EX-99.2 4 dex992.htm SUPPLEMENTAL FINANCIAL TABLES Supplemental Financial Tables

Exhibit 99.2

 

NATIONAL COMMERCE FINANCIAL CORPORATION

Quarterly Financial Results

First Quarter 2004

 

    Page
     

Highlights

   2   

Current Quarter Financial Highlights

        

        - First Quarter 2004 vs Fourth Quarter 2003

        

        - First Quarter 2004 vs First Quarter 2003

    3   

Five Quarter Financial Highlights

Income Statement

   4   

Current Quarter Consolidated Statement of Income

        

        - First Quarter 2004 vs Fourth Quarter 2003

        

        - First Quarter 2004 vs First Quarter 2003

    5   

Five Quarter Consolidated Statements of Income

    6   

Current Quarter Operating Segment Statement of Income

        

        - First Quarter 2004 vs Fourth Quarter 2003

        

        - First Quarter 2004 vs First Quarter 2003

    7   

Five Quarter Operating Segment Statements of Income

Balance Sheet

   8   

Current Quarter Average Balance Sheet

        

        - First Quarter 2004 vs Fourth Quarter 2003

        

        - First Quarter 2004 vs First Quarter 2003

    9   

Five Quarter Average Balance Sheets

    10   

Current Quarter End of Period Balance Sheet

        

        - First Quarter 2004 vs Fourth Quarter 2003

        

        - First Quarter 2004 vs First Quarter 2003

    11   

Five Quarter End of Period Balance Sheets

    12   

Rollforward of Stockholders’ Equity

Asset Quality

   13   

Current Quarter Asset Quality Analysis

        

        - First Quarter 2004 vs Fourth Quarter 2003

        

        - First Quarter 2004 vs First Quarter 2003

    14   

Five Quarter Asset Quality Analysis

Net Interest Margin

   15   

Five Quarter Average Balance Sheets and Net Interest Income Analysis

Reconcilement of

Non-GAAP Measures

   15   

Five Quarter Taxable Equivalent Interest Income

    16   

Current Quarter Cash Operating Noninterest Expense and Operating Revenues

        

        - First Quarter 2004 vs Fourth Quarter 2003

        

        - First Quarter 2004 vs First Quarter 2003

    17   

Five Quarter Cash Operating Noninterest Expense and Operating Revenues

    18   

Five Quarter Operating Cash Efficiency Ratio

 

NOTE: Certain amounts for prior periods have been reclassified to conform to the current presentation.

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)
  
     3/31/2004
     12/31/2003
      3/31/2004
     3/31/2003
   

Earnings and Earnings Per Share

                                     

Revenues (TE and excluding discontinued op.)

    $ 317,826     314,096    1.2     317,826     288,977    10.0  

Net income

      90,244     90,268    (.0 )   90,244     64,090    40.8  

Average basic shares outstanding

      204,978,998     204,953,486          204,978,998     205,270,721       

Average diluted shares outstanding

      207,082,844     207,009,648          207,082,844     206,755,698       

Basic EPS

    $ .44     .44    —       .44     .31    41.9  

Diluted EPS

      .44     .44    —       .44     .31    41.9  

Asset Quality Ratios

                                     

Loan loss allowance to total loans

      1.29 %   1.31          1.29     1.37       

Net loans charged-off (annualized) to average loans

      .28     .43          .28     .25       

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

      .48     .49          .48     .57       

Loan loss allowance to net charge-offs (annualized)

      4.71 x   3.04          4.71     5.23       

Loan loss allowance to nonperforming loans

      4.99     5.55          4.99     4.96       

Selected Average Balances

                                     

Assets

    $ 23,144,064     22,845,698    1.3     23,144,064     21,292,442    8.7  

Loans

      13,239,512     12,992,875    1.9     13,239,512     12,373,824    7.0  

Investment securities (1)

      6,642,411     6,626,168    .2     6,642,411     5,706,704    16.4  

Core deposits

      13,244,835     13,143,769    .8     13,244,835     12,734,843    4.0  

Stockholders’ equity

      2,782,955     2,745,465    1.4     2,782,955     2,695,846    3.2  

Selected Period End Balances

                                     

Assets

    $ 23,038,522     23,016,916    .1     23,038,522     21,721,985    6.1  

Loans

      13,418,567     13,034,948    2.9     13,418,567     11,881,973    12.9  

Investment securities

      6,217,177     6,619,000    (6.1 )   6,217,177     6,594,862    (5.7 )

Core deposits

      13,469,295     13,342,851    .9     13,469,295     13,121,371    2.7  

Stockholders’ equity

      2,798,939     2,781,186    .6     2,798,939     2,696,014    3.8  

Shares outstanding

      203,911,127     205,136,649          203,911,127     205,009,566       

Number of banking offices

      459     451          459     455       

Number of ATMs

      521     521          521     513       

Number of full-time equivalent employees (FTE)

      5,403     5,441          5,403     5,564       

Capital Ratios

                                     

Period-end tangible equity to period-end tangible assets (2)

      7.11 %   7.00          7.11     6.85       

Risk-based capital ratios:

                                     

Tier 1 capital

      10.95 E   11.03          10.95 E   10.50       

Total capital

      12.02 E   12.10          12.02 E   11.57       

Leverage ratio

      8.13 E   8.17          8.13 E   8.01       
E   - Estimated
(1) Average balances exclude the mark-to-market adjustment for Statement of Financial Accounting Standards No. 115.
(2) Tangible equity and tangible assets are computed by subtracting the sum of goodwill and core deposit intangibles from total equity and total assets, respectively.

 

Page 2

NATIONAL COMMERCE FINANCIAL CORPORATION

Five Quarter Financial Highlights

(In Thousands Except Share and Per Share Data)

 

     Three Months Ended
     3/31/2004
     12/31/2003
    9/30/2003
    6/30/2003
    3/31/2003

Earnings and Earnings Per Share

                            

Revenues (TE and excluding discontinued op.)

    $ 317,826     314,096    313,520    305,817    288,977

Net income

      90,244     90,268    85,809    71,507    64,090

Average Basic Shares Outstanding

      204,978,998     204,953,486    204,609,099    204,628,675    205,270,721

Average Diluted Shares Outstanding

      207,082,844     207,009,648    206,005,174    205,700,819    206,755,698

Basic EPS

    $ .44     .44    .42    .35    .31

Diluted EPS

      .44     .44    .42    .35    .31

Asset Quality Ratios

                            

Loan loss allowance to total loans

      1.29 %   1.31    1.34    1.35    1.37

Net loans charged-off (annualized) to average loans

      .28     .43    .31    .29    .25

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

      .48     .49    .52    .53    .57

Loan loss allowance to net charge-offs (annualized)

      4.71 x   3.04    4.30    4.69    5.23

Loan loss allowance to nonperforming loans

      4.99     5.55    4.79    4.94    4.96

Selected Average Balances

                            

Assets

    $ 23,144,064     22,845,698    22,727,299    22,173,395    21,292,442

Loans

      13,239,512     12,992,875    12,736,334    12,220,225    12,373,824

Investment securities (1)

      6,642,411     6,626,168    6,688,614    6,674,537    5,706,704

Core deposits

      13,244,835     13,143,769    13,180,992    13,056,980    12,734,843

Stockholders’ equity

      2,782,955     2,745,465    2,734,081    2,702,937    2,695,846

Selected Period End Balances

                            

Assets

    $ 23,038,522     23,016,916    22,890,089    22,679,991    21,721,985

Loans

      13,418,567     13,034,948    12,897,774    12,411,446    11,881,973

Investment securities

      6,217,177     6,619,000    6,702,885    6,756,217    6,594,862

Core deposits

      13,469,295     13,342,851    13,182,330    13,382,416    13,121,371

Stockholders’ equity

      2,798,939     2,781,186    2,729,403    2,720,435    2,696,014

Shares outstanding

      203,911,127     205,136,649    204,808,440    204,384,778    205,009,566

Number of banking offices

      459     451    444    455    455

Number of ATMs

      521     521    510    510    513

Number of full-time equivalent employees (FTE)

      5,403     5,441    5,458    5,582    5,564

Capital Ratios

                            

Period-end tangible equity to period-end tangible assets (2)

      7.11 %   7.00    6.74    6.70    6.85

Risk-based capital ratios:

                            

Tier 1 capital

      10.95 E   11.03    10.81    10.69    10.50

Total capital

      12.02 E   12.10    11.90    11.79    11.57

Leverage ratio

      8.13 E   8.17    7.93    7.81    8.01
E   - Estimated
(1) Average balances exclude the mark-to-market adjustment for Statement of Financial Accounting Standards No. 115.
(2) Tangible equity and tangible assets are computed by subtracting the sum of goodwill and core deposit intangibles from total equity and total assets, respectively.

 

Page 3

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)
  
     3/31/2004
    12/31/2003
      3/31/2004
    3/31/2003
    

Income Statement

                                    

Loan income (TE)

    $ 184,637    190,799    (3.2 )   184,637    199,861     (7.6 )

Securities income (TE)

      81,925    81,051    1.1     81,925    70,263     16.6  

Other interest income (TE)

      782    1,125    (30.5 )   782    192     307.3  
    
  
        
  
     

Total interest income (TE)

      267,344    272,975    (2.1 )   267,344    270,316     (1.1 )
    
  
        
  
     

Savings/NOW and money market expense

      8,990    9,287    3.2     8,990    11,957     24.8  

Jumbo and brokered CD expense

      6,416    6,354    (1.0 )   6,416    7,189     10.8  

Consumer time deposit expense

      32,353    32,769    1.3     32,353    38,142     15.2  
    
  
        
  
     

Interest expense on deposits

      47,759    48,410    1.3     47,759    57,288     16.6  

Short-term borrowed funds expense

      4,565    4,532    (.7 )   4,565    4,368     (4.5 )

FHLB advances expense

      15,602    15,722    .8     15,602    22,118     29.5  

Trust preferred securities and long-term debt expense

      1,530    1,920    20.3     1,530    2,160     29.2  
    
  
        
  
     

Total interest expense

      69,456    70,584    1.6     69,456    85,934     19.2  
    
  
        
  
     

Net interest income (TE)

      197,888    202,391    (2.2 )   197,888    184,382     7.3  

Taxable equivalent adjustment

      6,817    6,963    2.1     6,817    6,940     1.8  
    
  
        
  
     

Net interest income

      191,071    195,428    (2.2 )   191,071    177,442     7.7  

Provision for loan losses

      12,088    12,382    2.4     12,088    7,684     (57.3 )
    
  
        
  
     

Net interest income after provision

      178,983    183,046    (2.2 )   178,983    169,758     5.4  
    
  
        
  
     

Service charges on deposits

      41,026    41,211    (.4 )   41,026    41,250     (.5 )

Other service charges and fees

      8,437    8,303    1.6     8,437    9,341     (9.7 )

Broker/dealer revenue

      25,762    21,560    19.5     25,762    21,081     22.2  

Asset management

      16,498    16,234    1.6     16,498    12,382     33.2  

Mortgage banking income

      7,383    8,646    (14.6 )   7,383    9,654     (23.5 )

Equity earnings from First Market Bank

      1,285    1,219    5.4     1,285    926     38.8  

Other

      8,584    8,994    (4.6 )   8,584    7,642     12.3  

Gain (loss) on branch sale

      45    2,200    (98.0 )   45    (145 )   (131.0 )

Investment securities gains, net

      10,918    3,338    227.1     10,918    2,464     343.1  
    
  
        
  
     

Total noninterest income

      119,938    111,705    7.4     119,938    104,595     14.7  
    
  
        
  
     

Personnel

      79,121    75,404    (4.9 )   79,121    77,453     (2.2 )

Occupancy

      13,407    13,244    (1.2 )   13,407    12,904     (3.9 )

Equipment

      7,233    7,399    2.2     7,233    7,405     2.3  

Core deposit amortization

      13,639    14,337    4.9     13,639    16,284     16.2  

First Mercantile litigation

      —      —      —       —      19,654     100.0  

Employment contract terminations

      —      987    100.0     —      —       —    

Debt retirement/prepayment penalties

      —      —      —       —      —       —    

Other

      50,326    50,865    1.1     50,326    46,404     (8.5 )
    
  
        
  
     

Total noninterest expense

      163,726    162,236    (.9 )   163,726    180,104     9.1  
    
  
        
  
     

Income before income taxes

      135,195    132,515    2.0     135,195    94,249     43.4  

Income taxes

      44,951    43,014    (4.5 )   44,951    30,159     (49.0 )
    
  
        
  
     

Net income from continuing operations

      90,244    89,501    .8     90,244    64,090     40.8  

Discontinued operation - merchant processing

      —      767    (100.0 )   —      —       —    
    
  
        
  
     

Net income

    $ 90,244    90,268    (.0 )   90,244    64,090     40.8  
    
  
        
  
     

Average Common Shares Outstanding

                                    

Basic

      204,978,998    204,953,486          204,978,998    205,270,721        

Diluted

      207,082,844    207,009,648          207,082,844    206,755,698        

Earnings and Dividends Per Share

                                    

Basic

    $ .44    .44    —       .44    .31     41.9  

Diluted

      .44    .44    —       .44    .31     41.9  

Cash dividends

      .20    .20    —       .20    .17     17.6  

 

Page 4

NATIONAL COMMERCE FINANCIAL CORPORATION

Five Quarter Consolidated Statements of Income

(In Thousands Except Share and Per Share Data)

 

     Three Months Ended
  
     3/31/2004
    12/31/2003
    9/30/2003
     6/30/2003
     3/31/2003
  

Income Statement

                               

Loan income (TE)

    $ 184,637    190,799    188,073     190,239     199,861  

Securities income (TE)

      81,925    81,051    78,836     81,215     70,263  

Other interest income (TE)

      782    1,125    303     357     192  
    
  
  
 
 

Total interest income (TE)

      267,344    272,975    267,212     271,811     270,316  
    
  
  
 
 

Savings/NOW and money market expense

      8,990    9,287    9,372     11,006     11,957  

Jumbo and brokered CD expense

      6,416    6,354    6,452     7,378     7,189  

Consumer time deposit expense

      32,353    32,769    33,981     36,800     38,142  
    
  
  
 
 

Interest expense on deposits

      47,759    48,410    49,805     55,184     57,288  

Short-term borrowed funds expense

      4,565    4,532    4,619     4,698     4,368  

FHLB advances expense

      15,602    15,722    18,236     21,397     22,118  

Trust preferred securities and long-term debt expense

      1,530    1,920    2,036     2,133     2,160  
    
  
  
 
 

Total interest expense

      69,456    70,584    74,696     83,412     85,934  
    
  
  
 
 

Net interest income (TE)

      197,888    202,391    192,516     188,399     184,382  

Taxable equivalent adjustment

      6,817    6,963    7,057     7,218     6,940  
    
  
  
 
 

Net interest income

      191,071    195,428    185,459     181,181     177,442  

Provision for loan losses

      12,088    12,382    14,972     13,376     7,684  
    
  
  
 
 

Net interest income after provision

      178,983    183,046    170,487     167,805     169,758  
    
  
  
 
 

Service charges on deposits

      41,026    41,211    42,295     43,500     41,250  

Other service charges and fees

      8,437    8,303    9,565     9,721     9,341  

Broker/dealer revenue

      25,762    21,560    24,739     28,152     21,081  

Asset management

      16,498    16,234    14,828     13,356     12,382  

Mortgage banking income

      7,383    8,646    16,943     11,458     9,654  

Equity earnings from First Market Bank

      1,285    1,219    1,314     1,071     926  

Other

      8,584    8,994    8,777     7,700     7,642  

Gain (loss) on branch sale

      45    2,200    7,055     —       (145 )

Investment securities gains (losses), net

      10,918    3,338    (4,512 )   2,460     2,464  
    
  
  
 
 

Total noninterest income

      119,938    111,705    121,004     117,418     104,595  
    
  
  
 
 

Personnel

      79,121    75,404    79,726     77,483     77,453  

Occupancy

      13,407    13,244    14,898     13,292     12,904  

Equipment

      7,233    7,399    7,509     7,992     7,405  

Core deposit amortization

      13,639    14,337    15,062     15,673     16,284  

First Mercantile litigation

      —      —      —       1,041     19,654  

Employment contract terminations

      —      987    604     14,108     —    

Debt retirement/prepayment penalties (gains)

      —      —      31,987     (326 )   —    

Other

      50,326    50,865    51,709     51,341     46,404  
    
  
  
 
 

Total noninterest expense

      163,726    162,236    201,495     180,604     180,104  
    
  
  
 
 

Income before income taxes

      135,195    132,515    89,996     104,619     94,249  

Income taxes

      44,951    43,014    28,329     33,112     30,159  
    
  
  
 
 

Net income from continuing operations

      90,244    89,501    61,667     71,507     64,090  

Discontinued operation - merchant processing

      —      767    24,142     —       —    
    
  
  
 
 

Net income

    $ 90,244    90,268    85,809     71,507     64,090  
    
  
  
 
 

Average Common Shares Outstanding

                               

Basic

      204,978,998    204,953,486    204,609,099     204,628,675     205,270,721  

Diluted

      207,082,844    207,009,648    206,005,174     205,700,819     206,755,698  

Earnings and Dividends Per Share

                               

Basic

    $ .44    .44    .42     .35     .31  

Diluted

      .44    .44    .42     .35     .31  

Cash dividends

      .20    .20    .20     .17     .17  

 

Page 5

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)

  
     3/31/04
     12/31/03
       3/31/04
     3/31/03
    

Traditional Banking

                                       

Net interest income (TE)

    $ 190,886     195,876     (2.5 )   190,886     179,167     6.5  

Provision for loan losses

      (12,088 )   (12,382 )   2.4     (12,088 )   (7,684 )   (57.3 )

Gain (loss) on branch sale

      45     2,200     98.0     45     (145 )   131.0  

Other noninterest income

      68,789     63,246     8.8     68,789     61,601     11.7  

Intangibles amortization

      (13,639 )   (14,337 )   4.9     (13,639 )   (16,284 )   16.2  

First Mercantile litigation

      —       —       —       —       —       —    

Employment contract terminations

      —       (987 )   100.0     —       —       —    

Debt retirement/prepayment (penalties) gains

      —       —       —       —       —       —    

Conversion/merger expenses

      —       —       —       —       —       —    

Other noninterest expense

      (111,756 )   (109,390 )   (2.2 )   (111,756 )   (111,053 )   (.6 )
    
 
       
 
     

Income before income taxes (TE)

      122,237     124,226     (1.6 )   122,237     105,602     15.8  

Income taxes

      44,056     45,515     3.2     44,056     38,820     (13.5 )
    
 
       
 
     

Net income from continuing operations

      78,181     78,711     (.7 )   78,181     66,782     17.1  

Discontinued operation - merchant processing

      —       —       —       —       —       —    
    
 
       
 
     

Net income

    $ 78,181     78,711     (.7 )   78,181     66,782     17.1  
    
 
       
 
     

Financial Enterprises

                                       

Net interest income (TE)

    $ 7,002     6,515     7.5     7,002     5,215     34.3  

Provision for loan losses

      —       —       —       —       —       —    

Gain (loss) on branch sale

      —       —       —       —       —       —    

Other noninterest income

      53,068     48,104     10.3     53,068     44,757     18.6  

Intangibles amortization

      —       —       —       —       —       —    

First Mercantile litigation

      —       —       —       —       (19,654 )   100.0  

Employment contract terminations

      —       —       —       —       —       —    

Debt retirement/prepayment (penalties) gains

      —       —       —       —       —       —    

Conversion/merger expenses

      —       —       —       —       —       —    

Other noninterest expense

      (40,295 )   (39,367 )   (2.4 )   (40,295 )   (34,731 )   (16.0 )
    
 
       
 
     

Income before income taxes (TE)

      19,775     15,252     29.7     19,775     (4,413 )   (548.1 )

Income taxes

      7,712     4,462     (72.8 )   7,712     (1,721 )   548.1  
    
 
       
 
     

Net income from continuing operations

      12,063     10,790     11.8     12,063     (2,692 )   (548.1 )

Discontinued operation - merchant processing

      —       767     (100.0 )   —       —       —    
    
 
       
 
     

Net income

    $ 12,063     11,557     4.4     12,063     (2,692 )   (548.1 )
    
 
       
 
     

Fully Consolidated

                                       

Net interest income (TE)

    $ 197,888     202,391     (2.2 )   197,888     184,382     7.3  

Provision for loan losses

      (12,088 )   (12,382 )   2.4     (12,088 )   (7,684 )   (57.3 )

Gain (loss) on branch sale

      45     2,200     98.0     45     (145 )   131.0  

Other noninterest income

      119,893     109,505     9.5     119,893     104,740     14.5  

Intangibles amortization

      (13,639 )   (14,337 )   4.9     (13,639 )   (16,284 )   16.2  

First Mercantile litigation

      —       —       —       —       (19,654 )   100.0  

Employment contract terminations

      —       (987 )   100.0     —       —       —    

Debt retirement/prepayment (penalties) gains

      —       —       —       —       —       —    

Conversion/merger expenses

      —       —       —       —       —       —    

Other noninterest expense

      (150,087 )   (146,912 )   (2.2 )   (150,087 )   (144,166 )   (4.1 )
    
 
       
 
     

Income before income taxes (TE)

      142,012     139,478     1.8     142,012     101,189     40.3  

Income taxes

      51,768     49,977     (3.6 )   51,768     37,099     (39.5 )
    
 
       
 
     

Net income from continuing operations

      90,244     89,501     .8     90,244     64,090     40.8  

Discontinued operation - merchant processing

      —       767     (100.0 )   —       —       —    
    
 
       
 
     

Net income

    $ 90,244     90,268     (.0 )   90,244     64,090     40.8  
    
 
       
 
     
(1) Inter-segment eliminations are not separately presented.

 

Page 6

NATIONAL COMMERCE FINANCIAL CORPORATION

Five Quarter Operating Segment Statements of Income

(In Thousands)

 

     Three Months Ended
  
     3/31/2004
     12/31/2003
     9/30/2003
     6/30/2003
     3/31/2003
  

Traditional Banking

                                 

Net interest income (TE)

    $ 190,886     195,876     187,218     183,113     179,167  

Provision for loan losses

      (12,088 )   (12,382 )   (14,972 )   (13,376 )   (7,684 )

Gain (loss) on branch sale

      45     2,200     7,055     —       (145 )

Other noninterest income

      68,789     63,246     63,926     65,301     61,601  

Intangibles amortization

      (13,639 )   (14,337 )   (15,062 )   (15,673 )   (16,284 )

First Mercantile litigation

      —       —       —       —       —    

Employment contract terminations

      —       (987 )   (604 )   (14,108 )   —    

Debt retirement/prepayment (penalties) gains

      —       —       (31,987 )   326     —    

Conversion/merger expenses

      —       —       —       —       —    

Other noninterest expense

      (111,756 )   (109,390 )   (114,846 )   (111,313 )   (111,053 )
    
 
 
 
 

Income before income taxes (TE)

      122,237     124,226     80,728     94,270     105,602  

Income taxes

      44,056     45,515     27,533     33,479     38,820  
    
 
 
 
 

Net income from continuing operations

      78,181     78,711     53,195     60,791     66,782  

Discontinued operation - merchant processing

      —       —       —       —       —    
    
 
 
 
 

Net income

    $ 78,181     78,711     53,195     60,791     66,782  
    
 
 
 
 

Financial Enterprises

                                 

Net interest income (TE)

    $ 7,002     6,515     5,298     5,286     5,215  

Provision for loan losses

      —       —       —       —       —    

Gain (loss) on branch sale

      —       —       —       —       —    

Other noninterest income

      53,068     48,104     51,965     54,215     44,757  

Intangibles amortization

      —       —       —       —       —    

First Mercantile litigation

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

Employment contract terminations

      —       —       —       —       —    

Debt retirement/prepayment (penalties) gains

      —       —       —       —       —    

Conversion/merger expenses

      —       —       —       —       —    

Other noninterest expense

      (40,295 )   (39,367 )   (40,938 )   (40,893 )   (34,731 )
    
 
 
 
 

Income before income taxes (TE)

      19,775     15,252     16,325     17,567     (4,413 )

Income taxes

      7,712     4,462     7,853     6,851     (1,721 )
    
 
 
 
 

Net income from continuing operations

      12,063     10,790     8,472     10,716     (2,692 )

Discontinued operation - merchant processing

      —       767     24,142     —       —    
    
 
 
 
 

Net income

    $ 12,063     11,557     32,614     10,716     (2,692 )
    
 
 
 
 

Fully Consolidated

                                 

Net interest income (TE)

    $ 197,888     202,391     192,516     188,399     184,382  

Provision for loan losses

      (12,088 )   (12,382 )   (14,972 )   (13,376 )   (7,684 )

Gain (loss) on branch sale

      45     2,200     7,055     —       (145 )

Other noninterest income

      119,893     109,505     113,949     117,418     104,740  

Intangibles amortization

      (13,639 )   (14,337 )   (15,062 )   (15,673 )   (16,284 )

First Mercantile litigation

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

Employment contract terminations

      —       (987 )   (604 )   (14,108 )   —    

Debt retirement/prepayment (penalties) gains

      —       —       (31,987 )   326     —    

Conversion/merger expenses

      —       —       —       —       —    

Other noninterest expense

      (150,087 )   (146,912 )   (153,842 )   (150,108 )   (144,166 )
    
 
 
 
 

Income before income taxes (TE)

      142,012     139,478     97,053     111,837     101,189  

Income taxes

      51,768     49,977     35,386     40,330     37,099  
    
 
 
 
 

Net income from continuing operations

      90,244     89,501     61,667     71,507     64,090  

Discontinued operation - merchant processing

      —       767     24,142     —       —    
    
 
 
 
 

Net income

    $ 90,244     90,268     85,809     71,507     64,090  
    
 
 
 
 
(1) Inter-segment eliminations are not separately presented.

 

Page 7

NATIONAL COMMERCE FINANCIAL CORPORATION

Current Quarter Average Balance Sheet

(In Thousands)

 

     Three Months Ended
   

%

Inc/(Decr)

     Three Months Ended
   

%

Inc/(Decr)

  
     3/31/2004
    12/31/2003
      3/31/2004
    3/31/2003
   

Assets

                                   

Cash and due from banks

    $ 431,289    458,469    (5.9 )   431,289    398,564    8.2  

Time deposits in other banks

      38,023    64,169    (40.7 )   38,023    9,575    297.1  

Federal funds sold and other short-term investments

      178,951    142,362    25.7     178,951    51,187    249.6  

Investment securities (1)

      6,642,411    6,626,168    .2     6,642,411    5,706,704    16.4  

Trading securities

      259,602    188,287    37.9     259,602    87,496    196.7  

Loans held for sale

      212,075    226,446    (6.3 )   212,075    415,204    (48.9 )

Loans:

                                   

Commercial

      3,868,332    3,732,128    3.6     3,868,332    3,350,959    15.4  

Construction and commercial real estate

      3,760,015    3,776,419    (.4 )   3,760,015    3,677,697    2.2  

Mortgage

      954,352    994,567    (4.0 )   954,352    1,186,414    (19.6 )

Consumer

      4,441,559    4,278,651    3.8     4,441,559    3,945,287    12.6  

Revolving credit

      85,246    82,922    2.8     85,246    76,939    10.8  

Lease financing

      130,008    128,188    1.4     130,008    136,528    (4.8 )
    
  
        
  
      

Total loans

      13,239,512    12,992,875    1.9     13,239,512    12,373,824    7.0  

Allowance for loan losses

      171,087    171,580    (.3 )   171,087    163,203    4.8  
    
  
        
  
      

Net loans

      13,068,425    12,821,295    1.9     13,068,425    12,210,621    7.0  

Bank owned life insurance

      243,306    239,161    1.7     243,306    228,214    6.6  

Investment in First Market Bank

      32,946    31,803    3.6     32,946    28,353    16.2  

Premises and equipment

      265,599    271,113    (2.0 )   265,599    258,614    2.7  

Goodwill

      1,087,115    1,085,565    .1     1,087,115    1,077,121    .9  

Core deposit intangibles

      165,967    180,879    (8.2 )   165,967    229,044    (27.5 )

Other assets

      518,355    509,981    1.6     518,355    591,745    (12.4 )
    
  
        
  
      

Total assets

    $ 23,144,064    22,845,698    1.3     23,144,064    21,292,442    8.7  
    
  
        
  
      

Liabilities

                                   

Deposits:

                                   

Demand deposits (noninterest-bearing)

    $ 2,514,792    2,554,870    (1.6 )   2,514,792    2,140,299    17.5  

Savings, NOW and money market accounts

      5,816,757    5,799,594    .3     5,816,757    5,684,696    2.3  

Jumbo and brokered certificates of deposit

      2,290,967    2,207,988    3.8     2,290,967    1,796,198    27.5  

Time deposits

      4,913,286    4,789,305    2.6     4,913,286    4,909,848    .1  
    
  
        
  
      

Total deposits

      15,535,802    15,351,757    1.2     15,535,802    14,531,041    6.9  

Short-term borrowings

      1,697,317    1,685,250    .7     1,697,317    1,249,458    35.8  

FHLB advances

      2,351,862    2,312,746    1.7     2,351,862    2,056,896    14.3  

Trust preferred securities and long-term debt

      278,344    299,867    (7.2 )   278,344    296,745    (6.2 )

Other liabilities

      497,784    450,613    10.5     497,784    462,456    7.6  
    
  
        
  
      

Total liabilities

      20,361,109    20,100,233    1.3     20,361,109    18,596,596    9.5  
    
  
        
  
      

Stockholders’ Equity

                                   

Common stock

      409,958    409,907    .0     409,958    410,541    (.1 )

Additional paid-in capital

      1,730,778    1,737,372    (.4 )   1,730,778    1,749,408    (1.1 )

Retained earnings

      636,800    593,057    7.4     636,800    485,214    31.2  

Accumulated other comprehensive income

      5,419    5,129    5.7     5,419    50,683    (89.3 )
    
  
        
  
      

Total stockholders’ equity

      2,782,955    2,745,465    1.4     2,782,955    2,695,846    3.2  
    
  
        
  
      

Total liabilities and stockholders’ equity

    $ 23,144,064    22,845,698    1.3     23,144,064    21,292,442    8.7  
    
  
        
  
      
(1) Average balances exclude the mark-to-market adjustment for Statement of Financial Accounting Standards No. 115.

 

Page 8

NATIONAL COMMERCE FINANCIAL CORPORATION

Five Quarter Average Balance Sheets

(In Thousands)

 

     Three Months Ended
     3/31/2004
    12/31/2003
    9/30/2003
    6/30/2003
    3/31/2003

Assets

                           

Cash and due from banks

    $ 431,289    458,469    450,576    422,653    398,564

Time deposits in other banks

      38,023    64,169    5,726    5,742    9,575

Federal funds sold and other short-term investments

      178,951    142,362    148,627    107,462    51,187

Investment securities (1)

      6,642,411    6,626,168    6,688,614    6,674,537    5,706,704

Trading securities

      259,602    188,287    136,198    120,999    87,496

Loans held for sale

      212,075    226,446    328,968    394,321    415,204

Loans:

                           

Commercial

      3,868,332    3,732,128    3,547,153    3,492,900    3,350,959

Construction and commercial real estate

      3,760,015    3,776,419    3,785,911    3,690,766    3,677,697

Mortgage

      954,352    994,567    986,189    764,975    1,186,414

Consumer

      4,441,559    4,278,651    4,207,450    4,059,490    3,945,287

Revolving credit

      85,246    82,922    80,631    78,142    76,939

Lease financing

      130,008    128,188    129,000    133,952    136,528
    
  
  
  
  

Total loans

      13,239,512    12,992,875    12,736,334    12,220,225    12,373,824

Allowance for loan losses

      171,087    171,580    168,160    164,108    163,203
    
  
  
  
  

Net loans

      13,068,425    12,821,295    12,568,174    12,056,117    12,210,621

Bank owned life insurance

      243,306    239,161    235,741    231,397    228,214

Investment in First Market Bank

      32,946    31,803    30,471    29,248    28,353

Premises and equipment

      265,599    271,113    276,435    276,227    258,614

Goodwill

      1,087,115    1,085,565    1,083,340    1,082,077    1,077,121

Core deposit intangibles

      165,967    180,879    197,593    213,065    229,044

Other assets

      518,355    509,981    576,836    559,550    591,745
    
  
  
  
  

Total assets

    $ 23,144,064    22,845,698    22,727,299    22,173,395    21,292,442
    
  
  
  
  

Liabilities

                           

Deposits:

                           

Demand deposits (noninterest-bearing)

    $ 2,514,792    2,554,870    2,565,673    2,375,641    2,140,299

Savings, NOW and money market accounts

      5,816,757    5,799,594    5,845,036    5,765,351    5,684,696

Jumbo and brokered certificates of deposit

      2,290,967    2,207,988    2,166,011    2,032,881    1,796,198

Time deposits

      4,913,286    4,789,305    4,770,283    4,915,988    4,909,848
    
  
  
  
  

Total deposits

      15,535,802    15,351,757    15,347,003    15,089,861    14,531,041

Short-term borrowings

      1,697,317    1,685,250    1,608,179    1,388,604    1,249,458

FHLB advances

      2,351,862    2,312,746    2,218,184    2,197,173    2,056,896

Trust preferred securities and long-term debt

      278,344    299,867    297,701    299,247    296,745

Other liabilities

      497,784    450,613    522,151    495,573    462,456
    
  
  
  
  

Total liabilities

      20,361,109    20,100,233    19,993,218    19,470,458    18,596,596
    
  
  
  
  

Stockholders’ Equity

                           

Common stock

      409,958    409,907    409,218    409,257    410,541

Additional paid-in capital

      1,730,778    1,737,372    1,733,149    1,735,104    1,749,408

Retained earnings

      636,800    593,057    544,342    512,491    485,214

Accumulated other comprehensive income

      5,419    5,129    47,372    46,085    50,683
    
  
  
  
  

Total stockholders’ equity

      2,782,955    2,745,465    2,734,081    2,702,937    2,695,846
    
  
  
  
  

Total liabilities and stockholders’ equity

    $ 23,144,064    22,845,698    22,727,299    22,173,395    21,292,442
    
  
  
  
  
(1) Average balances exclude the mark-to-market adjustment for Statement of Financial Accounting Standards No. 115.

 

Page 9

NATIONAL COMMERCE FINANCIAL CORPORATION

Current Quarter End of Period Balance Sheet

(In Thousands)

 

     As of
   

%

Inc/(Decr)

     As of
   

%

Inc/(Decr)

  
     3/31/2004
    12/31/2003
      3/31/2004
    3/31/2003
   

Assets

                                   

Cash and due from banks

    $ 458,494    558,313    (17.9 )   458,494    522,814    (12.3 )

Time deposits in other banks

      4,552    64,174    (92.9 )   4,552    4,328    5.2  

Federal funds sold and other short-term investments

      164,818    129,722    27.1     164,818    42,899    284.2  

Investment securities:

                                   

Available for sale

      4,858,421    5,238,429    (7.3 )   4,858,421    5,299,253    (8.3 )

Held to maturity

      1,358,756    1,380,571    (1.6 )   1,358,756    1,295,609    4.9  

Trading securities

      257,338    280,649    (8.3 )   257,338    80,842    218.3  

Loans held for sale

      277,778    215,132    29.1     277,778    406,893    (31.7 )

Loans:

                                   

Commercial

      3,935,130    3,820,585    3.0     3,935,130    3,403,217    15.6  

Construction and commercial real estate

      3,765,122    3,723,336    1.1     3,765,122    3,689,692    2.0  

Mortgage

      970,923    933,057    4.1     970,923    610,328    59.1  

Consumer

      4,531,275    4,342,695    4.3     4,531,275    3,966,994    14.2  

Revolving credit

      85,718    84,534    1.4     85,718    76,616    11.9  

Lease financing

      130,399    130,741    (.3 )   130,399    135,126    (3.5 )
    
  
        
  
      

Total loans

      13,418,567    13,034,948    2.9     13,418,567    11,881,973    12.9  

Allowance for loan losses

      173,384    170,452    1.7     173,384    162,842    6.5  
    
  
        
  
      

Net loans

      13,245,183    12,864,496    3.0     13,245,183    11,719,131    13.0  

Bank owned life insurance

      244,842    241,481    1.4     244,842    230,228    6.3  

Investment in First Market Bank

      33,811    32,527    3.9     33,811    28,923    16.9  

Premises and equipment

      261,699    266,401    (1.8 )   261,699    274,433    (4.6 )

Goodwill

      1,090,117    1,085,565    .4     1,090,117    1,077,332    1.2  

Core deposit intangibles

      158,800    172,658    (8.0 )   158,800    220,632    (28.0 )

Other assets

      623,913    486,798    28.2     623,913    518,668    20.3  
    
  
        
  
      

Total assets

    $ 23,038,522    23,016,916    .1     23,038,522    21,721,985    6.1  
    
  
        
  
      

Liabilities

                                   

Deposits:

                                   

Demand deposits (noninterest-bearing)

    $ 2,705,354    2,602,026    4.0     2,705,354    2,383,806    13.5  

Savings, NOW and money market accounts

      5,871,488    5,878,002    (.1 )   5,871,488    5,795,400    1.3  

Jumbo and brokered certificates of deposit

      2,321,673    2,206,736    5.2     2,321,673    1,804,492    28.7  

Time deposits

      4,892,453    4,862,823    .6     4,892,453    4,942,165    (1.0 )
    
  
        
  
      

Total deposits

      15,790,968    15,549,587    1.6     15,790,968    14,925,863    5.8  

Short-term borrowings

      1,671,568    1,671,908    (.0 )   1,671,568    1,351,105    23.7  

FHLB advances

      1,875,893    2,301,191    (18.5 )   1,875,893    1,951,912    (3.9 )

Trust preferred securities and long-term debt

      279,973    277,996    .7     279,973    300,127    (6.7 )

Other liabilities

      621,181    435,048    42.8     621,181    496,964    25.0  
    
  
        
  
      

Total liabilities

      20,239,583    20,235,730    .0     20,239,583    19,025,971    6.4  
    
  
        
  
      

Stockholders’ Equity

                                   

Common stock

      407,822    410,273    (.6 )   407,822    410,019    (.5 )

Additional paid-in capital

      1,700,765    1,738,157    (2.2 )   1,700,765    1,743,146    (2.4 )

Retained earnings

      676,622    627,406    7.8     676,622    496,783    36.2  

Accumulated other comprehensive income

      13,730    5,350    156.6     13,730    46,066    (70.2 )
    
  
        
  
      

Total stockholders’ equity

      2,798,939    2,781,186    .6     2,798,939    2,696,014    3.8  
    
  
        
  
      

Total liabilities and stockholders’ equity

    $ 23,038,522    23,016,916    .1     23,038,522    21,721,985    6.1  
    
  
        
  
      

 

Page 10

NATIONAL COMMERCE FINANCIAL CORPORATION

Five Quarter End of Period Balance Sheets

(In Thousands Except Share and Per Share Data)

 

     As of
     3/31/2004
    12/31/2003
    9/30/2003
    6/30/2003
    3/31/2003

Assets

                           

Cash and due from banks

    $ 458,494    558,313    520,138    536,123    522,814

Time deposits in other banks

      4,552    64,174    9,335    5,265    4,328

Federal funds sold and other short-term investments

      164,818    129,722    105,629    160,383    42,899

Investment securities:

                           

Available for sale

      4,858,421    5,238,429    5,254,107    5,311,700    5,299,253

Held to maturity

      1,358,756    1,380,571    1,448,778    1,444,517    1,295,609

Trading securities

      257,338    280,649    175,048    105,923    80,842

Loans held for sale

      277,778    215,132    364,606    498,447    406,893

Loans:

                           

Commercial

      3,935,130    3,820,585    3,654,366    3,570,337    3,403,217

Construction and commercial real estate

      3,765,122    3,723,336    3,854,437    3,719,164    3,689,692

Mortgage (1)

      970,923    933,057    939,532    783,615    610,328

Consumer

      4,531,275    4,342,695    4,238,782    4,128,195    3,966,994

Revolving credit

      85,718    84,534    81,916    79,437    76,616

Lease financing

      130,399    130,741    128,741    130,698    135,126
    
  
  
  
  

Total loans

      13,418,567    13,034,948    12,897,774    12,411,446    11,881,973

Allowance for loan losses

      173,384    170,452    172,186    167,316    162,842
    
  
  
  
  

Net loans

      13,245,183    12,864,496    12,725,588    12,244,130    11,719,131

Bank owned life insurance

      244,842    241,481    237,840    233,452    230,228

Investment in First Market Bank

      33,811    32,527    31,309    29,995    28,923

Premises and equipment

      261,699    266,401    273,395    275,612    274,433

Goodwill

      1,090,117    1,085,565    1,085,565    1,083,157    1,077,332

Core deposit intangibles

      158,800    172,658    187,867    204,959    220,632

Other assets

      623,913    486,798    470,884    546,328    518,668
    
  
  
  
  

Total assets

    $ 23,038,522    23,016,916    22,890,089    22,679,991    21,721,985
    
  
  
  
  

Liabilities

                           

Deposits:

                           

Demand deposits (noninterest-bearing)

    $ 2,705,354    2,602,026    2,672,509    2,657,291    2,383,806

Savings, NOW and money market accounts

      5,871,488    5,878,002    5,813,981    5,849,113    5,795,400

Jumbo and brokered certificates of deposit

      2,321,673    2,206,736    2,277,003    2,063,785    1,804,492

Time deposits

      4,892,453    4,862,823    4,695,840    4,876,012    4,942,165
    
  
  
  
  

Total deposits

      15,790,968    15,549,587    15,459,333    15,446,201    14,925,863

Short-term borrowings

      1,671,568    1,671,908    1,641,172    1,465,425    1,351,105

FHLB advances

      1,875,893    2,301,191    2,324,433    2,274,384    1,951,912

Trust preferred securities and long-term debt

      279,973    277,996    303,248    295,049    300,127

Other liabilities

      621,181    435,048    432,500    478,497    496,964
    
  
  
  
  

Total liabilities

      20,239,583    20,235,730    20,160,686    19,959,556    19,025,971
    
  
  
  
  

Stockholders’ Equity

                           

Common stock

      407,822    410,273    409,617    408,770    410,019

Additional paid-in-capital

      1,700,765    1,738,157    1,736,411    1,730,367    1,743,146

Retained earnings

      676,622    627,406    578,249    533,462    496,783

Accumulated other comprehensive income

      13,730    5,350    5,126    47,836    46,066
    
  
  
  
  

Total stockholders’ equity

      2,798,939    2,781,186    2,729,403    2,720,435    2,696,014
    
  
  
  
  

Total liabilities and stockholders’ equity

    $ 23,038,522    23,016,916    22,890,089    22,679,991    21,721,985
    
  
  
  
  
(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 11

NATIONAL COMMERCE FINANCIAL CORPORATION

Year to Date Rollforward of Stockholders’ Equity

(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, 2003

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

Net income

    —         —       —       64,090     —       64,090  

Restricted stock transactions, net

    1,568       3     606     —       —       609  

Options exercised, net of shares tendered

    213,009       427     2,566     —       —       2,993  

Shares repurchased and retired

    (589,800 )     (1,180 )   (12,800 )   —       —       (13,980 )

Cash dividends ($.17 per share)

    —         —       —       (34,948 )   —       (34,948 )

Change in minimum pension liability, net of applicable income taxes

    —         —       —       —       (742 )   (742 )

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

    —         —       —       —       (3,926 )   (3,926 )

Other transactions, net

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

Balance March 31, 2003

    205,009,566     $ 410,019     1,743,146     496,783     46,066     2,696,014  
    
 
 
 
 
 

Balance January 1, 2004

    205,136,649     $ 410,273     1,738,157     627,406     5,350     2,781,186  

Net income

    —         —       —       90,244     —       90,244  

Restricted stock transactions, net

    29,200       58     120     —       —       178  

Options exercised, net of shares tendered

    560,215       1,121     10,859     —       —       11,980  

Shares repurchased and retired

    (1,886,806 )     (3,774 )   (49,471 )   —       —       (53,245 )

Cash dividends ($.20 per share)

    —         —       —       (41,028 )   —       (41,028 )

Change in minimum pension liability, net of applicable income taxes

    —         —       —       —       (113 )   (113 )

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

    —         —       —       —       4,104     4,104  

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

    —         —       —       —       4,389     4,389  

Other transactions, net

    71,869       144     1,100     —       —       1,244  
    
 
 
 
 
 

Balance March 31, 2004

    203,911,127     $ 407,822     1,700,765     676,622     13,730     2,798,939  
    
 
 
 
 
 

 

Page 12

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)

  
   3/31/04
     12/31/03
       3/31/04
     3/31/03
    

Allowance For Loan Losses

                                       

Beginning balance

    $ 170,452     172,186     (1.0 )   170,452     163,424     4.3  

Charge-offs:

                                       

Commercial

      (1,600 )   (7,348 )   (78.2 )   (1,600 )   (1,441 )   11.0  

Construction and commercial real estate

      —       (106 )   (100.0 )   —       (141 )   (100.0 )

Secured by real estate

      (1,022 )   (1,140 )   (10.4 )   (1,022 )   (727 )   40.6  

Consumer

      (6,565 )   (6,048 )   8.5     (6,565 )   (5,977 )   9.8  

Revolving credit

      (1,109 )   (1,016 )   9.2     (1,109 )   (941 )   17.9  

Lease financing

      (405 )   (849 )   (52.3 )   (405 )   (53 )   664.2  
    
 
       
 
     

Total charge-offs

      (10,701 )   (16,507 )   (35.2 )   (10,701 )   (9,280 )   15.3  
    
 
       
 
     

Recoveries:

                                       

Commercial

      219     1,280     (82.9 )   219     273     (19.8 )

Construction and commercial real estate

      1     1     .0     1     7     (85.7 )

Secured by real estate

      50     70     (28.6 )   50     26     92.3  

Consumer

      967     693     39.5     967     931     3.9  

Revolving credit

      234     250     (6.4 )   234     322     (27.3 )

Lease financing

      74     97     (23.7 )   74     37     100.0  
    
 
       
 
     

Total recoveries

      1,545     2,391     (35.4 )   1,545     1,596     (3.2 )
    
 
       
 
     

Net charge-offs

      (9,156 )   (14,116 )   (35.1 )   (9,156 )   (7,684 )   19.2  

Provision for loan losses

      12,088     12,382     (2.4 )   12,088     7,684     57.3  

Changes from acquisitions (sales)

      —       —       —       —       (582 )   (100.0 )
    
 
       
 
     

Ending balance

    $ 173,384     170,452     1.7     173,384     162,842     6.5  
    
 
       
 
     

Nonperforming Assets

                                       

Nonaccrual loans by loan type:

                                       

Commercial

    $ 15,100     13,991     7.9     15,100     19,833     (23.9 )

Construction and commercial real estate

      12,455     10,944     13.8     12,455     6,883     81.0  

Secured by real estate

      2,660     1,701     56.4     2,660     2,105     26.4  

Consumer

      3,733     2,916     28.0     3,733     2,004     86.3  

Lease financing

      777     1,137     (31.7 )   777     2,013     (61.4 )
    
 
       
 
     

Total nonperforming loans

      34,725     30,689     13.2     34,725     32,838     5.7  

Foreclosed real estate

      23,225     28,196     (17.6 )   23,225     22,981     1.1  
    
 
       
 
     

Nonperforming loans and foreclosed real estate

      57,950     58,885     (1.6 )   57,950     55,819     3.8  

Other repossessed assets

      6,108     4,638     31.7     6,108     11,962     (48.9 )
    
 
       
 
     

Nonperforming assets

    $ 64,058     63,523     .8     64,058     67,781     (5.5 )
    
 
       
 
     

Ninety days past due and accruing

    $ 65,275     64,457     1.3     65,275     56,384     15.8  
    
 
       
 
     

Asset Quality Ratios (1)

                                       

Net charge-offs (annualized) by loan type:

                                       

Commercial

      .14 %   .65           .14     .14        

Construction and commercial real estate

      .00     .01           .00     .01        

Secured by real estate

      .41     .43           .41     .24        

Consumer

      .51     .50           .51     .52        

Revolving credit

      4.13     3.66           4.13     3.26        

Lease financing

      1.02     2.33           1.02     .05        

Net loans charged-off (annualized) to average loans

      .28     .43           .28     .25        

Nonperforming loans to total loans

      .26     .24           .26     .28        

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

      .43     .45           .43     .47        

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

      .48     .49           .48     .57        

Loan loss allowance to total loans

      1.29     1.31           1.29     1.37        

Loan loss allowance to net charge-offs (annualized)

      4.71 x   3.04           4.71     5.23        

Loan loss allowance to nonperforming loans

      4.99     5.55           4.99     4.96        
(1) Ratios computed excluding loans held for sale.

 

Page 13

NATIONAL COMMERCE FINANCIAL CORPORATION

Five Quarter Asset Quality

(In Thousands)

 

     As Of And For The Three Months Ended
  
     3/31/2004
     12/31/2003
     9/30/2003
     6/30/2003
     3/31/2003
  

Allowance For Loan Losses

                                 

Beginning balance

    $ 170,452     172,186     167,316     162,842     163,424  

Charge-offs:

                                 

Commercial

      (1,600 )   (7,348 )   (3,023 )   (893 )   (1,441 )

Construction and commercial real estate

      —       (106 )   (19 )   (84 )   (141 )

Secured by real estate

      (1,022 )   (1,140 )   (1,833 )   (1,375 )   (727 )

Consumer

      (6,565 )   (6,048 )   (5,355 )   (6,289 )   (5,977 )

Revolving credit

      (1,109 )   (1,016 )   (1,077 )   (1,133 )   (941 )

Lease financing

      (405 )   (849 )   (146 )   (605 )   (53 )
    
 
 
 
 

Total charge-offs

      (10,701 )   (16,507 )   (11,453 )   (10,379 )   (9,280 )
    
 
 
 
 

Recoveries:

                                 

Commercial

      219     1,280     218     261     273  

Construction and commercial real estate

      1     1     22     1     7  

Secured by real estate

      50     70     145     69     26  

Consumer

      967     693     705     824     931  

Revolving credit

      234     250     240     290     322  

Lease financing

      74     97     21     32     37  
    
 
 
 
 

Total recoveries

      1,545     2,391     1,351     1,477     1,596  
    
 
 
 
 

Net charge-offs

      (9,156 )   (14,116 )   (10,102 )   (8,902 )   (7,684 )

Provision for loan losses

      12,088     12,382     14,972     13,376     7,684  

Changes from acquisitions (sales)

      —       —       —       —       (582 )
    
 
 
 
 

Ending balance

    $ 173,384     170,452     172,186     167,316     162,842  
    
 
 
 
 

Nonperforming Assets

                                 

Nonaccrual loans by loan type:

                                 

Commercial

    $ 15,100     13,991     15,691     20,151     19,833  

Construction and commercial real estate

      12,455     10,944     13,911     7,014     6,883  

Secured by real estate

      2,660     1,701     239     1,901     2,105  

Consumer

      3,733     2,916     4,734     3,227     2,004  

Lease financing

      777     1,137     1,408     1,550     2,013  
    
 
 
 
 

Total nonperforming loans

      34,725     30,689     35,983     33,843     32,838  

Foreclosed real estate

      23,225     28,196     25,500     23,961     22,981  
    
 
 
 
 

Nonperforming loans and foreclosed real estate

      57,950     58,885     61,483     57,804     55,819  

Other repossessed assets

      6,108     4,638     5,138     8,420     11,962  
    
 
 
 
 

Nonperforming assets

    $ 64,058     63,523     66,621     66,224     67,781  
    
 
 
 
 

Ninety days past due and accruing

      65,275     64,457     59,691     56,104     56,384  
    
 
 
 
 

Asset Quality Ratios (1)

                                 

Net charge-offs (annualized) by loan type:

                                 

Commercial

      .14 %   .65     .31     .07     .14  

Construction and commercial real estate

      .00     .01     .00     .01     .01  

Secured by real estate

      .41     .43     .68     .68     .24  

Consumer

      .51     .50     .44     .54     .52  

Revolving credit

      4.13     3.66     4.12     4.33     3.26  

Lease financing

      1.02     2.33     .38     1.72     .05  

Net loans charged-off (annualized) to average loans

      .28     .43     .31     .29     .25  

Nonperforming loans to total loans

      .26     .24     .28     .27     .28  

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

      .43     .45     .48     .46     .47  

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

      .48     .49     .52     .53     .57  

Loan loss allowance to total loans

      1.29     1.31     1.34     1.35     1.37  

Loan loss allowance to net charge-offs (annualized)

      4.71 x   3.04     4.30     4.69     5.23  

Loan loss allowance to nonperforming loans

      4.99     5.55     4.79     4.94     4.96  
(1) Ratios computed excluding loans held for sale.

 

Page 14

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
     3/31/2004
     12/31/2003
    9/30/2003
    6/30/2003
    3/31/2003

Taxable Equivalent Basis (1)

    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 (2)

    $ 13,451,587      184,637    5.52 %   13,219,321    190,799    5.73    13,065,302    188,073    5.72    12,614,546    190,239    6.05    12,789,028    199,861    6.32

Investment securities (3)

      6,642,411      79,991    4.82     6,626,168    79,588    4.80    6,688,614    78,420    4.69    6,674,537    80,778    4.84    5,706,704    69,677    4.88

Trading securities

      259,602      1,934    2.98     188,287    1,463    3.11    136,198    416    1.22    120,999    437    1.44    87,496    586    2.68

Time deposits in other banks

      38,023      408    4.31     64,169    814    5.03    5,726    16    1.11    5,742    17    1.21    9,575    25    1.06

Federal funds sold and other short-term investments

      178,951      374    .84     142,362    311    .87    148,627    287    .76    107,462    340    1.27    51,187    167    1.33
    
  
  
 
  
  
  
  
  
  
  
  
  
  
  

Total earning assets

      20,570,574      267,344    5.22     20,240,307    272,975    5.37    20,044,467    267,212    5.31    19,523,286    271,811    5.58    18,643,990    270,316    5.85
           
  
      
  
       
  
       
  
       
  

Non-earning assets:

                                                                                

Cash and due from banks

      431,289                 458,469              450,576              422,653              398,564          

Bank owned life insurance

      243,306                 239,161              235,741              231,397              228,214          

Investment in First Market Bank

      32,946                 31,803              30,471              29,248              28,353          

Premises and equipment

      265,599                 271,113              276,435              276,227              258,614          

Goodwill

      1,087,115                 1,085,565              1,083,340              1,082,077              1,077,121          

Core deposit intangibles

      165,967                 180,879              197,593              213,065              229,044          

Other assets, net

      347,268                 338,401              408,676              395,442              428,542          
    
               
            
            
            
         

Total assets

    $ 23,144,064                 22,845,698              22,727,299              22,173,395              21,292,442          
    
               
            
            
            
         

Interest-bearing liabilities

                                                                                

Interest-bearing deposits:

                                                                                

Savings, NOW and money market accounts

    $ 5,816,757      8,990    .62 %   5,799,594    9,287    .63    5,845,036    9,372    .64    5,765,351    11,006    .76    5,684,696    11,957    .85

Jumbo and brokered certificates of deposit

      2,290,967      6,416    1.13     2,207,988    6,354    1.14    2,166,011    6,452    1.18    2,032,881    7,378    1.46    1,796,198    7,189    1.62

Time deposits

      4,913,286      32,353    2.65     4,789,305    32,769    2.71    4,770,283    33,981    2.82    4,915,988    36,800    3.00    4,909,848    38,142    3.15
    
  
  
 
  
  
  
  
  
  
  
  
  
  
  

Total interest-bearing deposits

      13,021,010      47,759    1.48     12,796,887    48,410    1.50    12,781,330    49,805    1.55    12,714,220    55,184    1.74    12,390,742    57,288    1.88

Short-term borrowings

      1,697,317      4,565    1.08     1,685,250    4,532    1.06    1,608,179    4,619    1.14    1,388,604    4,698    1.37    1,249,458    4,368    1.40

FHLB advances

      2,351,862      15,602    2.67     2,312,746    15,722    2.70    2,218,184    18,236    3.26    2,197,173    21,397    3.91    2,056,896    22,118    4.36

Trust preferred securities and long-term debt (4)

      278,344      1,530    2.20     299,867    1,920    2.56    297,701    2,036    2.74    299,247    2,133    2.81    296,745    2,160    2.95
    
  
  
 
  
  
  
  
  
  
  
  
  
  
  

Total interest-bearing liabilities

      17,348,533      69,456    1.61     17,094,750    70,584    1.64    16,905,394    74,696    1.75    16,599,244    83,412    2.02    15,993,841    85,934    2.18
           
  
      
  
       
  
       
  
       
  

Other liabilities and stockholders’ equity:

                                                                                

Demand deposits (noninterest-bearing)

      2,514,792                 2,554,870              2,565,673              2,375,641              2,140,299          

Other liabilities

      497,784                 450,613              522,151              495,573              462,456          

Stockholders’ equity

      2,782,955                 2,745,465              2,734,081              2,702,937              2,695,846          
    
               
            
            
            
         

Total liabilities and stockholders’ equity

    $ 23,144,064                 22,845,698              22,727,299              22,173,395              21,292,442          
    
               
            
            
            
         

Net interest income and margin

           $ 197,888    3.86 %        202,391    3.98         192,516    3.83         188,399    3.86         184,382    3.98
           
  
      
  
       
  
       
  
       
  

Interest rate spread

                  3.61 %             3.73              3.56              3.56              3.67
                  
           
            
            
            
(1) The taxable equivalent basis is computed using 35 percent federal and applicable state tax rates. A reconciliation of taxable equivalent interest income, a non-GAAP measure, to GAAP interest income for each of the quarters is provided below:

 

     3/31/04
    12/31/03
    9/30/03
    6/30/03
    3/31/03

Taxable equivalent interest income

    $ 267,344    272,975    267,212    271,811    270,316

Less taxable equivalent adjustment for:

                           

Loans

      1,655    1,792    1,993    2,140    2,192

Investment securities

      5,153    5,157    5,022    4,909    4,724

Trading account securities

      9    14    41    165    20

Federal funds sold and other short-term investments

      —      —      1    4    4
    
  
  
  
  

GAAP interest income

    $ 260,527    266,012    260,155    264,593    263,376
    
  
  
  
  

 

(2) Includes loans held for sale.
(3) Average balances exclude the mark-to-market adjustment for Statement of Financial Accounting Standards No. 115.
(4) NCF adopted the provisions of FASB Interpretation No. 46 in the fourth quarter of 2003 and deconsolidated entities that had issued trust preferred securities.

 

Page 15

NATIONAL COMMERCE FINANCIAL CORPORATION

Reconcilement of Non-GAAP Measures

(In Thousands)

 

     As Of And For The           As Of And For The        
     Three Months Ended
     % Change     Three Months Ended
     %  
     3/31/04
     12/31/03
     Fav/(Unfav)
     3/31/04
     3/31/03
     Inc/(Decr)
  

GAAP Noninterest Expense to Cash

                                       

Operating Noninterest Expense

                                       

Fully Consolidated

                                       

GAAP noninterest expense

    $ 163,726     162,236     (.9 )   163,726     180,104     9.1  

Less: Core deposit intangible amortization

      (13,639 )   (14,337 )   4.9     (13,639 )   (16,284 )   16.2  

First Mercantile litigation

      —       —       —       —       (19,654 )   100.0  

Employment contract terminations

      —       (987 )   100.0     —       —       —    

Debt retirement/prepayment (penalties) gains

      —       —       —       —       —       —    

Other items (1)

      (2,543 )   (1,021 )   (149.1 )   (2,543 )   —       —    
    
 
       
 
     

Cash operating noninterest expense

    $ 147,544     145,891     (1.1 )   147,544     144,166     (2.3 )
    
 
       
 
     

Traditional Banking Segment

                                       

GAAP noninterest expense

    $ 125,395     124,714     (.5 )   125,395     127,337     1.5  

Less: Core deposit intangible amortization

      (13,639 )   (14,337 )   4.9     (13,639 )   (16,284 )   16.2  

Employment contract terminations

      —       (987 )   100.0     —       —       —    

Debt retirement/prepayment (penalties) gains

      —       —       —       —       —       —    

Other items (1)

      (2,543 )   (1,021 )   (149.1 )   (2,543 )   —       —    
    
 
       
 
     

Cash operating noninterest expense

    $ 109,213     108,369     (.8 )   109,213     111,053     1.7  
    
 
       
 
     

Financial Enterprises Segment

                                       
    
 
       
 
     

GAAP noninterest expense

    $ 40,295     39,367     (2.4 )   40,295     54,385     25.9  

Less: First Mercantile litigation

      —       —       —       —       (19,654 )   100.0  
    
 
       
 
     

Cash operating noninterest expense

    $ 40,295     39,367     (2.4 )   40,295     34,731     (16.0 )
    
 
       
 
     

Total Revenues to Operating Revenues

                                       

Fully Consolidated

                                       

Net interest income (TE) (2)

    $ 197,888     202,391     (2.2 )   197,888     184,382     7.3  

GAAP noninterest income

      119,938     111,705     7.4     119,938     104,595     14.7  
    
 
       
 
     

Total revenues

    $ 317,826     314,096     1.2     317,826     288,977     10.0  
    
 
       
 
     

GAAP noninterest income

    $ 119,938     111,705     7.4     119,938     104,595     14.7  

Less: (Gain) loss on branch sales

      (45 )   (2,200 )   (98.0 )   (45 )   145     (131.0 )

Investment securities (gains) losses

      (10,918 )   (3,338 )   227.1     (10,918 )   (2,464 )   (343.1 )
    
 
       
 
     

Operating noninterest revenues

      108,975     106,167     2.6     108,975     102,276     6.5  

Net interest income (TE)

      197,888     202,391     (2.2 )   197,888     184,382     7.3  
    
 
       
 
     

Operating revenues

    $ 306,863     308,558     (.5 )   306,863     286,658     7.0  
    
 
       
 
     

Traditional Banking Segment

                                       
    
 
       
 
     

Net interest income (TE)

    $ 190,886     195,876     (2.5 )   190,886     179,167     6.5  

GAAP noninterest income

      68,834     65,446     5.2     68,834     61,456     12.0  
    
 
       
 
     

Total revenues

    $ 259,720     261,322     (.6 )   259,720     240,623     7.9  
    
 
       
 
     

GAAP noninterest income

      68,834     65,446     5.2     68,834     61,456     12.0  

Less: (Gain) loss on branch sales

      (45 )   (2,200 )   (98.0 )   (45 )   145     (131.0 )

Investment securities (gains) losses

      (10,918 )   (3,338 )   227.1     (10,918 )   (2,464 )   343.1  
    
 
       
 
     

Operating noninterest revenues

      57,871     59,908     (3.4 )   57,871     59,137     (2.1 )

Net interest income (TE)

      190,886     195,876     (2.5 )   190,886     179,167     6.5  
    
 
       
 
     

Operating revenues

    $ 248,757     255,784     (2.7 )   248,757     238,304     4.4  
    
 
       
 
     

Financial Enterprises Segment

                                       
    
 
       
 
     

Net interest income (TE)

    $ 7,002     6,515     7.5     7,002     5,215     34.3  

GAAP noninterest income

      53,068     48,104     10.3     53,068     44,757     18.6  
    
 
       
 
     

Total and operating revenues

    $ 60,070     54,619     10.0     60,070     49,972     20.2  
    
 
       
 
     

 

(1) Comprised of expenses related to consulting project, severance and branch closures.
(2) Taxable equivalent interest income is reconciled to GAAP interest income on Page 15.
(3) Inter-segment eliminations are not separately presented.

 

Page 16

NATIONAL COMMERCE FINANCIAL CORPORATION

Reconcilement of Non-GAAP Measures

(In Thousands)

 

     As Of And For The Three Months Ended
  
     03/31/2004
     12/31/2003
     09/30/2003
     06/30/2003
     03/31/2003
  

GAAP Noninterest Expense to Cash Operating Noninterest Expense

                                 

Fully Consolidated

                                 

GAAP noninterest expense

    $ 163,726     162,236     201,495     180,604     180,104  

Less: Core deposit intangible amortization

      (13,639 )   (14,337 )   (15,062 )   (15,673 )   (16,284 )

First Mercantile litigation

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

Employment contract terminations

      —       (987 )   (604 )   (14,108 )   —    

Debt retirement/prepayment (penalties) gains

      —       —       (31,987 )   326     —    

Other items (1)

      (2,543 )   (1,021 )   (1,722 )   —       —    
    
 
 
 
 

Cash operating noninterest expense

    $ 147,544     145,891     152,120     150,108     144,166  
    
 
 
 
 

Traditional Banking Segment

                                 

GAAP noninterest expense

    $ 125,395     124,714     162,499     140,768     127,337  

Less: Core deposit intangible amortization

      (13,639 )   (14,337 )   (15,062 )   (15,673 )   (16,284 )

Employment contract terminations

      —       (987 )   (604 )   (14,108 )   —    

Debt retirement/prepayment (penalties) gains

      —       —       (31,987 )   326     —    

Other items (1)

      (2,543 )   (1,021 )   (1,722 )   —       —    
    
 
 
 
 

Cash operating noninterest expense

    $ 109,213     108,369     113,124     111,313     111,053  
    
 
 
 
 

Financial Enterprises Segment

                                 

GAAP noninterest expense

    $ 40,295     39,367     40,938     41,934     54,385  

Less: First Mercantile litigation

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

Cash operating noninterest expense

    $ 40,295     39,367     40,938     40,893     34,731  
    
 
 
 
 

Total Revenues to Operating Revenues

                                 

Fully Consolidated

                                 

Net interest income (TE) (2)

    $ 197,888     202,391     192,516     188,399     184,382  

GAAP noninterest income

      119,938     111,705     121,004     117,418     104,595  
    
 
 
 
 

Total revenues

    $ 317,826     314,096     313,520     305,817     288,977  
    
 
 
 
 

GAAP noninterest income

    $ 119,938     111,705     121,004     117,418     104,595  

Less: (Gain) loss on branch sales

      (45 )   (2,200 )   (7,055 )   —       145  

Investment securities (gains) losses

      (10,918 )   (3,338 )   4,512     (2,460 )   (2,464 )
    
 
 
 
 

Operating noninterest revenues

      108,975     106,167     118,461     114,958     102,276  

Net interest income (TE)

      197,888     202,391     192,516     188,399     184,382  
    
 
 
 
 

Operating revenues

    $ 306,863     308,558     310,977     303,357     286,658  
    
 
 
 
 

Traditional Banking Segment

                                 

Net interest income (TE)

    $ 190,886     195,876     187,218     183,113     179,167  

GAAP noninterest income

      68,834     65,446     70,981     65,301     61,456  
    
 
 
 
 

Total revenues

    $ 259,720     261,322     258,199     248,414     240,623  
    
 
 
 
 

GAAP noninterest income

    $ 68,834     65,446     70,981     65,301     61,456  

Less: (Gain) loss on branch sales

      (45 )   (2,200 )   (7,055 )   —       145  

Investment securities (gains) losses

      (10,918 )   (3,338 )   4,512     (2,460 )   (2,464 )
    
 
 
 
 

Operating noninterest revenues

      57,871     59,908     68,438     62,841     59,137  

Net interest income (TE)

      190,886     195,876     187,218     183,113     179,167  
    
 
 
 
 

Operating revenues

    $ 248,757     255,784     255,656     245,954     238,304  
    
 
 
 
 

Financial Enterprises Segment

                                 

Net interest income (TE)

    $ 7,002     6,515     5,298     5,286     5,215  

GAAP noninterest income

      53,068     48,104     51,965     54,215     44,757  
    
 
 
 
 

Total and operating revenues

    $ 60,070     54,619     57,263     59,501     49,972  
    
 
 
 
 

 

(1) Comprised of expenses related to consulting project, severance and branch closures.
(2) Taxable equivalent interest income is reconciled to GAAP interest income on Page 15.
(3) Inter-segment eliminations are not separately presented.

 

17

NATIONAL COMMERCE FINANCIAL CORPORATION

Reconcilement of Non-GAAP Measures

(In Thousands)

 

     As Of And For The Three Months Ended
     03/31/2004
     12/31/2003
    09/30/2003
    06/30/2003
    03/31/2003

Efficiency Ratio (TE) to Operating Cash Efficiency Ratio (TE) (1)

                            

Fully Consolidated

                            

GAAP noninterest expense

    $ 163,726     162,236    201,495    180,604    180,104

Total revenues

      317,826     314,096    313,520    305,817    288,977

Efficiency ratio (TE)

      51.51 %   51.65    64.27    59.06    62.32
    
 
  
  
  

Cash operating noninterest expense

    $ 147,544     145,891    152,120    150,108    144,166

Operating revenues

      306,863     308,558    310,977    303,357    286,658

Operating cash efficiency ratio (TE)

      48.08 %   47.28    48.92    49.48    50.29
    
 
  
  
  

Traditional Banking Segment

                            

GAAP noninterest expense

    $ 125,395     124,714    162,499    140,768    127,337

Total revenues

      259,720     261,322    258,199    248,414    240,623

Efficiency ratio (TE)

      48.28 %   47.72    62.94    56.67    52.92
    
 
  
  
  

Cash operating noninterest expense

    $ 109,213     108,369    113,124    111,313    111,053

Operating revenues

      248,757     255,784    255,656    245,954    238,304

Operating cash efficiency ratio (TE)

      43.90 %   42.37    44.25    45.26    46.60
    
 
  
  
  

Financial Enterprises Segment

                            

GAAP noninterest expense

    $ 40,295     39,367    40,938    41,934    54,385

Total revenues

      60,070     54,619    57,263    59,501    49,972

Efficiency ratio (TE)

      67.08 %   72.08    71.49    70.48    108.83
    
 
  
  
  

Cash operating noninterest expense

    $ 40,295     39,367    40,938    40,893    34,731

Operating revenues

      60,070     54,619    57,263    59,501    49,972

Operating cash efficiency ratio (TE)

      67.08 %   72.08    71.49    68.73    69.50
    
 
  
  
  
(1) Taxable equivalent interest income is reconciled to GAAP interest income on Page 15.

 

18