market expense

     22,963    35,929    12,966     36.1  

Jumbo and brokered CD expense

     14,567    17,108    2,541     14.9  

Consumer time deposit expense

     74,942    93,660    18,718     20.0  
    

  
  

     

Interest expense on deposits

     112,472    146,697    34,225     23.3  

Short-term borrowed funds expense

     9,066    7,961    (1,105 )   (13.9 )

FHLB advances expense

     43,515    45,815    2,300     5.0  

Trust preferred securities and long-term debt expense

     4,293    4,955    662     13.4  
    

  
  

     

Total interest expense

     169,346    205,428    36,082     17.6  
    

  
  

     

Net interest income (TE)

     372,781    376,947    (4,166 )   (1.1 )

Taxable equivalent adjustment

     14,158    15,024    (866 )   (5.8 )
    

  
  

     

Net interest income

     358,623    361,923    (3,300 )   (.9 )

Provision for loan losses

     21,060    14,227    (6,833 )   (48.0 )
    

  
  

     

Net interest income after provision

     337,563    347,696    (10,133 )   (2.9 )
    

  
  

     

Service charges on deposits

     84,750    74,127    10,623     14.3  

Other service charges and fees

     19,062    18,674    388     2.1  

Broker/dealer revenue

     49,233    33,063    16,170     48.9  

Asset management

     25,738    26,388    (650 )   (2.5 )

Mortgage banking income

     30,972    6,248    24,724     395.7  

Equity earnings from First Market Bank

     1,997    1,289    708     54.9  

Other

     17,012    16,096    916     5.7  

Investment securities gains, net

     4,924    4,414    510     11.6  
    

  
  

     

Total noninterest income

     233,688    180,299    53,389     29.6  
    

  
  

     

Personnel

     164,796    137,251    (27,545 )   (20.1 )

Occupancy

     26,196    23,186    (3,010 )   (13.0 )

Equipment

     15,397    13,027    (2,370 )   (18.2 )

Core deposit amortization

     31,957    35,528    3,571     10.1  

Other

     99,234    85,667    (13,567 )   (15.8 )

First Mercantile litigation

     20,695    —      (20,695 )   —    

Employment contract terminations

     14,108    —      (14,108 )   —    

Conversion/merger expenses

     —      4,940    4,940     100.0  
    

  
  

     

Total noninterest expense

     372,383    299,599    (72,784 )   (24.3 )
    

  
  

     

Income before income taxes

     198,868    228,396    (29,528 )   (12.9 )

Income taxes

     63,271    72,629    9,358     12.9  
    

  
  

     

Net income

     135,597    155,767    (20,170 )   (12.9 )

Conversion/merger expenses, net of tax

     —      3,211    (3,211 )   (100.0 )

First Mercantile litigation, net of tax

     13,452    —      13,452     —    

Employment contract terminations, net of tax

     9,170    —      9,170     —    
    

  
  

     

Operating earnings

     158,219    158,978    (759 )   (.5 )

Amortization of core deposit, net of tax

     19,494    21,672    (2,178 )   (10.0 )
    

  
  

     

Operating cash earnings

   $ 177,713    180,650    (2,937 )   (1.6 )
    

  
  

     

Average Common Shares Outstanding

                        

Basic

     204,947,925    206,058,688             

Diluted

     206,225,344    208,634,557             

Earnings and Dividends Per Share

                        

Basic

   $ .66    .76    (.10 )   (13.2 )

Diluted

     .66    .75    (.09 )   (12.0 )

Basic operating

     .77    .77    .00     —    

Diluted operating

     .77    .76    .01     1.3  

Basic operating cash

     .87    .88    (.01 )   (1.1 )

Diluted operating cash

     .86    .87    (.01 )   (1.1 )

Cash dividends

     .34    .30    .04     13.3  

 

Page 7


NATIONAL COMMERCE FINANCIAL CORPORATION

Current Quarter Operating Segment Statement of Income

(In Thousands)

 

     Three Months Ended

   

% Change

Fav/(Unfav)


    Three Months Ended

   

% Change

Fav/(Unfav)


 
     6/30/03

    3/31/03

      6/30/03

    6/30/02

   

Traditional Banking

                                      

Net interest income (TE)

   $ 183,113     179,167     2.2     183,113     186,096     (1.6 )

Provision for loan losses

     (13,376 )   (7,684 )   (74.1 )   (13,376 )   (8,713 )   (53.5 )

Noninterest income

     71,294     65,682     8.5     71,294     55,459     28.6  

Intangibles amortization

     (15,673 )   (16,284 )   3.8     (15,673 )   (18,118 )   13.5  

First Mercantile litigation

     —       —       —       —       —       —    

Employment contract terminations

     (14,108 )   —       —       (14,108 )   —       —    

Cash operating expense

     (116,980 )   (115,279 )   (1.5 )   (116,980 )   (103,237 )   (13.3 )
    


 

       

 

     

Income before income taxes (TE)

     94,270     105,602     (10.7 )   94,270     111,487     (15.4 )

Income taxes

     33,479     38,820     13.8     33,479     39,605     15.5  
    


 

       

 

     

Net income

     60,791     66,782     (9.0 )   60,791     71,882     (15.4 )

First Mercantile litigation, net of tax

     —       —       —       —       —       —    

Employment contract terminations, net of tax

     9,170     —       —       9,170     —       —    
    


 

       

 

     

Operating earnings

     69,961     66,782     4.8     69,961     71,882     (2.7 )

Amortization of core deposit, net of tax

     9,561     9,933     (3.7 )   9,561     11,052     (13.5 )
    


 

       

 

     

Operating cash earnings

   $ 79,522     76,715     3.7     79,522     82,934     (4.1 )
    


 

       

 

     

Financial Enterprises

                                      

Net interest income (TE)

   $ 5,286     5,215     1.4     5,286     4,774     10.7  

Provision for loan losses

     —       —       —       —       —       —    

Noninterest income

     54,215     44,757     21.1     54,215     41,972     29.2  

Intangibles amortization

     —       —       —       —       —       —    

First Mercantile litigation

     (1,041 )   (19,654 )   94.7     (1,041 )   —       (100.0 )

Employment contract terminations

     —       —       —       —       —       —    

Cash operating expense

     (40,893 )   (34,731 )   (17.7 )   (40,893 )   (32,016 )   (27.7 )
    


 

       

 

     

Income before income taxes (TE)

     17,567     (4,413 )   (498.1 )   17,567     14,730     19.3  

Income taxes

     6,851     (1,721 )   498.1     6,851     5,744     (19.3 )
    


 

       

 

     

Net income

     10,716     (2,692 )   (498.1 )   10,716     8,986     19.3  

First Mercantile litigation, net of tax

     677     12,775     94.7     677     —       100.0  

Employment contract terminations, net of tax

     —       —       —       —       —       —    
    


 

       

 

     

Operating earnings

     11,393     10,083     13.0     11,393     8,986     26.8  

Amortization of core deposit, net of tax

     —       —       —       —       —       —    
    


 

       

 

     

Operating cash earnings

   $ 11,393     10,083     13.0     11,393     8,986     26.8  
    


 

       

 

     

Fully Consolidated

                                      

Net interest income (TE)

   $ 188,399     184,382     2.2     188,399     190,870     (1.3 )

Provision for loan losses

     (13,376 )   (7,684 )   (74.1 )   (13,376 )   (8,713 )   (53.5 )

Noninterest income

     124,399     109,289     13.8     124,399     95,022     30.9  

Intangibles amortization

     (15,673 )   (16,284 )   3.8     (15,673 )   (18,118 )   13.5  

First Mercantile litigation

     (1,041 )   (19,654 )   94.7     (1,041 )   —       (100.0 )

Employment contract terminations

     (14,108 )   —       (100.0 )   (14,108 )   —       (100.0 )

Cash operating expense

     (156,763 )   (148,860 )   (5.3 )   (156,763 )   (132,844 )   (18.0 )
    


 

       

 

     

Income before income taxes (TE)

     111,837     101,189     10.5     111,837     126,217     (11.4 )

Income taxes

     40,330     37,099     (8.7 )   40,330     45,349     11.1  
    


 

       

 

     

Net income

     71,507     64,090     11.6     71,507     80,868     (11.6 )

First Mercantile litigation, net of tax

     677     12,775     94.7     677     —       100.0  

Employment contract terminations, net of tax

     9,170     —       100.0     9,170     —       100.0  
    


 

       

 

     

Operating earnings

     81,354     76,865     5.8     81,354     80,868     .6  

Amortization of core deposit, net of tax

     9,561     9,933     (3.7 )   9,561     11,052     (13.5 )
    


 

       

 

     

Operating cash earnings

   $ 90,915     86,798     4.7     90,915     91,920     (1.1 )
    


 

       

 

     

 

(1)   Inter-segment eliminations are not separately presented.

 

Page 8


NATIONAL COMMERCE FINANCIAL CORPORATION

Five Quarter Operating Segment Statements of Income

(In Thousands)

 

     Three Months Ended

 
     6/30/2003

    3/31/2003

    12/31/2002

    9/30/2002

    6/30/2002

 

Traditional Banking

                                

Net interest income (TE)

   $ 183,113     179,167     186,708     187,947     186,096  

Provision for loan losses

     (13,376 )   (7,684 )   (7,127 )   (10,990 )   (8,713 )

Noninterest income

     71,294     65,682     64,560     62,299     55,459  

Intangibles amortization

     (15,673 )   (16,284 )   (16,895 )   (17,507 )   (18,118 )

First Mercantile litigation

     —       —       —       —       —    

Employment contract terminations

     (14,108 )   —       —       —       —    

Cash operating expense

     (116,980 )   (115,279 )   (110,040 )   (106,918 )   (103,237 )
    


 

 

 

 

Income before income taxes (TE)

     94,270     105,602     117,206     114,831     111,487  

Income taxes

     33,479     38,820     40,778     40,510     39,605  
    


 

 

 

 

Net income

     60,791     66,782     76,428     74,321     71,882  

First Mercantile litigation, net of tax

     —       —       —       —       —    

Employment contract terminations, net of tax

     9,170     —       —       —       —    
    


 

 

 

 

Operating earnings

     69,961     66,782     76,428     74,321     71,882  

Amortization of core deposit, net of tax

     9,561     9,933     10,306     10,679     11,052  
    


 

 

 

 

Operating cash earnings

   $ 79,522     76,715     86,734     85,000     82,934  
    


 

 

 

 

Financial Enterprises

                                

Net interest income (TE)

   $ 5,286     5,215     6,108     5,355     4,774  

Provision for loan losses

     —       —       —       —       —    

Noninterest income

     54,215     44,757     44,367     42,835     41,972  

Intangibles amortization

     —       —       —       —       —    

First Mercantile litigation

     (1,041 )   (19,654 )   —       —       —    

Employment contract terminations

     —       —       —       —       —    

Cash operating expense

     (40,893 )   (34,731 )   (36,642 )   (33,999 )   (32,016 )
    


 

 

 

 

Income before income taxes (TE)

     17,567     (4,413 )   13,833     14,191     14,730  

Income taxes

     6,851     (1,721 )   5,395     5,535     5,744  
    


 

 

 

 

Net income

     10,716     (2,692 )   8,438     8,656     8,986  

First Mercantile litigation, net of tax

     677     12,775     —       —       —    

Employment contract terminations, net of tax

     —       —       —       —       —    
    


 

 

 

 

Operating earnings

     11,393     10,083     8,438     8,656     8,986  

Amortization of core deposit, net of tax

     —       —       —       —       —    
    


 

 

 

 

Operating cash earnings

   $ 11,393     10,083     8,438     8,656     8,986  
    


 

 

 

 

Fully Consolidated

                                

Net interest income (TE)

   $ 188,399     184,382     192,816     193,302     190,870  

Provision for loan losses

     (13,376 )   (7,684 )   (7,127 )   (10,990 )   (8,713 )

Noninterest income

     124,399     109,289     107,321     103,368     95,022  

Intangibles amortization

     (15,673 )   (16,284 )   (16,895 )   (17,507 )   (18,118 )

First Mercantile litigation

     (1,041 )   (19,654 )   —       —       —    

Employment contract terminations

     (14,108 )   —       —       —       —    

Cash operating expense

     (156,763 )   (148,860 )   (145,076 )   (139,151 )   (132,844 )
    


 

 

 

 

Income before income taxes (TE)

     111,837     101,189     131,039     129,022     126,217  

Income taxes

     40,330     37,099     46,173     46,045     45,349  
    


 

 

 

 

Net income

     71,507     64,090     84,866     82,977     80,868  

First Mercantile litigation, net of tax

     677     12,775     —       —       —    

Employment contract terminations, net of tax

     9,170     —       —       —       —    
    


 

 

 

 

Operating earnings

     81,354     76,865     84,866     82,977     80,868  

Amortization of core deposit, net of tax

     9,561     9,933     10,306     10,679     11,052  
    


 

 

 

 

Operating cash earnings

   $ 90,915     86,798     95,172     93,656     91,920  
    


 

 

 

 

 

(1)   Inter-segment eliminations are not separately presented.

 

Page 9


NATIONAL COMMERCE FINANCIAL CORPORATION

Year to Date Operating Segment Statements of Income

(In Thousands)

 

     Six Months Ended

   

$ Change

Fav/(Unfav)


   

% Change

Fav/(Unfav)


 
     6/30/2003

    6/30/2002

     

Traditional Banking

                          

Net interest income (TE)

   $ 362,280     367,719     (5,439 )   (1.5 )

Provision for loan losses

     (21,060 )   (14,227 )   (6,833 )   (48.0 )

Noninterest income

     136,976     103,552     33,424     32.3  

Intangibles amortization

     (31,957 )   (35,528 )   3,571     10.1  

First Mercantile litigation

     —       —       —       —    

Employment contract terminations

     (14,108 )   —       (14,108 )   —    

Conversion/merger expenses

     —       (4,940 )   4,940     100.0  

Cash operating expense

     (232,259 )   (200,534 )   (31,725 )   (15.8 )
    


 

 

     

Income before income taxes (TE)

     199,872     216,042     (16,170 )   (7.5 )

Income taxes

     72,299     76,976     4,677     6.1  
    


 

 

     

Net income

     127,573     139,066     (11,493 )   (8.3 )

Conversion/merger expenses, net of tax

     —       3,211     (3,211 )   (100.0 )

First Mercantile litigation, net of tax

     —       —       —       —    

Employment contract terminations, net of tax

     9,170     —       9,170     —    
    


 

 

     

Operating earnings

     136,743     142,277     (5,534 )   (3.9 )

Amortization of core deposit, net of tax

     19,494     21,672     (2,178 )   (10.0 )
    


 

 

     

Operating cash earnings

   $ 156,237     163,949     (7,712 )   (4.7 )
    


 

 

     

Financial Enterprises

                          

Net interest income (TE)

   $ 10,501     9,228     1,273     13.8  

Provision for loan losses

     —       —       —       —    

Noninterest income

     98,972     80,308     18,664     23.2  

Intangibles amortization

     —       —       —       —    

First Mercantile litigation

     (20,695 )   —       (20,695 )   (100.0 )

Employment contract terminations

     —       —                

Conversion/merger expenses

     —       —       —       —    

Cash operating expense

     (75,624 )   (62,158 )   (13,466 )   (21.7 )
    


 

 

     

Income before income taxes (TE)

     13,154     27,378     (14,224 )   (52.0 )

Income taxes

     5,130     10,677     5,547     52.0  
    


 

 

     

Net income

     8,024     16,701     (8,677 )   (52.0 )

Conversion/merger expenses, net of tax

     —       —       —       —    

First Mercantile litigation, net of tax

     13,452     —       13,452     100.0  

Employment contract terminations, net of tax

     —       —       —       —    
    


 

 

     

Operating earnings

     21,476     16,701     4,775     28.6  

Amortization of core deposit, net of tax

     —       —       —       —    
    


 

 

     

Operating cash earnings

   $ 21,476     16,701     4,775     28.6  
    


 

 

     

Fully Consolidated

                          

Net interest income (TE)

   $ 372,781     376,947     (4,166 )   (1.1 )

Provision for loan losses

     (21,060 )   (14,227 )   (6,833 )   (48.0 )

Noninterest income

     233,688     180,299     53,389     29.6  

Intangibles amortization

     (31,957 )   (35,528 )   3,571     10.1  

First Mercantile litigation

     (20,695 )   —       (20,695 )   (100.0 )

Employment contract terminations

     (14,108 )   —       (14,108 )   (100.0 )

Conversion/merger expenses

     —       (4,940 )   4,940     100.0  

Cash operating expense

     (305,623 )   (259,131 )   (46,492 )   (17.9 )
    


 

 

     

Income before income taxes (TE)

     213,026     243,420     (30,394 )   (12.5 )

Income taxes

     77,429     87,653     10,224     11.7  
    


 

 

     

Net income

     135,597     155,767     (20,170 )   (12.9 )

Conversion/merger expenses, net of tax

     —       3,211     (3,211 )   (100.0 )

First Mercantile litigation, net of tax

     13,452     —       13,452     100.0  

Employment contract terminations, net of tax

     9,170     —       9,170     100.0  
    


 

 

     

Operating earnings

     158,219     158,978     (759 )   (.5 )

Amortization of core deposit, net of tax

     19,494     21,672     (2,178 )   (10.0 )
    


 

 

     

Operating cash earnings

   $ 177,713     180,650     (2,937 )   (1.6 )
    


 

 

     

 

(1)   Inter-segment eliminations are not separately presented.

 

 

Page 10


NATIONAL COMMERCE FINANCIAL CORPORATION

Current Quarter Average Balance Sheet

(In Thousands)

 

     Three Months Ended

  

%

Inc/(Decr)


    Three Months Ended

   

%

Inc/(Decr)


 
     6/30/2003

   3/31/2003

     6/30/2003

   6/30/2002

   

Assets

                                   

Cash and due from banks

   $ 422,653    398,564    6.0     422,653    436,473     (3.2 )

Time deposits in other banks

     5,742    9,575    (40.0 )   5,742    22,411     (74.4 )

Federal funds sold and other short-term investments

     107,462    51,187    109.9     107,462    21,187     407.2  

Investment securities (1)

     6,674,537    5,706,704    17.0     6,674,537    5,197,443     28.4  

Trading securities

     120,999    87,496    38.3     120,999    89,229     35.6  

Loans:

                                   

Commercial

     3,492,900    3,350,959    4.2     3,492,900    3,062,154     14.1  

Construction and commercial real estate

     3,690,766    3,677,697    .4     3,690,766    3,526,901     4.6  

Mortgage (including loans held for sale)

     1,159,296    1,601,618    (27.6 )   1,159,296    1,663,703     (30.3 )

Consumer

     4,059,490    3,945,287    2.9     4,059,490    3,880,490     4.6  

Revolving credit

     78,142    76,939    1.6     78,142    68,573     14.0  

Lease financing

     133,952    136,528    (1.9 )   133,952    133,716     .2  
    

  
        
  

     

Total loans

     12,614,546    12,789,028    (1.4 )   12,614,546    12,335,537     2.3  

Allowance for loan losses

     164,108    163,203    .6     164,108    160,711     2.1  
    

  
        
  

     

Net loans

     12,450,438    12,625,825    (1.4 )   12,450,438    12,174,826     2.3  

Bank owned life insurance

     231,397    228,214    1.4     231,397    217,458     6.4  

Investment in First Market Bank

     29,248    28,353    3.2     29,248    25,317     15.5  

Premises and equipment

     276,227    258,614    6.8     276,227    247,739     11.5  

Goodwill

     1,082,077    1,077,121    .5     1,082,077    1,070,724     1.1  

Core deposit intangibles

     213,065    229,044    (7.0 )   213,065    280,701     (24.1 )

Other assets

     559,550    591,745    (5.4 )   559,550    449,796     24.4  
    

  
        
  

     

Total assets

   $ 22,173,395    21,292,442    4.1     22,173,395    20,233,304     9.6  
    

  
        
  

     

Liabilities

                                   

Deposits:

                                   

Demand deposits (noninterest-bearing)

   $ 2,375,641    2,140,299    11.0     2,375,641    1,923,408     23.5  

Savings, NOW and money market accounts

     5,765,351    5,684,696    1.4     5,765,351    5,800,664     (.6 )

Jumbo and brokered certificates of deposit

     2,032,881    1,796,198    13.2     2,032,881    1,533,119     32.6  

Time deposits

     4,915,988    4,909,848    .1     4,915,988    4,681,751     5.0  
    

  
        
  

     

Total deposits

     15,089,861    14,531,041    3.8     15,089,861    13,938,942     8.3  

Short-term borrowings

     1,388,604    1,249,458    11.1     1,388,604    1,124,318     23.5  

FHLB advances

     2,197,173    2,056,896    6.8     2,197,173    1,949,166     12.7  

Trust preferred securities and long-term debt

     299,247    296,745    .8     299,247    282,053     6.1  

Other liabilities

     495,573    462,456    7.2     495,573    408,906     21.2  
    

  
        
  

     

Total liabilities

     19,470,458    18,596,596    4.7     19,470,458    17,703,385     10.0  
    

  
        
  

     

Stockholders' Equity

                                   

Common stock

     409,257    410,541    (.3 )   409,257    412,736     (.8 )

Additional paid-in capital

     1,735,104    1,749,408    (.8 )   1,735,104    1,780,106     (2.5 )

Retained earnings

     512,491    485,214    5.6     512,491    344,678     48.7  

Accumulated other comprehensive income

     46,085    50,683    (9.1 )   46,085    (7,601 )   (706.3 )
    

  
        
  

     

Total stockholders' equity

     2,702,937    2,695,846    .3     2,702,937    2,529,919     6.8  
    

  
        
  

     

Total liabilities and stockholders' equity

   $ 22,173,395    21,292,442    4.1     22,173,395    20,233,304     9.6  
    

  
        
  

     

 

(1)   Average balances exclude the mark-to-market adjustment for Statement of Financial Accounting Standards No. 115.

 

Page 11


NATIONAL COMMERCE FINANCIAL CORPORATION

Five Quarter Average Balance Sheets

(In Thousands)

 

     Three Months Ended

 
     6/30/2003

   3/31/2003

   12/31/2002

   9/30/2002

   6/30/2002

 

Assets

                            

Cash and due from banks

   $ 422,653    398,564    419,601    418,062    436,473  

Time deposits in other banks

     5,742    9,575    8,491    5,475    22,411  

Federal funds sold and other short-term investments

     107,462    51,187    35,083    39,867    21,187  

Investment securities (1)

     6,674,537    5,706,704    5,382,247    5,310,350    5,197,443  

Trading securities

     120,999    87,496    70,464    75,782    89,229  

Loans:

                            

Commercial

     3,492,900    3,350,959    3,246,050    3,164,303    3,062,154  

Construction and commercial real estate

     3,690,766    3,677,697    3,666,631    3,621,559    3,526,901  

Mortgage (including loans held for sale)

     1,159,296    1,601,618    1,734,853    1,670,716    1,663,703  

Consumer

     4,059,490    3,945,287    3,950,658    3,940,340    3,880,490  

Revolving credit

     78,142    76,939    73,195    70,419    68,573  

Lease financing

     133,952    136,528    132,434    132,738    133,716  
    

  
  
  
  

Total loans

     12,614,546    12,789,028    12,803,821    12,600,075    12,335,537  

Allowance for loan losses

     164,108    163,203    163,012    162,243    160,711  
    

  
  
  
  

Net loans

     12,450,438    12,625,825    12,640,809    12,437,832    12,174,826  

Bank owned life insurance

     231,397    228,214    224,742    221,185    217,458  

Investment in First Market Bank

     29,248    28,353    27,265    26,221    25,317  

Premises and equipment

     276,227    258,614    257,005    251,228    247,739  

Goodwill

     1,082,077    1,077,121    1,073,597    1,071,943    1,070,724  

Core deposit intangibles

     213,065    229,044    245,583    262,844    280,701  

Other assets

     559,550    591,745    596,126    518,885    449,796  
    

  
  
  
  

Total assets

   $ 22,173,395    21,292,442    20,981,013    20,639,674    20,233,304  
    

  
  
  
  

Liabilities

                            

Deposits:

                            

Demand deposits (noninterest-bearing)

   $ 2,375,641    2,140,299    2,120,154    1,989,040    1,923,408  

Savings, NOW and money market accounts

     5,765,351    5,684,696    5,601,106    5,591,451    5,800,664  

Jumbo and brokered certificates of deposit

     2,032,881    1,796,198    1,740,695    1,683,886    1,533,119  

Time deposits

     4,915,988    4,909,848    4,865,312    4,778,297    4,681,751  
    

  
  
  
  

Total deposits

     15,089,861    14,531,041    14,327,267    14,042,674    13,938,942  

Short-term borrowings

     1,388,604    1,249,458    1,134,553    1,192,955    1,124,318  

FHLB advances

     2,197,173    2,056,896    2,132,665    2,133,208    1,949,166  

Trust preferred securities and long-term debt

     299,247    296,745    285,003    281,684    282,053  

Other liabilities

     495,573    462,456    451,370    382,656    408,906  
    

  
  
  
  

Total liabilities

     19,470,458    18,596,596    18,330,858    18,033,177    17,703,385  
    

  
  
  
  

Stockholders’ Equity

                            

Common stock

     409,257    410,541    410,722    412,517    412,736  

Additional paid-in capital

     1,735,104    1,749,408    1,752,110    1,773,722    1,780,106  

Retained earnings

     512,491    485,214    439,535    386,072    344,678  

Accumulated other comprehensive income

     46,085    50,683    47,788    34,186    (7,601 )
    

  
  
  
  

Total stockholders’ equity

     2,702,937    2,695,846    2,650,155    2,606,497    2,529,919  
    

  
  
  
  

Total liabilities and stockholders’ equity

   $ 22,173,395    21,292,442    20,981,013    20,639,674    20,233,304  
    

  
  
  
  

Average assets

   $ 22,173,395    21,292,442    20,981,013    20,639,674    20,233,304  

Intangible assets

     1,295,142    1,306,165    1,319,180    1,334,787    1,351,425  
    

  
  
  
  

Average tangible assets

   $ 20,878,253    19,986,277    19,661,833    19,304,887    18,881,879  
    

  
  
  
  

Average stockholders’ equity

   $ 2,702,937    2,695,846    2,650,155    2,606,497    2,529,919  

Intangible assets

     1,295,142    1,306,165    1,319,180    1,334,787    1,351,425  
    

  
  
  
  

Average tangible stockholders’ equity

   $ 1,407,795    1,389,681    1,330,975    1,271,710    1,178,494  
    

  
  
  
  

 

(1)   Average balances exclude the mark-to-market adjustment for Statement of Financial Accounting Standards No. 115.

 

Page 12


NATIONAL COMMERCE FINANCIAL CORPORATION

Year to Date Average Balance Sheets

(In Thousands)

 

     Six Months Ended

            
     6/30/2003

   6/30/2002

   $ Change

    % Change

 

Assets

                        

Cash and due from banks

   $ 410,675    454,467    (43,792 )   (9.6 )

Time deposits in other banks

     7,648    25,256    (17,608 )   (69.7 )

Federal funds sold and other short-term investments

     79,480    25,021    54,459     217.7  

Investment securities (1)

     6,193,294    5,014,627    1,178,667     23.5  

Trading securities

     104,340    82,513    21,827     26.5  

Loans:

                        

Commercial

     3,422,322    3,025,204    397,118     13.1  

Construction and commercial real estate

     3,684,267    3,469,588    214,679     6.2  

Mortgage (including loans held for sale)

     1,379,235    1,726,981    (347,746 )   (20.1 )

Consumer

     4,002,704    3,799,552    203,152     5.3  

Revolving credit

     77,544    67,040    10,504     15.7  

Lease financing

     135,233    134,457    776     —    
    

  
  

     

Total loans

     12,701,305    12,222,822    478,483     3.9  

Allowance for loan losses

     163,658    159,202    4,456     2.8  
    

  
  

     

Net loans

     12,537,647    12,063,620    474,027     3.9  

Bank owned life insurance

     229,814    215,737    14,077     6.5  

Investment in First Market Bank

     28,803    25,021    3,782     15.1  

Premises and equipment

     267,469    239,188    28,281     11.8  

Goodwill

     1,079,613    1,040,625    38,988     3.7  

Core deposit intangibles

     221,010    275,911    (54,901 )   (19.9 )

Other assets

     575,559    430,499    145,060     33.7  
    

  
  

     

Total assets

   $ 21,735,352    19,892,485    1,842,867     9.3  
    

  
  

     

Liabilities

                        

Deposits:

                        

Demand deposits (noninterest-bearing)

   $ 2,258,620    1,835,344    423,276     23.1  

Savings, NOW and money market accounts

     5,725,246    5,643,359    81,887     1.5  

Jumbo and brokered certificates of deposit

     1,915,194    1,552,380    362,814     23.4  

Time deposits

     4,912,935    4,592,683    320,252     7.0  
    

  
  

     

Total deposits

     14,811,995    13,623,766    1,188,229     8.7  

Short-term borrowings

     1,319,415    1,048,208    271,207     25.9  

FHLB advances

     2,127,422    2,021,161    106,261     5.3  

Trust preferred securities and long-term debt

     298,003    282,052    15,951     5.7  

Other liabilities

     479,106    408,431    70,675     17.3  
    

  
  

     

Total liabilities

     19,035,941    17,383,618    1,652,323     9.5  
    

  
  

     

Stockholders’ Equity

                        

Common stock

     409,896    412,117    (2,221 )   (.5 )

Additional paid-in capital

     1,742,216    1,772,944    (30,728 )   (1.7 )

Retained earnings

     498,928    321,416    177,512     55.2  

Accumulated other comprehensive income

     48,371    2,390    45,981     N/A  
    

  
  

     

Total stockholders’ equity

     2,699,411    2,508,867    190,544     7.6  
    

  
  

     

Total liabilities and stockholders’ equity

   $ 21,735,352    19,892,485    1,842,867     9.3  
    

  
  

     

Average assets

   $ 21,735,352    19,892,485    1,842,867     9.3  

Intangible assets

     1,300,623    1,316,536    (15,913 )   (1.2 )
    

  
  

     

Average tangible assets

   $ 20,434,729    18,575,949    1,858,780     10.0  
    

  
  

     

Average stockholders’ equity

   $ 2,699,411    2,508,867    190,544     7.6  

Intangible assets

     1,300,623    1,316,536    (15,913 )   (1.2 )
    

  
  

     

Average tangible stockholders’ equity

   $ 1,398,788    1,192,331    206,457     17.3  
    

  
  

     

 

(1)   Average balances exclude the mark-to-market adjustment for Statement of Financial Accounting Standards No. 115.

 

Page 13


NATIONAL COMMERCE FINANCIAL CORPORATION

Current Quarter End of Period Balance Sheet

(In Thousands)

 

     As of

  

%

Inc/(Decr)


    As of

  

%

Inc/(Decr)


 
     6/30/2003

   3/31/2003

     6/30/2003

   6/30/2002

  

Assets

                                  

Cash and due from banks

   $ 536,123    522,814    2.5     536,123    481,326    11.4  

Time deposits in other banks

     5,265    4,328    21.6     5,265    6,544    (19.5 )

Federal funds sold and other short-term investments

     160,383    42,899    273.9     160,383    105,932    51.4  

Investment securities:

                                  

Available for sale

     5,215,357    5,299,253    (1.6 )   5,215,357    4,632,713    12.6  

Held to maturity

     1,540,860    1,295,609    18.9     1,540,860    839,542    83.5  

Trading securities

     105,923    80,842    31.0     105,923    110,427    (4.1 )

Loans:

                                  

Commercial

     3,570,337    3,403,217    4.9     3,570,337    3,114,754    14.6  

Construction and commercial real estate

     3,719,164    3,689,692    .8     3,719,164    3,582,421    3.8  

Mortgage (including loans held for sale)

     1,282,062    1,017,221    26.0     1,282,062    1,658,905    (22.7 )

Consumer

     4,128,195    3,966,994    4.1     4,128,195    3,910,081    5.6  

Revolving credit

     79,437    76,616    3.7     79,437    69,388    14.5  

Lease financing

     130,698    135,126    (3.3 )   130,698    134,481    (2.8 )
    

  
        
  
      

Total loans

     12,909,893    12,288,866    5.1     12,909,893    12,470,030    3.5  

Allowance for loan losses

     167,316    162,842    2.7     167,316    161,616    3.5  
    

  
        
  
      

Net loans

     12,742,577    12,126,024    5.1     12,742,577    12,308,414    3.5  

Bank owned life insurance

     233,452    230,228    1.4     233,452    219,542    6.3  

Investment in First Market Bank

     29,995    28,923    3.7     29,995    25,839    16.1  

Premises and equipment

     275,612    274,433    .4     275,612    248,567    10.9  

Goodwill

     1,083,157    1,077,332    .5     1,083,157    1,071,769    1.1  

Core deposit intangibles

     204,959    220,632    (7.1 )   204,959    271,318    (24.5 )

Other assets

     546,328    518,668    5.3     546,328    490,235    11.4  
    

  
        
  
      

Total assets

   $ 22,679,991    21,721,985    4.4     22,679,991    20,812,168    9.0  
    

  
        
  
      

Liabilities

                                  

Deposits:

                                  

Demand deposits (noninterest-bearing)

   $ 2,657,291    2,383,806    11.5     2,657,291    2,051,963    29.5  

Savings, NOW and money market accounts

     5,849,113    5,795,400    .9     5,849,113    5,732,415    2.0  

Jumbo and brokered certificates of deposit

     2,063,785    1,804,492    14.4     2,063,785    1,652,279    24.9  

Time deposits

     4,876,012    4,942,165    (1.3 )   4,876,012    4,703,158    3.7  
    

  
        
  
      

Total deposits

     15,446,201    14,925,863    3.5     15,446,201    14,139,815    9.2  

Short-term borrowings

     1,465,425    1,351,105    8.5     1,465,425    1,352,416    8.4  

FHLB advances

     2,274,384    1,951,912    16.5     2,274,384    2,026,082    12.3  

Trust preferred securities and long-term debt

     295,049    300,127    (1.7 )   295,049    282,108    4.6  

Other liabilities

     478,497    496,964    (3.7 )   478,497    415,361    15.2  
    

  
        
  
      

Total liabilities

     19,959,556    19,025,971    4.9     19,959,556    18,215,782    9.6  
    

  
        
  
      

Stockholders' Equity

                                  

Common stock

     408,770    410,019    (.3 )   408,770    412,835    (1.0 )

Additional paid-in capital

     1,730,367    1,743,146    (.7 )   1,730,367    1,779,603    (2.8 )

Retained earnings

     533,462    496,783    7.4     533,462    369,912    44.2  

Accumulated other comprehensive income

     47,836    46,066    3.8     47,836    34,036    40.5  
    

  
        
  
      

Total stockholders' equity

     2,720,435    2,696,014    .9     2,720,435    2,596,386    4.8  
    

  
        
  
      

Total liabilities and stockholders' equity

   $ 22,679,991    21,721,985    4.4     22,679,991    20,812,168    9.0  
    

  
        
  
      

 

Page 14


NATIONAL COMMERCE FINANCIAL CORPORATION

Five Quarter End of Period Balance Sheets

(In Thousands Except Share and Per Share Data)

 

     As of

     6/30/2003

   3/31/2003

   12/31/2002

   9/30/2002

   6/30/2002

Assets

                          

Cash and due from banks

   $ 536,123    522,814    517,295    484,879    481,326

Time deposits in other banks

     5,265    4,328    12,276    2,984    6,544

Federal funds sold and

                          

other short-term investments

     160,383    42,899    73,186    10,722    105,932

Investment securities:

                          

Available for sale

     5,215,357    5,299,253    4,777,009    4,512,627    4,632,713

Held to maturity

     1,540,860    1,295,609    925,652    934,506    839,542

Trading securities

     105,923    80,842    116,954    102,892    110,427

Loans:

                          

Commercial

     3,570,337    3,403,217    3,329,451    3,219,205    3,114,754

Construction and commercial real estate

     3,719,164    3,689,692    3,655,671    3,668,588    3,582,421

Mortgage (including loans held for sale) (1)

     1,282,062    1,017,221    1,798,326    1,685,122    1,658,905

Consumer

     4,128,195    3,966,994    3,933,482    3,962,914    3,910,081

Revolving credit

     79,437    76,616    74,463    71,805    69,388

Lease financing

     130,698    135,126    132,547    132,929    134,481
    

  
  
  
  

Total loans

     12,909,893    12,288,866    12,923,940    12,740,563    12,470,030

Allowance for loan losses

     167,316    162,842    163,424    163,336    161,616
    

  
  
  
  

Net loans

     12,742,577    12,126,024    12,760,516    12,577,227    12,308,414

Bank owned life insurance

     233,452    230,228    227,051    223,425    219,542

Investment in First Market Bank

     29,995    28,923    27,997    26,913    25,839

Premises and equipment

     275,612    274,433    257,676    253,739    248,567

Goodwill

     1,083,157    1,077,332    1,077,118    1,072,371    1,071,769

Core deposit intangibles

     204,959    220,632    236,916    253,812    271,318

Other assets

     546,328    518,668    462,470    487,634    490,235
    

  
  
  
  

Total assets

   $ 22,679,991    21,721,985    21,472,116    20,943,731    20,812,168
    

  
  
  
  

Liabilities

                          

Deposits:

                          

Demand deposits (noninterest-bearing)

   $ 2,657,291    2,383,806    2,241,833    2,185,954    2,051,963

Savings, NOW and money market accounts

     5,849,113    5,795,400    5,666,407    5,558,221    5,732,415

Jumbo and brokered certificates of deposit

     2,063,785    1,804,492    1,723,548    1,856,527    1,652,279

Time deposits

     4,876,012    4,942,165    4,862,946    4,822,424    4,703,158
    

  
  
  
  

Total deposits

     15,446,201    14,925,863    14,494,734    14,423,126    14,139,815

Short-term borrowings

     1,465,425    1,351,105    1,452,764    1,012,128    1,352,416

FHLB advances

     2,274,384    1,951,912    2,106,474    2,218,750    2,026,082

Trust preferred securities and long-term debt

     295,049    300,127    296,707    279,112    282,108

Other liabilities

     478,497    496,964    439,005    371,102    415,361
    

  
  
  
  

Total liabilities

     19,959,556    19,025,971    18,789,684    18,304,218    18,215,782
    

  
  
  
  

Stockholders’ Equity

                          

Common stock

     408,770    410,019    410,816    411,536    412,835

Additional paid-in-capital

     1,730,367    1,743,146    1,753,241    1,762,453    1,779,603

Retained earnings

     533,462    496,783    467,641    417,769    369,912

Accumulated other comprehensive income

     47,836    46,066    50,734    47,755    34,036
    

  
  
  
  

Total stockholders’ equity

     2,720,435    2,696,014    2,682,432    2,639,513    2,596,386
    

  
  
  
  

Total liabilities and stockholders’ equity

   $ 22,679,991    21,721,985    21,472,116    20,943,731    20,812,168
    

  
  
  
  

Total assets

   $ 22,679,991    21,721,985    21,472,116    20,943,731    20,812,168

Intangible assets

     1,288,116    1,297,964    1,314,034    1,326,183    1,343,087
    

  
  
  
  

Total tangible assets

   $ 21,391,875    20,424,021    20,158,082    19,617,548    19,469,081
    

  
  
  
  

Total stockholders’ equity

   $ 2,720,435    2,696,014    2,682,432    2,639,513    2,596,386

Intangible assets

     1,288,116    1,297,964    1,314,034    1,326,183    1,343,087
    

  
  
  
  

Total tangible stockholders’ equity

   $ 1,432,319    1,398,050    1,368,398    1,313,330    1,253,299
    

  
  
  
  

 

(1)   In late March 2003, the Company consummated a transaction securitizing mortgage loans and retained a majority of the resulting securities. The March 31, 2003 period end balances were reduced by approximately $646 million.

 

Page 15


NATIONAL COMMERCE FINANCIAL CORPORATION

Rollforward of Stockholders’ Equity

Six Months ended June 30, 2003 and 2002

(In Thousands Except for Share Data)

 

     Shares of
Common Stock


    Common
Stock


    Additional
Paid-In
Capital


    Retained
Earnings


    Other Comp.
Income


    Total
Stockholders’
Equity


 

Balance January 1, 2002

   205,058,713     $ 410,117     1,756,128     276,342     12,744     2,455,331  

Net income

   —         —       —       155,767     —       155,767  

Restricted stock transactions, net

   7,065       14     1,172     —       —       1,186  

Options exercised, net of shares tendered

   1,491,863       2,985     26,064     —       —       29,049  

Shares repurchased and retired

   (100,000 )     (200 )   (2,337 )   —       —       (2,537 )

Cash dividends ($.30 per share)

   —         —       —       (62,197 )   —       (62,197 )

Change in minimum pension liability, net of applicable income taxes

   —         —       —       —       98     98  

Change in unrealized losses on investment securities available for sale, net of applicable income taxes

   —         —       —       —       21,194     21,194  

Other transactions, net

   (40,377 )     (81 )   (1,424 )   —       —       (1,505 )
    

 


 

 

 

 

Total equity, June 30, 2002

   206,417,264     $ 412,835     1,779,603     369,912     34,036     2,596,386  
    

 


 

 

 

 

Total equity, January 1, 2003

   205,408,183     $ 410,816     1,753,241     467,641     50,734     2,682,432  

Net income

   —         —       —       135,597     —       135,597  

Restricted stock transactions, net

   1,693       3     1,258     —       —       1,261  

Options exercised, net of shares tendered

   472,596       947     5,607     —       —       6,554  

Shares repurchased and retired

   (1,474,300 )     (2,949 )   (29,272 )   —       —       (32,221 )

Cash dividends ($.34 per share)

   —         —       —       (69,776 )   —       (69,776 )

Change in minimum pension liability, net of applicable income taxes

   —         —       —       —       (742 )   (742 )

Change in unrealized gains on investment securities available for sale, net of applicable income taxes

   —         —       —       —       (1,955 )   (1,955 )

Change in unrealized loss on hedging instruments, net of applicable income taxes

   —         —       —       —       (201 )   (201 )

Other transactions, net

   (23,394 )     (47 )   (467 )   —       —       (514 )
    

 


 

 

 

 

Balance, June 30, 2003

   204,384,778     $ 408,770     1,730,367     533,462     47,836     2,720,435  
    

 


 

 

 

 

 

Page 16


NATIONAL COMMERCE FINANCIAL CORPORATION

Current Quarter Asset Quality

(In Thousands)

 

     As Of And For The
Three Months Ended


    %
Inc/(Decr)


    As Of And For The
Three Months Ended


    %
Inc/(Decr)


 
     6/30/03

    3/31/03

      6/30/03

    6/30/02

   

Allowance For Loan Losses

                                      

Beginning balance

   $ 162,842     163,424     (.4 )   162,842     160,194     1.7  

Charge-offs:

                                      

Commercial

     (893 )   (1,441 )   (38.0 )   (893 )   (2,637 )   (66.1 )

Construction and commercial real estate

     (84 )   (141 )   (40.4 )   (84 )   (37 )   127.0  

Secured by real estate

     (1,375 )   (727 )   89.1     (1,375 )   (985 )   39.6  

Consumer

     (6,289 )   (5,977 )   5.2     (6,289 )   (4,140 )   51.9  

Revolving credit

     (1,133 )   (941 )   20.4     (1,133 )   (926 )   22.4  

Lease financing

     (605 )   (53 )   1041.5     (605 )   (173 )   249.7  
    


 

       

 

     

Total charge-offs

     (10,379 )   (9,280 )   11.8     (10,379 )   (8,898 )   16.6  
    


 

       

 

     

Recoveries:

                                      

Commercial

     261     273     (4.4 )   261     150     74.0  

Construction and commercial real estate

     1     7     (85.7 )   1     2     (50.0 )

Secured by real estate

     69     26     165.4     69     88     (21.6 )

Consumer

     824     931     (11.5 )   824     1,096     (24.8 )

Revolving credit

     290     322     (9.9 )   290     287     1.0  

Lease financing

     32     37     (13.5 )   32     (16 )   (300.0 )
    


 

       

 

     

Total recoveries

     1,477     1,596     (7.5 )   1,477     1,607     (8.1 )
    


 

       

 

     

Net charge-offs

     (8,902 )   (7,684 )   15.9     (8,902 )   (7,291 )   22.1  

Provision for loan losses

     13,376     7,684     74.1     13,376     8,713     53.5  

Changes from acquisitions (sales)

     —       (582 )   (100.0 )   —       —       —    
    


 

       

 

     

Ending balance

   $ 167,316     162,842     2.7     167,316     161,616     3.5  
    


 

       

 

     

Nonperforming Assets

                                      

Nonaccrual loans by loan type:

                                      

Commercial

   $ 20,151     19,833     1.6     20,151     17,676     14.0  

Construction and commercial real estate

     7,014     6,883     1.9     7,014     9,988     (29.8 )

Secured by real estate

     1,901     2,105     (9.7 )   1,901     238     698.7  

Consumer

     3,227     2,004     61.0     3,227     1,588     103.2  

Lease financing

     1,550     2,013     (23.0 )   1,550     975     59.0  
    


 

       

 

     

Total nonperforming loans

     33,843     32,838     3.1     33,843     30,465     11.1  

Foreclosed real estate

     23,961     22,981     4.3     23,961     24,634     (2.7 )
    


 

       

 

     

Nonperforming loans and foreclosed real estate

     57,804     55,819     3.6     57,804     55,099     4.9  

Other repossessed assets

     8,420     11,962     (29.6 )   8,420     10,602     (20.6 )
    


 

       

 

     

Nonperforming assets

   $ 66,224     67,781     (2.3 )   66,224     65,701     .8  
    


 

       

 

     

Ninety days past due and accruing

   $ 51,761     56,104     (7.7 )   51,761     52,351     (1.1 )
    


 

       

 

     

Asset Quality Ratios

                                      

Net charge-offs (annualized) by loan type:

                                      

Commercial

     .07 %   .14           .07     .33        

Construction and commercial real estate

     .01     .01           .01     .00        

Secured by real estate

     .45     .18           .45     .22        

Consumer

     .54     .52           .54     .31        

Revolving credit

     4.33     3.26           4.33     3.74        

Lease financing

     1.72     .05           1.72     .57        

Net loans charged-off (annualized) to average loans

     .28     .24           .28     .24        

Nonperforming loans to total loans

     .26     .27           .26     .24        

Nonperforming loans and foreclosed real estate to loans and foreclosed real estate

     .45     .45           .45     .44        

Nonperforming assets to loans plus foreclosed real estate and other repossessed assets

     .51     .55           .51     .53        

Loan loss allowance to total loans

     1.30     1.33           1.30     1.30        

Loan loss allowance to loans (excluding loans held for sale)

     1.35     1.37           1.35     1.31        

Loan loss allowance to net charge-offs (annualized)

     4.69 x   5.23           4.69     5.53        

Loan loss allowance to nonperforming loans

     4.94     4.96           4.94     5.30        

 

Page 17


NATIONAL COMMERCE FINANCIAL CORPORATION

Five Quarter Asset Quality

(In Thousands)

 

     As Of And For The Three Months Ended

 
     6/30/2003

    3/31/2003

    12/31/2002

    9/30/2002

    6/30/2002

 

Allowance For Loan Losses

                                

Beginning balance

   $ 162,842     163,424     163,336     161,616     160,194  

Charge-offs:

                                

Commercial

     (893 )   (1,441 )   (1,287 )   (2,449 )   (2,637 )

Construction and commercial real estate

     (84 )   (141 )   (123 )   (126 )   (37 )

Secured by real estate

     (1,375 )   (727 )   (951 )   (666 )   (985 )

Consumer

     (6,289 )   (5,977 )   (4,053 )   (6,231 )   (4,140 )

Revolving credit

     (1,133 )   (941 )   (1,255 )   (955 )   (926 )

Lease financing

     (605 )   (53 )   (708 )   (249 )   (173 )
    


 

 

 

 

Total charge-offs

     (10,379 )   (9,280 )   (8,377 )   (10,676 )   (8,898 )
    


 

 

 

 

Recoveries:

                                

Commercial

     261     273     125     141     150  

Construction and commercial real estate

     1     7     —       6     2  

Secured by real estate

     69     26     49     119     88  

Consumer

     824     931     813     961     1,096  

Revolving credit

     290     322     231     179     287  

Lease financing

     32     37     38     —       (16 )
    


 

 

 

 

Total recoveries

     1,477     1,596     1,256     1,406     1,607  
    


 

 

 

 

Net charge-offs

     (8,902 )   (7,684 )   (7,121 )   (9,270 )   (7,291 )

Provision for loan losses

     13,376     7,684     7,127     10,990     8,713  

Changes from acquisitions (sales)

     —       (582 )   82     —       —    
    


 

 

 

 

Ending balance

   $ 167,316     162,842     163,424     163,336     161,616  
    


 

 

 

 

Nonperforming Assets

                                

Nonaccrual loans by loan type:

                                

Commercial

   $ 20,151     19,833     16,992     19,761     17,676  

Construction and commercial real estate

     7,014     6,883     8,531     6,976     9,988  

Secured by real estate

     1,901     2,105     2,261     278     238  

Consumer

     3,227     2,004     2,089     1,461     1,588  

Lease financing

     1,550     2,013     933     1,178     975  
    


 

 

 

 

Total nonperforming loans

     33,843     32,838     30,806     29,654     30,465  

Foreclosed real estate

     23,961     22,981     25,480     24,612     24,634  
    


 

 

 

 

Nonperforming loans and foreclosed real estate

     57,804     55,819     56,286     54,266     55,099  

Other repossessed assets

     8,420     11,962     9,285     9,688     10,602  
    


 

 

 

 

Nonperforming assets

   $ 66,224     67,781     65,571     63,954     65,701  
    


 

 

 

 

Ninety days past due and accruing

     51,761     56,104     56,384     49,803     52,351  
    


 

 

 

 

Asset Quality Ratios

                                

Net charge-offs (annualized) by loan type:

                                

Commercial

     .07 %   .14     .14     .29     .33  

Construction and commercial real estate

     .01     .01     .01     .01     .00  

Secured by real estate

     .45     .18     .21     .13     .22  

Consumer

     .54     .52     .33     .53     .31  

Revolving credit

     4.33     3.26     5.55     4.37     3.74  

Lease financing

     1.72     .05     2.01     .74     .57  

Net loans charged-off (annualized) to average loans

     .28     .24     .22     .29     .24  

Nonperforming loans to total loans

     .26     .27     .24     .23     .24  

Nonperforming loans and foreclosed real estate to loans and foreclosed real estate

     .45     .45     .43     .43     .44  

Nonperforming assets to loans plus foreclosed real estate and other repossessed assets

     .51     .55     .51     .50     .53  

Loan loss allowance to total loans

     1.30     1.33     1.26     1.28     1.30  

Loan loss allowance to loans (excluding loans held for sale)

     1.35     1.37     1.31     1.30     1.31  

Loan loss allowance to net charge-offs (annualized)

     4.69 x   5.23     5.78     4.44     5.53  

Loan loss allowance to nonperforming loans

     4.94     4.96     5.30     5.51     5.30  

 

Page 18


NATIONAL COMMERCE FINANCIAL CORPORATION

Year to Date Asset Quality

(In Thousands)

 

     As Of And For The
Six Months Ended


   

$

Change


   

%

Inc/(Decr)


 
     6/30/03

    6/30/02

     

Allowance For Loan Losses

                          

Beginning balance

   $ 163,424     156,401     7,023     4.5  

Charge-offs:

                          

Commercial

     (2,334 )   (3,719 )   1,385     (37.2 )

Construction and commercial real estate

     (225 )   (135 )   (90 )   66.7  

Secured by real estate

     (2,102 )   (1,868 )   (234 )   12.5  

Consumer

     (12,266 )   (10,532 )   (1,734 )   16.5  

Revolving credit

     (2,074 )   (1,870 )   (204 )   10.9  

Lease financing

     (658 )   (341 )   (317 )   93.0  
    


 

 

     

Total charge-offs

     (19,659 )   (18,465 )   (1,194 )   6.5  
    


 

 

     

Recoveries:

                          

Commercial

     534     525     9     1.7  

Construction and commercial real estate

     8     2     6     300.0  

Secured by real estate

     95     92     3     3.3  

Consumer

     1,755     2,212     (457 )   (20.7 )

Revolving credit

     612     509     103     20.2  

Lease financing

     69     6     63     1050.0  
    


 

 

     

Total recoveries

     3,073     3,346     (273 )   (8.2 )
    


 

 

     

Net charge-offs

     (16,586 )   (15,119 )   (1,467 )   9.7  

Provision for loan losses

     21,060     14,227     6,833     48.0  

Changes from acquisitions (sales)

     (582 )   6,107     (6,689 )   (109.5 )
    


 

 

     

Ending balance

   $ 167,316     161,616     5,700     3.5  
    


 

 

     

Asset Quality Ratios

                          

Net charge-offs by loan type:

                          

Commercial

     .11 %   .21              

Construction and commercial real estate

     .01     .01              

Secured by real estate

     .29     .21              

Consumer

     .53     .44              

Revolving credit

     3.80     4.09              

Lease financing

     .88     .50              

Net loans charged-off to average loans

     .26     .25              

Loan loss allowance to total loans

     1.30     1.30              

Loan loss allowance to net charge-offs

     5.00 x   5.30              

 

Page 19


NATIONAL COMMERCE FINANCIAL CORPORATION

Five Quarter Average Balance Sheets and Net Interest Income Analysis

(In Thousands Except Share and Per Share Data)

 

     Three Months Ended

     6/30/2003

    3/31/2003

  12/31/2002

  9/30/2002

  6/30/2002

     Average
Balance


  Interest

  Average
Yield/Rate


    Average
Balance


  Interest

  Average
Yield/Rate


  Average
Balance


  Interest

  Average
Yield/Rate


  Average
Balance


  Interest

  Average
Yield/Rate


  Average
Balance


  Interest

  Average
Yield/Rate


Earning assets:

                                                                  

Total loans

   $ 12,614,546     190,239   6.05 %   12,789,028   199,861   6.32   12,803,821   214,799   6.67   12,600,075   217,482   6.86   12,335,537   218,856   7.11

Investment securities (1)

     6,674,537     80,778   4.84     5,706,704   69,677   4.88   5,382,247   71,006   5.28   5,310,350   72,611   5.47   5,197,443   72,555   5.58

Trading securities

     120,999     437   1.44     87,496   586   2.68   70,464   595   3.38   75,782   672   3.55   89,229   613   2.75

Time deposits in other banks

     5,742     17   1.21     9,575   25   1.06   8,491   37   1.72   5,475   26   1.87   22,411   142   2.54

Federal funds sold and other short-term investments

     107,462     340   1.27     51,187   167   1.33   35,083   162   1.85   39,867   191   1.90   21,187   128   2.43
    

 

 

 
 
 
 
 
 
 
 
 
 
 
 

Total earning assets

     19,523,286     271,811   5.58     18,643,990   270,316   5.85   18,300,106   286,599   6.23   18,031,549   290,982   6.42   17,665,807   292,294   6.63
          

 

     
 
     
 
     
 
     
 

Non-earning assets:

                                                                  
                                                                    

Cash and due from banks

     422,653               398,564           419,601           418,062           436,473        

Bank owned life insurance

     231,397               228,214           224,742           221,185           217,458        

Investment in First Market Bank

     29,248               28,353           27,265           26,221           25,317        

Premises and equipment

     276,227               258,614           257,005           251,228           247,739        

Goodwill

     1,082,077               1,077,121           1,073,597           1,071,943           1,070,724        

Core deposit intangibles

     213,065               229,044           245,583           262,844           280,701        

Other assets, net

     395,442               428,542           433,114           356,642           289,085        
    

             
         
         
         
       

Total assets

   $ 22,173,395               21,292,442           20,981,013           20,639,674           20,233,304        
    

             
         
         
         
       

Interest-bearing liabilities

                                                                  

Interest-bearing deposits:

                                                                  

Savings, NOW and money market accounts

   $ 5,765,351     11,006   .76 %   5,684,696   11,957   .85   5,601,106   14,036   .99   5,591,451   15,605   1.11   5,800,664   18,527   1.28

Jumbo and brokered certificates of deposit

     2,032,881     7,378   1.46     1,796,198   7,189   1.62   1,740,695   8,281   1.89   1,683,886   8,611   2.03   1,533,119   8,290   2.17

Time deposits

     4,915,988     36,800   3.00     4,909,848   38,142   3.15   4,865,312   40,878   3.33   4,778,297   41,651   3.46   4,681,751   45,046   3.86
    

 

 

 
 
 
 
 
 
 
 
 
 
 
 

Total interest-bearing deposits

     12,714,220     55,184   1.74     12,390,742   57,288   1.88   12,207,113   63,195   2.05   12,053,634   65,867   2.17   12,015,534   71,863   2.40

Short-term borrowings

     1,388,604     4,698   1.37     1,249,458   4,368   1.40   1,134,553   4,463   1.56   1,192,955   5,393   1.79   1,124,318   4,461   1.59

FHLB advances

     2,197,173     21,397   3.91     2,056,896   22,118   4.36   2,132,665   23,667   4.40   2,133,208   24,010   4.47   1,949,166   22,626   4.66

Trust preferred securities and long-term debt

     299,247     2,133   2.81     296,745   2,160   2.95   285,003   2,458   3.45   281,684   2,410   3.42   282,053   2,474   3.51
    

 

 

 
 
 
 
 
 
 
 
 
 
 
 

Total interest-bearing liabilities

     16,599,244     83,412   2.02     15,993,841   85,934   2.18   15,759,334   93,783   2.36   15,661,481   97,680   2.47   15,371,071   101,424   2.65
          

 

     
 
     
 
     
 
     
 

Other liabilities and stockholders’ equity:

                                                                  

Demand deposits (noninterest-bearing)

     2,375,641               2,140,299           2,120,154           1,989,040           1,923,408        

Other liabilities

     495,573               462,456           451,370           382,656           408,906        

Stockholders’ equity

     2,702,937               2,695,846           2,650,155           2,606,497           2,529,919        
    

             
         
         
         
       

Total liabilities and stockholders’ equity

   $ 22,173,395               21,292,442           20,981,013           20,639,674           20,233,304        
    

             
         
         
         
       

Net interest income and margin

         $ 188,399   3.86 %       184,382   3.98       192,816   4.20       193,302   4.27       190,870   4.33
          

 

     
 
     
 
     
 
     
 

Interest rate spread

               3.56 %           3.67           3.87           3.95           3.98
                

         
         
         
         

 

(1)   Average balances exclude the mark-to-market adjustment for Statement of Financial Accounting Standards No. 115.

 

Page 20


NATIONAL COMMERCE FINANCIAL CORPORATION

Year to Date Average Balance Sheets and Net Interest Income Analysis

(In Thousands Except Share and Per Share Data)

 

     Six Months Ended

     6/30/2003

    6/30/2002

    

Average

Balance


  

Interest


  

Average

Yield/Rate


   

Average

Balance


  

Interest


  

Average

Yield/Rate


Earning assets:

                                  

Total loans

   $ 12,701,305      390,100    6.19 %   12,222,822    439,677    7.24

Investment securities (1)

     6,193,294      150,455    4.86     5,014,627    141,056    5.63

Trading securities

     104,340      1,023    1.96     82,513    1,055    2.56

Time deposits in other banks

     7,648      42    1.11     25,256    310    2.47

Federal funds sold and other short-term investments

     79,480      507    1.29     25,021    277    2.23
    

  

  

 
  
  

Total earning assets

     19,086,067      542,127    5.71     17,370,239    582,375    6.74
           

  

      
  

Non-earning assets:

                                  

Cash and due from banks

     410,675                 454,467          

Bank owned life insurance

     229,814                 215,737          

Investment in First Market Bank

     28,803                 25,021          

Premises and equipment

     267,469                 239,188          

Goodwill

     1,079,613                 1,040,625          

Core deposit intangibles

     221,010                 275,911          

Other assets, net

     411,901                 271,297          
    

               
         

Total assets

   $ 21,735,352                 19,892,485          
    

               
         

Interest-bearing liabilities

                                  

Interest-bearing deposits:

                                  

Savings, NOW and money market accounts

   $ 5,725,246      22,963    .81 %   5,643,359    35,929    1.28

Jumbo and brokered certificates of deposit

     1,915,194      14,567    1.53     1,552,380    17,108    2.22

Time deposits

     4,912,935      74,942    3.08     4,592,683    93,660    4.11
    

  

  

 
  
  

Total interest-bearing deposits

     12,553,375      112,472    1.81     11,788,422    146,697    2.51

Short-term borrowings

     1,319,415      9,066    1.38     1,048,208    7,961    1.53

FHLB advances

     2,127,422      43,515    4.12     2,021,161    45,815    4.57

Trust preferred securities and long-term debt

     298,003      4,293    2.88     282,052    4,955    3.52
    

  

  

 
  
  

Total interest-bearing liabilities

     16,298,215      169,346    2.09     15,139,843    205,428    2.74
           

  

      
  

Other liabilities and stockholders’ equity:

                                  

Demand deposits (noninterest-bearing)

     2,258,620                 1,835,344          

Other liabilities

     479,106                 408,431          

Stockholders’ equity

     2,699,411                 2,508,867          
    

               
         

Total liabilities and stockholders’ equity

   $ 21,735,352                 19,892,485          
    

               
         

Net interest income and margin

          $ 372,781    3.92 %        376,947    4.36
           

  

      
  

Interest rate spread

                 3.62 %             4.00
                  

           

 

(1)   Average balances exclude the mark-to-market adjustment for Statement of Financial Accounting Standards No. 115.

 

Page 21