NATIONAL CITY CORP - 10-K Annual Report

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2001 ANNUAL REPORT

THE WORLD IS CHANGING...
[GRAPHIC]

WE 'RE PREPARING AND INNOVATING...
[PHOTOS]

BUILDING FOR
FUTURE SUCCESS... [PHOTOS]

[NATIONAL CITY LOGO]

FINANCIAL HIGHLIGHTS

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(Dollars in Millions, Except Per Share Amounts) 2001 2000 1999
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For the Year

Revenue

Tax-Equivalent Net Interest Income $ 3,472 $ 2,992 $ 3,037

Noninterest Income 2,678 2,484 2,381
------------ ------------ ------------

Total Revenue $ 6,150 $ 5,476 $ 5,418
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Net Income $ 1,388 $ 1,302 $ 1,405

Net Income Per Common Share

Basic 2.30 2.14 2.25

Diluted 2.27 2.13 2.22

Dividends Paid Per Common Share 1.16 1.14 1.06
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Return on Average Common Equity 19.89% 21.29% 22.64%

Return on Average Assets 1.49 1.52 1.67

Net Interest Margin 4.09 3.85 3.99

Efficiency Ratio 55.70 58.75 56.49
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Average Shares-Basic 603,611,073 607,378,801 623,623,811

Average Shares-Diluted 611,936,906 612,625,349 632,452,146

=====================================================================================================================

At Year End

Assets $ 105,817 $ 88,535 $ 87,121

Loans 68,041 65,604 60,204

Earning Assets 95,045 79,623 78,903

Deposits 63,130 55,256 50,066

Stockholders' Equity 7,381 6,770 5,728
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Book Value Per Common Share $ 12.15 $ 11.06 $ 9.39

Market Value Per Common Share 29.24 28.75 23.69

Equity to Assets Ratio 6.98% 7.65% 6.57%
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Common Shares Outstanding 607,354,729 609,188,668 607,058,364

Common Stockholders of Record 64,631 68,981 70,545

Full-Time Equivalent Employees 32,360 36,097 38,054
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BUSINESS PROFILE

National City Corporation (NYSE: NCC) is a $106 billion financial holding
company headquartered in Cleveland, Ohio. The company provides a full range of
banking and financial services to individuals and businesses and operates more
than 1,100 branch banking offices and over 1,600 ATMs in Ohio, Pennsylvania,
Indiana, Kentucky, Illinois, and Michigan.

CONTENTS

To Our Stockholders ................................................... 1
National City Overview ................................................ 3
Board of Directors and Officers ....................................... 8
Financial Review ...................................................... 9
Consolidated Financial Statements and Notes ........................... 28
Form 10-K ............................................................. 61

TO OUR STOCKHOLDERS:
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In last year's letter we stated, "Our primary goal for 2001 and the coming
years is the resumption of positive revenue and earnings momentum. The people
and strategies are in place to do just that." I am pleased to report that,
despite a challenging economic environment and other unforeseen difficulties,
National City achieved record revenue and earnings per share in 2001. Revenue
grew 12 percent, to $6.2 billion, led by a 16 percent increase in net interest
income. Net income was $1.4 billion, and earnings were $2.27 per share, the
highest in our 156-year history. This record performance reflects exceptional
efforts by our employees and represents the payoff from long-term strategies and
investments made across our businesses. The stage is set for continued growth in
2002 and beyond.

The operating environment in 2001 was characterized by declining interest
rates and a weaker economy. The lower interest rate climate triggered
unprecedented demand for home mortgage refinancing. Our investments in mortgage
origination capacity and process improvement over the last five years put us in
a perfect position to benefit from this environment, evidenced by record
mortgage banking results. At the same time, the faltering economy created
difficulties for many borrowers, both corporate and individual, driving
increased loan losses. While our credit performance was better than nearly all
of our large bank peers, charge offs did rise from 46 basis points to 68 basis
points. The strong mortgage performance helped to offset the increase in credit
costs. We anticipate the cycle will turn for both of these items in 2002.

Although overall loan demand slowed during the year, we generated strong
loan growth in both the corporate and retail sectors, by focusing on customers'
needs and providing high-quality service. Deposit growth was the strongest in
years, reflective of better staffing and service at the branch level, improved
products, and more aggressive promotion. Customer acquisition and retention
trends across all businesses continued to improve, but we can and will do
better.

Our capital position is very strong even as total assets surpassed the $100
billion level for the first time in our history. Loan loss reserves, essentially
a form of capital, were also bolstered during the year, and we remain vigilant
in the identification, monitoring, and disposition of problem loan assets. The
balance sheet is in excellent shape as we embark on the new year.

At a deeper level, not necessarily obvious in the financials, National City
undertook a series of investments in 2001 in people, products, and technology to
position the company for sustainable long-term growth. In many cases these
investments reduced rather than enhanced current financial results. The
objective is for each business unit to be "best-in-class" in the marketplace.
For any component of a business unit not on a viable path of excellence, we will
consider divestiture or restructuring, as appropriate.

Building on the National City brand promise

We have consciously adopted a customer relationship approach to our
business. National City is committed to doing what's right for our customers. In
so doing, we will strive to optimize the long-term revenue stream from each
customer relationship, as opposed to maximizing the profit realized from a
single transaction. These statements are not idle words; in fact, we have
refocused the entire organization from the ground up to fulfill our brand
promise - that of "customer champion." Our employees have enthusiastically
embraced this promise.

[PHOTO] Left to Right:
Robert G. Siefers, Vice Chairman
David A. Daberko, Chairman & CEO
William E. MacDonald III, Vice Chairman

Following Vince DiGirolamo's retirement in March 2001 (see box on
next page), William E. MacDonald III was appointed to the Office of
the Chairman. Bill's 34 years with National City include broad
experience in retail banking, marketing, corporate banking, and
numerous administrative responsibilities. In his new role, Bill is
directly responsible for National City's corporate banking
businesses, including middle-market lending, leasing, commercial
real estate lending, and cash management services across the
six-state footprint. Bill also oversees international banking,
capital markets, and the business development efforts of the
company's bank presidents.

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NATIONAL CITY
2001 ANNUAL REPORT

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Four elements necessary to fulfill the brand promise have been put in place
over the last several years. The first is a commitment to truly outstanding
service quality. Since instituting some 200 corporate-wide and business-unit-
specific standards two years ago, we have seen reductions in error rates of at
least 50 percent along with significant improvements in related quality
measurements, such as call center speed-to-answer and turnaround times for
service requests. Independent third-party surveys show that our service levels
are surpassing those of most of our major competitors.

Ultimately, quality service is unattainable without quality people.
Investments in human resources - recruitment, training, development, and
retention - have been upgraded, especially at the branch level, where most
face-to-face customer contact takes place. The culture of our company and the
execution of the brand promise are driven by our people, and we have never been
more serious about having the right people, all empowered to be and do their
best. That is the second element behind our brand promise.

The third element is technology. Technological advancements, including the
Internet and enhanced computing and communications capabilities, have
revolutionized financial services and will continue to make these services
easier to access. We expect our customer-accessible technology to be easy to use
and full of function. Further, our internal philosophy is one of continuous
improvement and the reduction or elimination of "friction" - the time, cost, and
redundancy of entering data and processing routine transactions. We increased
rather than decreased discretionary technology spending in 2001 and have no
plans to cut back in 2002, with payback expected in 2003 and beyond.

The final element is product. Our products have been or are being upgraded
to be on par with the best in the marketplace. They must be suitable for the
needs of customers and be part of a fair value exchange between producer and
consumer. In some cases, such as in the system-wide rollout of free checking
and counseling customers to switch from savings accounts to higher-yielding
money market accounts, we are deliberately sacrificing current income in the
interests of the long-term value of the customer relationship. We will shortly
be introducing a state-of-the-art cash management account, which will be as good
or better than comparable offerings at competing banks and brokerages.

This past year we spent significant time and energy conveying the National
City brand promise to employees so that they, in turn, could begin to deliver a
consistent brand experience for our customers. In 2002 we will begin to
publicize and promote our commitment to doing what's right for customers through
a relatively aggressive brand awareness and advertising program. As a
stockholder, you should be aware that earnings in 2002, as was the case in 2001,
will be less than they would have been in the absence of these programs. The
management team and the board are fully committed to this course of action.
Successfully executed, this customer-driven strategy will assure the ongoing
viability of National City for years to come.

Looking back, moving ahead

The events of the past year remind us that we live in troubled, if not
perilous, times. In 2001 we did a good job navigating through a difficult
economy and uncertain markets and their attendant risks, thanks to the
unstinting efforts of thousands of employees, the dedication of the management
team, and the support of the board. Those qualities will be further put to the
test in 2002, but I believe we have never been better equipped to respond to the
challenges. Management depth and continuity have long been a quiet and
underappreciated strength of National City, and we are fortunate to be entering
2002 with an exceptionally strong cadre of people, sharing a common vision and
focused on the tasks at hand. I thank you for your support and look forward to
reviewing our progress with you as the year unfolds.

/s/ David A. Daberko

David A. Daberko
Chairman and CEO
January 23, 2002

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OUR SINCEREST THANK YOU TO VINCENT A. DIGIROLAMO

Following more than four decades of outstanding service,
Vincent A. DiGirolamo retired as National City Vice
Chairman on March 31, 2001. Known for his compassionate
management style, he fostered an environment of trust
[PHOTO] and open communication.
VINCENT A. DIGIROLAMO
On both a personal and professional level, Vince
demonstrated character, integrity, competitive spirit,
and a sense of humor. As a leader, his vision helped
drive National City's success and will continue to
benefit our organization for years to come.

Thank you, Vince, for your immeasurable contributions
and may you enjoy exceptional health and much happiness
in retirement.

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NATIONAL CITY
2001 ANNUAL REPORT

2001: A RECORD YEAR
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LONG-TERM STRATEGIES AND INVESTMENTS YIELD BEST-EVER RESULTS

[PHOTO]

CONSISTENCY OF PURPOSE.

It is the underlying theme in our management principles and strategic direction.
It is put into practice each day as we fulfill our commitments to customers,
stockholders, employees, and communities. It is the reason why National City
continues to be successful at each turn, through every change.

NATIONAL CITY MORTGAGE COMPANY DELIVERS

A forward-thinking business strategy combined with the lowest interest rates
in decades helped to provide a banner year for National City Mortgage Company.
The business strategy, put in place in the mid 1990s, added origination capacity
during downturns in the market. Since 1996, National City Mortgage Company's
profitability has increased tenfold. Annual production volume over the same time
period has increased more than 13 times and in 2001 was greater than the years
1999 and 2000 combined.

NONCONFORMING MORTGAGE LOAN RETENTION POWERS BALANCE SHEET ENRICHMENT PROGRAM

Strategies for improving net interest income have been a prominent
initiative for National City. In 2000, the Corporation sold lower-yielding
investment securities, conventional mortgages, and student loans, replacing them
with higher-yielding, nonconforming mortgage loans generated by its First
Franklin subsidiary. Exceptional results were tallied in 2001 as National City
Corporation reaped the benefits of retaining $3.8 billion or 60 percent of the
mortgage loans generated by First Franklin. This strategy initially reduces net
income by foregoing gains that otherwise would have been realized by selling
these loans into the market, but the subsequent improvement in the interest
income over the life of the loan more than recoups this foregone gain.

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NATIONAL CITY
2001 ANNUAL REPORT

[PHOTO]

HIGH RANKINGS FOR SERVICE AND SALES

For the fourth consecutive year, National City's Stock Transfer Group earned the
highest customer satisfaction rating from corporate clients as measured by the
annual Group Five Inc. Shareowner Services Corporate Satisfaction Study.
National City is the only company ever to have won this distinction more than
once. Additionally, National City again received the SCS/Rutgers University
Agent Comparison Survey's TALON (R) Award for being the best mid-sized stock
transfer agent. In small business, National City is the leader in Small Business
Administration loans in its six-state area. The company is ranked No. 1 in
Pennsylvania, Michigan, and Indiana, No. 2 in Ohio, and 11th in the country.

NATIONAL PROCESSING, INC. POSTS SUBSTANTIAL GROWTH

National Processing (NPC), National City's 86-percent owned merchant card
processing subsidiary, continues to be a success story. NPC is well positioned
to take advantage of the long-term growth trend in credit and debit card usage
in nontraditional venues such as grocery stores and quick-service restaurants,
and in retail transactions conducted by phone or through the Internet. NPC now
supports in excess of 600,000 merchant locations nationwide and has been winning
new customers at a rate of nearly 9,000 each month - up from approximately
7,000 per month in 2000. This past year, NPC completed a multiyear restructuring
of its operations as it exited the last of its paper-based transaction
businesses. Going forward, it is a "pure play" electronic-based payments
processor. In the past five years, NPC's business mix has also shifted from
primarily larger customers to a more diverse mix, which includes mid-sized and
smaller regional merchants. The shift reduces the company's reliance on a single
sector while retaining the benefits of scale, providing more stability and
opportunity for future growth and further success.

[PHOTO]

National City's custom-designed Project Services and Technology Center began
operations in January 2001. The fresh environment, combined with process
optimization and an innovative work culture, has reduced project delivery time
by nearly 45 percent in one year.

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NATIONAL CITY
2001 ANNUAL REPORT

INVESTING IN SERVICE QUALITY, PEOPLE, TECHNOLOGY, AND PRODUCTS
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ENHANCING REVENUE THROUGH THE ATTRACTION
AND RETENTION OF CUSTOMERS

ENSURING GROWTH.

Investment professionals often describe National City as solid, well managed,
consistent, and sound - accolades earned for superior financial performance over
156 years. This performance is, and has always been, the result of constant
progression and adaptation. Preparation, innovation, and a willingness to
embrace change - and the opportunities it brings - keep National City ready to
address the financial needs and service demands of increasingly sophisticated
customer segments - from large corporations to individuals and small businesses.

SERVICE QUALITY IMPROVEMENTS

It's often said it takes months to find a customer but just seconds to lose
one. That's why meeting and exceeding customer service expectations is at the
heart of National City's brand promise of doing what's right for our customers.
In 2000, the Corporation developed formal performance standards across all
business lines to measure service levels and customer satisfaction. The extra
efforts began to pay off in 2001, especially in the retail network. We now track
more than 200 service-quality standards across the network and each day, in
every location, customers are asked by an independent survey firm to comment
about their experiences to ensure continuous, current feedback. Results show
targets are being met or exceeded more than 90 percent of the time. In addition,
National City's problem resolution process continues to enhance the customer
experience and tracking reports show that errors have been reduced by 50 percent
in the past 18 months.

[PHOTO]

INVESTING IN HUMAN CAPITAL

Established in 2000 to enhance the performance and retention of employees,
the National City Institute now has nine locations across the Corporation's
six-state footprint. Throughout 2001, more than 3,000 new employees and managers
attended classes with training lasting approximately three weeks compared to
five days or less in the past. New employees emerge with a stronger
understanding of National City products, services, and procedures, and are
better prepared to provide quality customer service. Managers are better
equipped to reduce new-hire turnover and enhance morale. The Institute also
facilitates the acclimation process of new employees by assigning sponsors who
offer guidance and support. In addition to the Institute's training programs,
the branch network has standardized processes and procedures to ensure
consistency in service quality.

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NATIONAL CITY
2001 ANNUAL REPORT

INVESTING IN TECHNOLOGY

Retail OnLine - To enhance the overall efficiency of its branch network,
National City equipped each office with Retail OnLine in 2001. This
branch-system intranet provides immediate access to current retail banking
information in a searchable format. Armed with more timely and accurate data,
managers and staff are now better able to assist customers with their needs and
concerns. The capabilities of Retail OnLine have also greatly facilitated
problem resolution. In 2002, a broader set of initiatives are already underway
to redesign branch and call center processes to further improve service quality
and work flow while reducing back-office operating costs.

Credit and investment sweep - National City's Small Business and Corporate
Banking lines of business automated the sweeping of a customer's funds into
investment vehicles or for payments on a line of credit. This technology will
continue to be shared across National City business lines in 2002.

NationalCity.com - This past year the revamped NationalCity.com received 7.3
million visits and the number of customers using Online Banking more than
doubled to approximately 275,000. Moreover, NationalCity.com was rated as the
No. 1 business-to-business Web site operated by a bank and the second best
business-to-business site in the nation by Business To Business magazine. A very
visible enhancement to the site in 2001 was the addition of My Sites, a free
account aggregation service enabling individuals to consolidate multiple sites
in one location with one password. Behind the scenes, the Corporation moved the
hosting of the Online Banking service from a third-party vendor to National
City's eCommerce environment. Benefits of the move include improved customer
service and faster problem resolution.

NatCity(R) Online Investing - NatCity Investments, Inc., the Corporation's
retail brokerage subsidiary, debuted this service in late 2001. Online Investing
allows customers to purchase stocks and mutual funds via the Internet. Users
have the choice of making their own investment decisions or can call on the
expertise of a full-service financial consultant.

ShareBuilder(R) - With no account or investment minimums, or an annual fee,
ShareBuilder eliminates many of the financial barriers to entering the stock
market. The online service enables anyone to build a diversified portfolio by
offering investment options in more than 4,000 stocks and 60 index securities.
Investors can purchase shares or fractions of shares on a weekly, monthly, or
one-time basis by directly withdrawing from a National City checking or savings
account.

StockAccess(SM) - Through StockAccess at ncstockaccess.com, National City
Corporation shareholders now have interactive access to comprehensive account
information around the clock. With this free service, a shareholder can view
balances, research certificate history, analyze dividend payment history, review
1099 tax information, and see the current market value of holdings.

BETTER PRODUCTS AND SERVICES

Pricing and product migration efforts - To more closely align with
customers' needs and market pricing, National City implemented changes to retail
products and pricing strategies as part of its annual pricing evaluation. The
product migration efforts included contact with more than 200,000 customers
offering an upgrade from traditional savings to higher-yielding money market
accounts. Customers responded well to these endeavors, migrating more than $2
billion in deposits.

Checking Solutions - Free Checking and Small Business ValuePak Checking have
been important components to direct deposit account growth in 2001. National
City now offers Free Checking across our six-state footprint. ValuePak Checking
bundles several products for small businesses at discounted prices.

Private Investment Advisors Trust Statements - An improved account statement
was introduced to investment management and personal trust clients this year.
The new statements provide expanded information on account performance and
activity in an easy-to-read consolidated format.

Asset Management Account - During 2001 National City laid the groundwork for
this high-quality investment sweep product. Designed for individuals, the Asset
Management Account will sweep a customer's funds into investment vehicles or use
them for payments on a line of credit. The new account will premier in 2002.

Community Banking Initiative - To address the unique needs of customers
outside of major urban markets, a new Community Banking division was created.
Comprised of 350 offices in smaller cities and towns throughout our geographic
footprint, the division features broad sales coverage across multiple product
lines. Employees are empowered with local deposit pricing and credit decision-
making flexibility, operating and acting like a local bank rather than a branch
office.

[PHOTO]

An important initiative within National City in the last few years has been the
expansion of our corporate banking presence in Philadelphia, Detroit, and
Chicago. In Chicago (above), National City has increased its corporate lending
staff from 25 to 70 since 1999, and in 2002 will open its first branch in the
loop area, at One North Franklin.

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NATIONAL CITY
2001 ANNUAL REPORT

BUILDING THE NATIONAL CITY BRAND
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PUTTING THE INFRASTRUCTURE IN PLACE

-----------------------------------
[PHOTO]

YOU ARE THE BRAND...
the face of the company...
the key to our success.

You &
NATIONAL CITY.
------------------------------------

IT IS CERTAIN. To succeed tomorrow, National City must put the customer at the
center of decisions today, deliver unparalleled service to differentiate itself
from competitors, and invest wisely in technology. Customer loyalty to the
National City brand is the long-term goal and the wellspring for future growth.

THE VISION

In March 2001, Chairman and CEO David A. Daberko stood before employees to
describe his vision of National City's future. His message outlined what needed
to be accomplished in order to become customer champions: people committed to
improving personal performance as well as the performance of the company as a
whole; a company that cooperates across business lines and units; a company that
innovates constantly to fuel future growth and respond to customer demand; a
company that is agile and prepared to meet change head-on.

CREATING A CUSTOMER CHAMPION ORGANIZATION FROM THE INSIDE OUT

To help bring the vision into reality, National City held more than 200
internal brand awareness meetings which were attended by nearly 4,000 managers.
The following core values summarizing customer champion behavior were instilled
in these meetings:

- Always offer the customer fair value

- Convey a sense of recognition and appreciation for each customer's
business

- Resolve problems in an efficient and personalized manner

- Be proactive as well as responsive

- Provide unbiased advice

- Provide a high level of overall service quality (convenience, speed, and
accuracy)

- Establish and nurture long-term relationships

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[PHOTO]

National City customers and employees contributed nearly $2 million to September
11- related causes, including a company match of employee contributions. More
broadly, National City is one of the largest supporters of educational,
cultural, and community services in its footprint. Since its formation in 1982,
National City Community Development Corporation has sponsored more than $340
million in inner city and rural community development projects within the
Corporation's service area. This investment has been leveraged to more than $3
billion of neighborhood revitalization and improved community support systems
and programs.
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ACHIEVING SUCCESS

National City heads into the future as a company that puts its customers'
needs first. By combining the ambition and abilities of good people with the
power of better products, cutting-edge technology, and first-class service,
National City is building brand preference and supporting revenue growth through
the attraction and retention of customers.

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NATIONAL CITY
2001 ANNUAL REPORT

BOARD OF DIRECTORS
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[PHOTO] [PHOTO] [PHOTO] [PHOTO]
DAVID A. DABERKO (2,3) JON E. BARFIELD (1,4,6) EDWARD B. BRANDON (2,3,6) JOHN G. BREEN (3,4,5)
Chairman & CEO Chairman & President Retired Chairman Retired Chairman
National City Corporation The Bartech Group, Inc. National City Corporation The Sherwin-Williams Company

[PHOTO] [PHOTO] [PHOTO] [PHOTO] [PHOTO]
JAMES S. BROADHURST (1,5,6) JOHN W. BROWN (3,4,5) DUANE E. COLLINS SANDRA AUSTIN CRAYTON (2,4,7) DANIEL E. EVANS (1,5,6)
Chairman & CEO Chairman, President & CEO (2,3,5) Chairman Retired President & CEO Retired Chairman
Eat'n Park Hospitality Stryker Corporation Parker Hannifin PhyServ LLC. Bob Evans Farms, Inc.
Group, Inc. Corporation

[PHOTO] [PHOTO] [PHOTO] [PHOTO]
JOSEPH T. GORMAN (4,5,7) PAUL ORMOND (3,5) ROBERT A. PAUL (1,2,3,7) MICHAEL A. SCHULER (1,6)
Retired Chairman President & CEO President & CEO Retired Chairman, President & CEO
TRW Inc. Manor Care, Inc. Ampco-Pittsburgh Corporation Zippo Manufacturing Company

[PHOTO] [PHOTO] [PHOTO] [PHOTO]
GERALD L. SHAHEEN JEROME F. TATAR (1,3,7) JERRY SUE THORNTON, PH.D. (2,6,7) MORRY WEISS (3,4,7)
Group President Chairman, President & CEO President Chairman & CEO
Caterpillar Inc. The Mead Corporation Cuyahoga Community College American Greetings Corporation

COMMITTEES:
(1) Audit
(2) Dividend
(3) Executive
(4) Nominating and Board of Directors Governance
(5) Compensation & Organization
(6) Public Policy
(7) Investment

OFFICERS
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OFFICE OF THE CHAIRMAN THOMAS W. GOLONSKI TED M. PARKER
Pennsylvania Banking Kentucky Banking
DAVID A. DABERKO JON L. GORNEY J. ARMANDO RAMIREZ
Chairman and CEO Information Services & Corporate Planning
WILLIAM E. MACDONALD III Operations PETER E. RASKIND
Vice Chairman JEFFREY D. KELLY Consumer Finance
ROBERT G. SIEFERS Chief Financial Officer PHILIP L. RICE
Vice Chairman TIMOTHY J. LATHE Ohio Banking
Michigan / Illinois Banking SHELLEY J. SEIFERT
EXECUTIVE VICE PRESIDENTS HERBERT R. MARTENS, JR. Human Resources
JAMES R. BELL III Private Investment Advisors STEPHEN A. STITLE
Capital Markets ROBERT J. ONDERCIK Indiana Banking
PAUL G. CLARK Credit Administration DAVID L. ZOELLER
Fee Businesses A. JOSEPH PARKER General Counsel
GARY A. GLASER Retail Sales and & Secretary
Ohio Banking Distribution

SENIOR VICE PRESIDENTS JAMES P. GULICK GARY P. OBERS
JEFFREY M. BIGGAR General Auditor, Risk Wholesale Banking
Private Investment Advisors Management KAMALA R. RAGHAVAN
WILLIAM I. CORNETT, JR. JOSEPH J. HERR Corporate Accounting
Wholesale Banking Loan Review THOMAS A. RICHLOVSKY
RICHARD J. DEKASER JAMES HUGHES Treasurer
Economist Information Services WILLIAM H. SCHECTER
J. ANDREW DUNHAM THOMAS C. KAYLOR Venture Capital
Investments Mergers and THOMAS H. SCHROTH
JANE GREBENC Acquisitions Operations
Retail Sales and J. MICHAEL KEARNEY KARIN L. STONE
Distribution Properties Corporate Marketing
MARY H. GRIFFITH JANIS E. LYONS GREGORY L. TUNIS
Internal Brand Comptroller Retail Sales and
Management BRUCE A. MCCRODDEN Distribution
Public Affairs

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NATIONAL CITY
2001 ANNUAL REPORT

(a)Prior period data have been restated for stock splits and
pooling-of-interests business combinations
(b)Includes loans held for sale or securitization

NATIONAL CITY
2001 ANNUAL REPORT

9

FINANCIAL REVIEW CONTINUED
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The Financial Review section discusses the financial condition and results of
operations of National City Corporation (the Corporation or National City) for
each of the past three years and should be read in conjunction with the
accompanying Consolidated Financial Statements and Notes presented on pages 28
through 60.

This annual report contains certain forward-looking statements (as defined in
the Private Securities Litigation Reform Act of 1995), which reflect
management's beliefs and expectations based on information currently available.
These forward-looking statements are inherently subject to significant risks and
uncertainties, including changes in general economic and financial market
conditions, the Corporation's ability to effectively carry out its business
plans, and changes in regulatory or legislative requirements. Although
management believes the expectations reflected in such forward-looking
statements are reasonable, actual results may differ materially.

EARNINGS SUMMARY

National City reported net income of $1,388.1 million, or $2.27 per diluted
share, in 2001, compared to $1,302.4 million, or $2.13 per diluted share, in
2000, and $1,405.5 million, or $2.22 per diluted share, in 1999. Returns on
average common equity and average assets for 2001 were 19.9% and 1.49%,
respectively, compared to returns of 21.3% and 1.52%, respectively in 2000, and
returns of 22.6% and 1.67%, respectively in 1999.

Over the past three years, several strategic initiatives were undertaken to
improve the financial strength of National City. Most significant among these
initiatives were the balance sheet restructuring efforts initiated in 2000,
which served to improve capital efficiency and the net interest margin; growth
strategies implemented in each of the business lines; the realignment and
divestiture of certain unprofitable business units; the acquisition of several
new businesses; and targeted investments in human capital and technology, which
served to significantly improve the quality of customer service and allow for
enhanced product offerings. Benefits from these initiatives combined with the
positive effects on mortgage banking activity of a declining interest rate
environment, along with wider lending spreads, led to strong financial results
in 2001.

NET INTEREST INCOME

The table beginning on page 12 presents net interest income, interest spread,
and net interest margin for the five years 1997 through 2001, comparing daily
average outstanding balances of earning assets and interest bearing liabilities
with the associated interest income and expense and the corresponding average
rates earned and paid. To compare the tax-exempt asset yields to taxable yields,
amounts are adjusted to pretax equivalents based on the marginal corporate
Federal tax rate of 35%. The tax-equivalent adjustments to net interest income
for 2001, 2000, and 1999 were $33.3 million, $33.7 million, and $36.9 million,
respectively. Average outstanding loan balances include nonperforming loans and
loans held for sale or securitization. Average outstanding securities balances
are computed based on amortized cost and excluded unrealized gains and losses on
securities available for sale.

In order to manage exposure to changes in interest rates, the Corporation uses
various types of derivative instruments. The cash flows generated by derivative
instruments used to manage interest rate risk associated with earning assets and
interest bearing liabilities are recorded along with the interest income or
expense of the hedged item and consequently affect the yields on those assets
and liabilities. Information regarding the derivative instruments used and how
they are accounted for is presented in Notes 1 and 22 to the Consolidated
Financial Statements. A discussion of the effects of changing interest rates is
included in the Market Risk Management section beginning on page 25.

The primary source of the Corporation's traditional banking revenue is net
interest income. Net interest income is the difference between interest income
on earning assets, such as loans and securities, and the interest expense on
liabilities used to fund those assets, including interest bearing deposits and
other borrowings. The amount of net interest income is affected by both changes
in the level of interest rates and the amount and composition of earning assets
and interest bearing liabilities. Changes in net interest income are most often
measured through two statistics - interest spread and net interest margin. The
difference between the yields on earning assets and the rates paid for interest
bearing liabilities represents the interest spread. The net interest margin is
expressed as the percentage of net interest income to average earning assets.
Both the interest spread and net interest margin are presented on a
tax-equivalent basis. Because noninterest bearing sources of funds, or free
funding, principally demand deposits and stockholders' equity, also support
earning assets, the net interest margin exceeds the interest spread.

Tax-equivalent net interest income in 2001 was $3,472.2 million, up from
$2,992.1 million in 2000 and $3,037.0 million in 1999. The net interest margin
rose to 4.09% in 2001 from 3.85% in 2000 and 3.99% in 1999. The growth in net
interest income and the net interest margin in 2001 reflected strong loan
volumes, especially mortgage loans held for sale, successful deposit-gathering
efforts, and the positive impact of a declining rate environment on funding
costs and spreads. A richer earning-asset mix, resulting from steps taken in
2000 to restructure the balance sheet,

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also contributed to the net interest margin's strength. The primary factors
behind the decline in net interest income and the net interest margin from 1999
to 2000 were a rising interest rate environment, which increased funding costs
and was in opposition to the Corporation's liability sensitive interest rate
risk position at the time, and a highly competitive lending environment. Net
interest income was also temporarily reduced by the effects of the balance sheet
restructuring efforts taken in 2000.

The steps taken in 2000 to restructure the balance sheet included the sales of
$2.0 billion of thin-spread student loans, $3.7 billion of fixed-rate debt
securities, and $1.0 billion of low-spread adjustable-rate mortgages. Through
the sale of these less capital-efficient assets, reliance on purchased funding
was reduced and the balance sheet was freed up for more profitable investment.

The Corporation also chose to further diversify its funding sources and provide
for greater capital efficiency by securitizing credit card receivables totaling
$397.4 million and $600.0 million in 2001 and 2000, respectively. Securitization
involves the sale of a pool of assets to a trust, which sells undivided
interests to investors through the public or private issuance of asset-backed
securities. As loan receivables are securitized, on-balance-sheet funding needs
are reduced by the amount of the receivables securitized. No receivables were
securitized in 1999.

During 2001, 2000, and 1999, National City repurchased 9.3 million, 2.5 million,
and 52.6 million shares, respectively, of its common stock. These repurchases
resulted in additional funding costs and reduced the net interest margin. While
the cost to fund these repurchases reduced net interest income and the net
interest margin, the lower average outstanding share base increased earnings per
share.

Average earning assets were $84.8 billion in 2001, up from $77.8 billion in 2000
and $76.1 billion in 1999. The increase in average earning assets in 2001 was
driven by loan growth offset to some extent by a planned reduction of the
securities portfolio and the asset sales in 2000. Strong loan growth in 2000,
partially offset by the effect of the asset sales, led to the increase in
average earning assets over 1999.

Average loans in 2001 were $75.6 billion compared to average loans of $65.3
billion in 2000. Average loans held for sale, included in total average loans,
were $8.0 billion in 2001, up considerably from $2.7 billion in 2000. Average
portfolio loans, adjusted for sales and securitizations, increased 11.0% over
2000. Propelled by lower interest rates and a strong housing market, residential
real estate and home equity loan production contributed significantly to the
increase in average loans in 2001. Conforming mortgage loan originations were
$56.0 billion in 2001, compared to $20.7 billion in 2000. Nonconforming mortgage
loans generated by the Corporation's consumer finance subsidiary First Franklin
Financial Corporation (First Franklin) also increased to $6.3 billion in 2001,
versus $4.5 billion in 2000. While a portion of the loans originated by First
Franklin are sold to third parties, the Corporation retained $3.8 billion of
First Franklin's production in 2001 to boost net interest income and to improve
its mix of earning assets. The retention of these loans also contributed to the
overall increase in average residential real estate loans.

Commercial loan and lease growth within the Corporation's wholesale banking
business was strong through the first three quarters of 2001 due to market share
gains in the Chicago, Philadelphia and Detroit markets combined with the success
of new product offerings. Solid growth in loans generated by the middle-market
and specialized lending groups also contributed to the increase. Commercial loan
growth slowed in the fourth quarter of 2001 due to the weaker economy. The
commercial loans originated in 2001 contributed to the richer earning asset mix
and wider spreads as the Corporation focused on improving risk-adjusted returns
while continuing to maintain sound underwriting standards.

Consumer loan balances declined in 2001 due to the sale of student loans in 2000
and runoff in the automobile lease portfolio following the decision in December
2000 to cease originating automobile leases, offset to some extent by growth in
automobile installment loans.

Average securities, at amortized cost, were $8.7 billion in 2001, compared to
$12.0 billion in 2000 and $15.0 billion in 1999. During the past three years,
the Corporation has been paring back the securities portfolio through sale and
runoff in an effort to improve the mix of earning assets.

Average interest bearing liabilities were $73.0 billion in 2001, versus $67.3
billion in 2000 and $65.5 billion in 1999. Average noninterest bearing sources
of funds, consisting of noninterest bearing deposits and stockholders' equity,
increased to $18.6 billion in 2001 from $16.9 billion in 2000 and $17.7 billion
in 1999. During 2001, loan growth was primarily funded with short-term purchased
deposits and borrowings. A higher level of core noninterest bearing and money
market deposits, spurred by more targeted promotion, improved products, and
better customer service, also aided the funding of loan growth in 2001. Despite
the increase in noninterest bearing funding in 2001, the relative contribution
of such funding to the net interest margin declined as a result of the
significant growth in earning assets, mainly loans held for sale.

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The following table shows changes in tax-equivalent interest income, interest
expense, and net interest income due to volume and rate variances for major
categories of earning assets and interest bearing liabilities. The change in
interest not solely due to changes in volume or rates has been allocated in
proportion to the absolute dollar amounts of the change in each.

NONINTEREST INCOME

Details of noninterest income follow:

Fees and other income in 2001 reached $2,533.0 million, up from $2,427.4 million
in 2000 and $2,242.4 million in 1999. National City's core banking, mortgage,
and processing businesses all contributed solidly to the growth in fee income in
2001.

Deposit service charges increased to $469.3 million in 2001, from $442.8 million
in 2000 and $420.4 million in 1999 reflecting growth in the core deposit base in
2001, increased cash management activity, a higher level of customer debit card
usage, and fewer waived fees. These same factors also led to the increase in
deposit service charges from 1999 to 2000.

Item processing revenue generated by National Processing, Inc. (National
Processing), National City's 86%-owned item processing subsidiary, rose to
$464.6 million in 2001, up from $439.4 million in 2000 and $441.7 million in
1999. Over the past several years, National Processing has taken strategic steps
to grow its business by focusing exclusively on electronic payment processing.
These efforts, which have included several acquisitions and divestitures (see
further discussion in Note 3 to the Consolidated Financial Statements), have led
to a significantly expanded customer base, balanced in both the regional and
national markets, and been the primary driver of growth in item processing
revenue. Accelerating growth in debit card usage and the increasing preference
for credit and debit cards as the payment of choice over checks and cash have
also contributed to revenue growth over the past two years. Affecting the
comparison of item processing revenue between 2000 and 1999 was $56.7 million of
revenue generated by several business units that were divested in the first half
of 1999. Excluding the effects of the divested business units, item processing
revenue in 2000 grew 14.5% over 1999.

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Trust and investment management fees, which include both institutional trust and
personal wealth management, were $319.8 million in 2001, down from $334.6
million in 2000 and $325.9 million in 1999. Equity market declines in 2001
resulted in lower fee income and offset the positive effects of net new
business. At December 31, 2001, National City had total assets under
administration of $142.7 billion, compared to $145.9 billion at December 31,
2000. Assets under administration included $61.0 billion and $60.9 billion of
assets under management at December 31, 2001 and 2000, respectively. Proprietary
Armada(R) mutual fund balances, included in assets under management, increased
10% to $18.5 billion at December 31, 2001 from $16.9 billion at December 31,
2000.

Mortgage banking revenue was $199.2 million in 2001, versus $479.0 million in
2000 and $389.3 million in 1999. Although the lower interest rate environment
drove record breaking mortgage production in 2001, the higher level of
refinancing also increased mortgage loan prepayment rates and lowered the
estimated value of existing mortgage servicing assets. The resulting
amortization and impairment charges decreased mortgage banking revenue in 2001.
The value of mortgage servicing assets is sensitive to changes in interest
rates. In a declining rate environment, as was experienced in 2001, mortgage
refinancings generally increase, causing actual and expected prepayments to
increase, which drives down the estimated value of existing mortgage servicing
assets. The Corporation manages the risk associated with declines in the
estimated fair value of mortgage servicing assets primarily by using derivative
instruments. In 2001, impairment charges on mortgage servicing assets totaled
$291.8 million. These losses were offset by net hedge gains from derivative
instruments of $328.4 million, included in the income statement line
"ineffective hedge and other derivative gains, net." Further discussion of
mortgage servicing assets and derivative instruments is included in Notes 7 and
22 to the Consolidated Financial Statements.

Mortgage banking servicing fees and origination and sales revenue grew in 2001
as a result of the historically low level of interest rates and strong housing
market. Conforming mortgage loan originations reached $56.0 billion in 2001, up
from $20.7 billion in 2000 and $16.1 billion in 1999. Sales of conforming loans
to the secondary market increased to $41.0 billion in 2001 and produced gains
and associated revenue of $355.2 million, compared to sales of $18.3 billion and
gains and related revenue of $320.5 million in 2000, and sales of $17.1 billion
and gains and associated revenue of $283.5 million in 1999. The residential
servicing portfolio grew to $83.5 billion at December 31, 2001, up from $57.1
billion at December 31, 2000 and $46.7 billion at December 31, 1999. The higher
level of originations in 2001, coupled with enhanced cost tracking, led to more
costs being deferred and incorporated into the basis of the loans originated,
which had the effect of lowering both gains on sale and noninterest expense in
2001 as compared to prior years.

Nonconforming mortgage originations generated by First Franklin were also
boosted by the lower interest rate environment, increasing to $6.3 billion in
2001 from $4.5 billion in 2000 and $1.8 billion for the four months following
acquisition in 1999. The Corporation generally retains a portion of First
Franklin's production for portfolio and sells the remainder to third parties.
Total nonconforming loans sold in 2001, 2000, and 1999 totaled $2.1 billion,
$2.0 billion, and $1.6 billion, respectively, and contributed gains of $58.6
million, $52.4 million, and $42.7 million, respectively, to mortgage banking
revenue.

Mortgage loans held for sale reached a record $15.6 billion at December 31,
2001, compared to $3.0 billion at December 31, 2000. As these loans are sold
into the secondary market in 2002, additional production revenue will be
realized.

Higher origination volumes and servicing income drove the increase in mortgage
banking revenue in 2000, due largely to purchase acquisitions in the second half
of 1999 of First Franklin and the conforming mortgage production units of
Accubanc Mortgage Corporation. Revenue in 2000 also included gains of $13.6
million and $10.6 million related to the sales of servicing assets and certain
low-spread adjustable-rate mortgage loans sold as part of the balance sheet
restructuring initiatives.

Card-related fees were $169.5 million in 2001, compared to $161.0 million in
2000 and $166.8 million in 1999. Successful sales efforts and the securitization
of $1.0 billion of credit card receivables over the past 18 months led to the
increase in card-related fees in 2001. Card-related fee income declined from
1999 to 2000 due to the wind down of two earlier credit card securitizations. As
a credit card securitization winds down, receivable balances are transferred
back into the on-balance sheet loan portfolio and interest-related revenue
streams shift from fee income to net interest income. Further discussion of
securitization activities is included in Notes 1 and 4 of the Consolidated
Financial Statements.

Ineffective hedge and other derivative gains included ineffective hedge gains
primarily associated with derivatives used to hedge interest rate risk, the
Corporation's primary market risk. These gains totaled $362.9 million in 2001,
$18.2 million in 2000, and $17.8 million in 1999. Effective January 1, 2001, the
Corporation adopted Statement of Financial Accounting Standards (SFAS) 133,
Accounting for Derivative Instruments and Hedging Activities, which requires all
derivative instruments to be carried at fair value on the balance sheet. Prior
to January 1, 2001, unrealized gains and losses on derivatives used for

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hedging purposes were generally not required to be recorded in the financial
statements. These new accounting requirements caused and will continue to cause
additional volatility in the income statement from what otherwise would have
been recorded. Of the gains recognized in 2001, $328.4 million were generated by
derivatives used to protect the estimated fair value of mortgage servicing
assets. Further discussion of derivative activities is included in Notes 1, 2,
and 22 to the Consolidated Financial Statements.

Other service fees increased to $115.2 million in 2001, up from $103.5 million
in 2000 and $90.4 million in 1999. Growth in fees from syndicated lending
activities drove the increases in other service fees in both 2001 and 2000.

Brokerage revenue was $97.5 million in 2001, relatively unchanged from $98.2
million in 2000 and down from $104.0 million in 1999. Equity market declines and
weaker economic conditions reduced retail brokerage and investment banking
activity and resulted in lower revenue over the past two years.

Other income in 2001 included an $88.8 million gain from the sale of the
Corporation's preferred share interest in National Asset Management Corporation
(NAMCO), a Kentucky-based investment advisor, a $20.6 million credit card
securitization gain, and $20.0 million of gains recognized on stock received
from insurance company demutualizations. In comparison, other income in 2000
included a $74.2 million gain on the sale of $2.0 billion of student loans, a
$27.2 million credit card securitization gain, and $6.5 million of insurance
company demutualization gains. Other income for 2001 also included net venture
capital losses of $1.9 million, versus $37.1 million of venture capital gains
recognized in 2000. In 1999, other income included gains of $101.8 million
related to sales of certain equity interests, partially offset by a $60.8
million loss on divestitures at National Processing.

Net securities gains and losses are summarized as follows:

Gains and losses on debt securities are generated mainly from the investment
portfolio maintained for interest rate risk and liquidity management purposes,
while equity securities gains are generated primarily from the
internally-managed equity portfolio of bank and thrift common stock investments.

The bank stock fund is managed opportunistically, with the degree of market
strength and industry consolidation affecting the comparability of achieved
results between periods. For 2001, pretax bank stock fund gains were $123.4
million, compared to $112.8 million in 2000 and $94.1 million in 1999. Net
unrealized appreciation in the bank stock fund portfolio was $44.9 million at
December 31, 2001.

In addition to gains from bank and thrift common stock investments, equity
securities gains in 2001 included pretax gains of $18.5 million on Student Loan
Marketing Association stock that was called and in 1999 included a pretax gain
of $32.1 million from the sale of Concord EFS, Inc. common stock.

In conjunction with the Corporation's balance sheet restructuring efforts in
2000, the Corporation sold $3.7 billion of lower-yielding, fixed-rate debt
securities and recognized pretax losses of $56.3 million.

Further discussion on the sales of the debt securities and the Concord EFS, Inc.
common stock is included in Note 3 to the Consolidated Financial Statements.

NONINTEREST EXPENSE

Details of noninterest expense follow:

Noninterest expense was $3,344.9 million in 2001, $3,183.9 million in 2000, and
$2,982.5 million in 1999. Higher volume-driven card processing and personnel
expenses, including commissions, along with costs associated with increased
training, expanded product offerings, enhanced service quality, and targeted
technology investment led to the increase in noninterest expense in 2001. These
same factors, along with increased expenses and intangibles amortization from
purchase acquisitions in the second half of 1999, also drove the increase in
noninterest expense from 1999 to 2000.

Salaries, benefits, and other personnel expense increased in 2001 due to a
higher level of commissions associated with increased mortgage loan origination
activity and increased incentive compensation within the wholesale and retail
banking lines of business.

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Salaries, benefits, and other personnel expense in 2000 grew over 1999 due
primarily to the effects of purchase acquisitions in the second half of 1999.

Increased mortgage loan origination activity also contributed to the increases
in third-party services, postage and supplies, and telephone expense.

Volume increases in credit and debit card processing activity due to
acquisitions, new business, and an increase in customer usage at National
Processing led to the increases in card-related fee expense in both 2001 and
2000.

Due to focused efforts internally in 2001 to deliver and instill the National
City brand promise to employees, so they in turn could deliver improved service
to customers, the Corporation spent less on external marketing programs in 2001.
In 2002, the Corporation has planned a relatively aggressive brand awareness and
advertising program built on the customer service initiatives put in place in
the previous two years.

State and local taxes were reduced in 2000 by several refunds received
attributed to prior years.

Included in other noninterest expense in 2001 were write-downs to automobile
lease residual values of $67.4 million and a $2.7 million impairment charge, net
of minority interest, at National Processing related to the sale of its Business
Processing Outsourcing business unit. Noninterest expense in 2000 included $44.0
million of charges related to the realignment of the consumer finance business
line, a $6.5 million charge, net of minority interest, for goodwill and
fixed-asset impairment associated with the divestiture of a small business unit
at National Processing, and a $2.5 million charge for branch closings and
consolidations at National City Mortgage Company. The $44.0 million of consumer
finance charges included write-downs to automobile lease residual values of
$26.0 million and losses associated with the decision to cease originating
automobile leases and close certain nonconforming loan production channels. The
consumer finance realignment and the National Processing divestitures are
discussed further in Note 3 to the Consolidated Financial Statements. Other
noninterest expense in 2000 also included an additional $15.0 million write-down
of automobile lease residual values recognized in the second quarter of 2000,
prior to management's decision to cease originating automobile leases.

Other noninterest expense in 1999 included a $28.6 million charge pursuant to a
plan to improve the cost efficiency of branch office facilities.

The efficiency ratio, which expresses noninterest expense as a percentage of
tax-equivalent net interest income and total fees and other income, was 55.7%
for 2001, down from 58.8% in 2000 and 56.5% in 1999. The improved efficiency
ratio in 2001 reflects strong growth in revenue and disciplined cost control.
The Corporation continues to pursue process improvement initiatives across all
business lines in order to improve productivity and take advantage of current
technology to deliver a broader array of products and higher levels of
satisfaction to customers.

LINE OF BUSINESS RESULTS

National City operates six major lines of business: retail sales and
distribution, wholesale banking, consumer finance, asset management, National
City Mortgage, and National Processing. A description of each business, selected
financial information, and the methodologies used to measure financial
performance are presented in Note 23 to the Consolidated Financial Statements.

Net income (loss) by line of business follows:

Results for retail sales and distribution improved over the prior year as the
business line has focused on developing a stronger sales and customer service
culture in order to increase customer acquisition and retention. The quality
initiatives put in place since last year included an enhanced training and
career development program, an internal branding campaign, and programs designed
to measure and address service quality issues and customer satisfaction. These
efforts, along with the lower rate environment, which boosted residential loan
origination and sales revenue along with growth in home equity loans, drove the
improved results in 2001. In January 2001, the business line sold its merchant
services business unit, which processes debit and credit card transactions, to
National Processing. Because the transaction occurred between entities under the
common control of National City, it was recorded at historical cost. The
merchant services business unit generated annual fee revenue for retail sales
and distribution of approximately $24 million. More than offsetting this loss of
revenue in 2001 were increases in deposit service charges, higher cash
management fees, and an increase in gains from the sale of secondary market
mortgage loans to National City Mortgage. Moderately higher credit costs, due to
an increase in net charge-offs, reduced deposit spreads as a result of lower
market interest rates, and an increase in noninterest expense, due to higher
training and personnel costs in support of service quality initiatives and
increased mortgage origination activity, somewhat dampened profitability in
2001. Net income in 2000 declined slightly from 1999 as a reduced level of
earning assets,

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due in part to the sales of $1.0 billion of adjustable-rate mortgage loans,
along with a lower level of core deposits, lowered net interest income.

Wholesale banking's net income was adversely affected by increased credit costs
related to leveraged and certain manufacturing-related commercial loans and an
increase in noninterest expense. The provision for loan losses was $218.0
million in 2001 compared to only $69.3 million in 2000 and $55.2 million in
1999, and net charge-offs were $185.6 million, $69.3 million, and $55.2 million
for those same periods, respectively. The increased provision for loan losses in
2001 reflected the increase in net charge-offs and associated declines in asset
quality. Noninterest expense rose due to higher costs in support of market
expansion in Chicago and Detroit. Solid loan growth and improved spreads
benefited net interest income and fee income in 2001, partially offsetting the
higher credit costs and noninterest expense. Market share gains in the Chicago,
Philadelphia, and Detroit markets, and the success of new products drove the
loan growth. Affecting the comparability of fee income were losses of $1.9
million on venture capital investments in 2001, versus gains of $37.1 million in
2000. Results in 2000 improved over 1999 due primarily to strong loan growth,
which significantly increased net interest income.

Net income for consumer finance was affected by increased credit costs, lower
fee income, and higher noninterest expense. The provision for loan losses
increased in 2001 as a result of the deterioration in certain nonconforming
residential mortgage loans generated by the former wholesale and retail
origination units of Altegra Credit Company (Altegra). These units were closed
in December 2000 as part of consumer finance's realignment efforts. Fee income
declined in 2001 due to a $74.2 million gain from the sales of $2.0 billion of
student loans in 2000. The increase in noninterest expense in 2001 was driven by
write-downs of automobile lease residual values, which totaled $67.4 million in
2001, versus $41.0 million in 2000. Also, as part of the 2000 realignment,
consumer finance ceased originating new automobile leases in December 2000 and
is liquidating the existing portfolio over time. Exclusive of the discontinued
automobile leasing and Altegra wholesale loan origination businesses, the core
businesses within consumer finance performed well in 2001, with the lower rate
environment boosting loan originations within the dealer, nonconforming loans,
and national home equity units. Strong loan growth in these units along with
better spreads drove the increase in net interest income in 2001. Compared to
1999, net income in 2000 was relatively unchanged as the gains of $74.2 million
from the student loan sales were offset by residual value and other realignment
charges and net overhead attributable to the acquisition of First Franklin in
the third quarter of 1999.

Asset management includes institutional trust, brokerage, and personal wealth
management. Despite an increase in assets under management and loan growth in
both 2001 and 2000, asset management's results have been diminished by equity
market declines and weaker economic conditions.

Net income for National City Mortgage in 2001 reflected record loan originations
fueled by the lower interest rate environment. Impairment losses incurred on
servicing assets whose estimated value was adversely affected by the lower level
of interest rates and resulting mortgage refinancings were more than offset by
net gains on derivative instruments used to hedge these assets. Net income in
2000 was hampered by the higher level of interest rates prevalent throughout
most of the year, which dampened origination activity.

National Processing's net income was driven by revenue growth. Revenue in 2001
continued to grow due to acquisitions and an increase in transactions and
volumes processed. During 2001, National Processing completed the sale of its
Business Processing Outsourcing business unit, which processed healthcare
claims, credit card applications, and airline lift tickets. An impairment loss
of $2.7 million, net of minority interest, was recorded related to this
divestiture. In 2001, National Processing acquired a 70% ownership interest in
ABN AMRO Merchant Services, LLC, for which National Processing is providing all
merchant-processing services. Both transactions are discussed in Note 3 to the
Consolidated Financial Statements. In January 2001, National Processing also
purchased, from the retail sales and distribution line of business, the merchant
services business unit, which processes debit and credit card transactions. The
purchase price of $44.0 million was charged directly to equity, net of tax,
because the transaction occurred between entities under the common control of
National City. Results for 1999 included a $69.9 million loss from the
divestiture of four business lines.

Parent and other includes the results of investment funding activities,
unallocated corporate income and expense, and intersegment revenue and expense
eliminations. Parent and other was favorably affected in 2001 by a significant
increase in net securities gains, due to a higher level of gains from the bank
stock fund and other equity securities, and the inclusion in 2000 of a $56.3
million loss on the sale of fixed-rate debt securities. Noninterest income in
2001 also included the $88.8 million gain on the sale of the Corporation's
preferred share interest in NAMCO, $20.0 million of insurance company
demutualization gains, and a $20.6 million credit card securitization gain.
Noninterest income in 2000 included $6.5 million of insurance company
demutualization gains and a $27.2 million credit card securitization gain.

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FINANCIAL CONDITION

LOANS: Portfolio loan balances by type at December 31 follow:

The percentage of portfolio loans in each category to total loans at year end
follows:

Commercial: Commercial loan growth was strong for the first three quarters of
2001 due to market share gains in Chicago, Philadelphia, and Detroit combined
with the success of new product offerings. Commercial loan origination activity
slowed in the fourth quarter due to the weaker economy. The commercial lease
portfolio, included in commercial loans, was $2.0 billion at December 31, 2001,
up from $1.8 billion at December 31, 2000, and $1.2 billion at December 31,
1999.

A maturity distribution and interest rate information for commercial loans at
December 31, 2001 follows:

Commercial Real Estate: At December 31, 2001, commercial real estate loans
totaled $7.3 billion, compared to $6.5 billion at year-end 2000. Profitable
lending opportunities, primarily in Illinois, Ohio, and Pennsylvania prompted
the growth in commercial real estate loans over the past two years.

Activities in commercial real estate are based primarily on relationships with
developers who are active in National City's local markets, with almost all
outstandings in National City's six-state banking market.

Residential Real Estate: The residential real estate category includes both
conforming and nonconforming mortgage loans.

Conforming mortgage loans are originated primarily by National City Mortgage
through a network of retail offices and wholesale/broker branches, and by the
retail line of business through traditional banking channels. Substantially all
conforming loan originations are sold in the secondary market. The right to
service the loans and receive servicing fee income is generally retained. See
further discussion under Loans Held for Sale or Securitization.

Nonconforming mortgages in 2001 were generated solely by the Corporation's First
Franklin subsidiary. Prior to 2001, nonconforming mortgages were also generated
by loan origination units within the Corporation's Altegra subsidiary; however,
these units were closed in December 2000 as part of a realignment of the
consumer finance business.

Nonconforming mortgages represent loans that are not saleable in the secondary
market for inclusion in conventional mortgage-backed securities due to the
characteristics of the borrower, the underlying documentation, the loan-to-value
ratio, or the size of the loan, among other factors. As of December 31, 2001,
nonconforming mortgage loans comprised 59% of the residential real estate
portfolio, compared to 50% at the end of 2000. During 2001 and 2000, as part of
a focused effort to retain higher-value assets, $3.8 billion and $2.7 billion,
respectively, of First Franklin's production was retained in the residential
real estate portfolio. The retention of these loans accounted for the majority
of the increase in the residential real estate portfolio in both 2001 and 2000.

Consumer: Consumer loans were $11.5 billion at December 31, 2001, down from
$12.1 billion at December 31, 2000, due to the decision made in December 2000 to
cease originating automobile leases and the transfer of approximately $825
million of automobile loans out of portfolio and into the held-
for-securitization category at the end of 2001 in anticipation of securitizing
these assets in 2002. The automobile lease portfolio, which is being liquidated
over time, was $1.2 billion at year-end 2001, compared to $1.8 billion at
year-end 2000. At December 31, 2001, the consumer loan portfolio consisted of
59% indirect installment loans, including auto, marine, and RV loans, 26% direct
installment loans, including installment home equity loans, 10% retail
automobile leases, and 5% student loans. Exclusive of retail automobile leases,
the mix of the portfolio was comparable to 2000.

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Credit Card: Credit card balances, including unsecured personal and business
lines of credit, declined in 2001 and 2000 due to the securitization of $397.4
million and $600.0 million of credit card receivables in those respective years
and the transfer of $425.0 million of loans out of portfolio and into the
held-for-securitization category at the end of 2001 in anticipation of the
expected securitization of these assets in 2002. Off-balance-sheet securitized
credit card receivables totaled $997.4 million at December 31, 2001, compared to
$630.0 million at December 31, 2000.

Home Equity: Home equity loans consist primarily of revolving lines of credit
and totaled $5.8 billion at December 31, 2001, up 22.0% from $4.8 billion at
December 31, 2000. Home equity loan growth in 2001 was the result of national
marketing efforts, aided by lower interest rates and cross-selling programs.

Loans Held for Sale or Securitization: At December 31, 2001, this category
included $15.6 billion of mortgage loans held for sale, $51.0 million of
commercial loans held for sale, and $824.4 million and $402.3 million of
automobile and credit card loans held for securitization, respectively. At
December 31, 2000, the Corporation held $3.0 billion of mortgage loans for sale
and $407.9 million of credit card receivables for securitization. The
significant increase in mortgage loans held for sale in 2001 reflects heavy
origination volumes driven by the low interest rate environment and a strong
housing market. As was discussed previously, the Corporation typically sells all
conforming mortgage loan originations in the secondary market and also sells
certain nonconforming mortgage loans to third parties.

SECURITIES: Securities balances at December 31 follow:

The Corporation uses securities to generate interest and dividend revenue, to
manage interest rate risk, and to provide liquidity to meet operating cash
needs.

Securities balances declined slightly in 2001 primarily due to runoff, partially
offset by the purchase of approximately $2 billion of mortgage-backed securities
in December 2001 for interest-rate risk management purposes. During 2000, the
Corporation sold $3.7 billion of lower-yielding debt securities as part of its
balance sheet restructuring program. At December 31, 2001, the securities
portfolio included net unrealized gains of $156.6 million, compared to net
unrealized gains of $93.2 million at December 31, 2000. Unrealized gains and
losses in the securities portfolio are included in stockholders' equity, net of
tax. The weighted average yield of debt securities included in the portfolio at
December 31, 2001 was 6.29%, versus 6.41% at December 31, 2000.

FUNDING: Core deposits, the most significant source of funding, include
noninterest bearing deposits, NOW and money market accounts, savings accounts,
and time deposits of individuals. Core deposit balances grew in 2001 as a result
of initiatives aimed at retaining and growing this more stable and typically
lower-cost source of funding. Escrow deposits associated with the increase in
mortgage loan origination and payoff activity also contributed to the increase
in deposits. Within the core deposit categories, there was a shift from
administered-rate products, such as savings accounts, to market-indexed money
market products, due in part to retail deposit migration initiatives, which
encouraged customers to upgrade to deposit products more suitable to their needs
in order to promote longer-term customer satisfaction and retention. Certificate
of deposit balances declined slightly in 2001 due to the reduced attractiveness
of this product in a low interest rate environment.

Purchased deposits include brokered certificates of deposit and Eurodollar
deposits. Short-term borrowings are comprised primarily of Federal funds
purchased, securities sold under agreements to repurchase, U.S. Treasury demand
notes, and commercial paper. Short-term borrowings generally fund short-term,
rate-sensitive earning asset growth. Long-term debt and capital securities
include senior and subordinated debt issued by the Corporation and its bank
subsidiaries. During 2001, the Corporation increased its use of purchased
deposits and short-term borrowings in order to fund asset growth, primarily
mortgage loans held for sale. At December 31, 2001, the Corporation's funding
included $8.2 billion of U.S. Treasury demand notes, compared to only $413.9
million at year-end 2000. These demand notes are typically a lower-cost source
of funding provided by the U.S. Treasury when excess funds are on hand. The
amount of the notes held at any given time can fluctuate significantly depending
on the U.S. Treasury's cash needs. When called, the Corporation generally seeks
replacement funding through its other short-term borrowing channels.

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Average funding sources follow:

The percentage of each funding source to total funding follows:

Further detail of average deposits follows:

Certificates of deposit of $100,000 or more totaled $7.4 billion at December 31,
2001, of which $2.6 billion mature within three months, $.6 billion mature
between three and six months, $1.2 billion mature between six months and one
year, and $3.0 billion mature beyond one year.

ASSET QUALITY

The Corporation's loan portfolios are subject to varying degrees of credit risk.
Credit risk is mitigated through portfolio diversification, limiting exposure to
any single industry or customer, collateral protection, and standard lending
policies and underwriting criteria. The following tables provide information and
statistics on the overall quality of National City's loan portfolio. Note 1 to
the Consolidated Financial Statements describes the Corporation's accounting
policies related to nonperforming loans and charge-offs and describes the
methodologies used to develop the allowance, including both the allocated and
unallocated components. The policies governing nonperforming loans and
charge-offs are consistent with regulatory standards.

Average loans by portfolio type follow:

NONPERFORMING ASSETS: Nonperforming assets at December 31 follow:

Nonperforming assets and net charge-offs increased in 2001 mainly due to
continued deterioration in leveraged commercial credits and certain
nonconforming residential mortgage loans generated by the former wholesale and
retail origination units of Altegra. As a result of the continuing economic
slowdown and weaker outlook, management took more aggressive actions in 2001 to
manage problem commercial loans, primarily in the leveraged portfolio, which
added to the rise in charge-offs. The Corporation closed the wholesale and
retail loan origination units of Altegra in December 2000 to allow Altegra to
focus its resources on its growing servicing business. As part of the decision
to exit this activity, the Corporation assumed a more aggressive stance on the
management of this portfolio, which also contributed to increased levels of
nonperforming assets and charge-offs in 2001.

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The nonperforming asset increase in 2000 was due to weakness in the healthcare
sector and higher delinquencies in residential real estate loans, primarily in
nonconforming mortgages. A more difficult economy, combined with more stringent
standards for granting extensions, drove the increase in loans 90 days past due
accruing interest in 2001, whereas the increase in 2000 was mostly the result of
growth in the nonconforming mortgage portfolio.

ALLOWANCE FOR LOAN LOSSES: A reconciliation of the allowance for loan losses
follows:

Net charge-offs as a percentage of average loans by portfolio type follow:

National City maintains an allowance for loan losses sufficient to absorb
estimated probable losses inherent in the loan portfolio. The evaluation of each
element and the overall allowance are based on the size and current risk
characteristics of the loan portfolio and include an assessment of individual
problem loans, actual loss experience, economic trends in specific industries
and geographical areas, and other factors, including regulatory guidance and
general economic conditions.

While management considers the allowance for loan losses to be adequate based on
information currently available, future adjustments to the allowance may be
necessary due to changes in economic conditions, delinquencies or loss rates,
and management's intent with regard to asset disposition options. In addition,
the allowance for loan losses is periodically reviewed by the bank regulatory
agencies as an integral part of their examination process. Based on their
review, the agencies may require the Corporation to adjust the allowance for
loan losses based on their judgments about information available to them at the
time of their review.

As portfolio loans are identified for sale or securitization, the balances,
along with the attributed allowance for loan losses, are reclassified to a
held-for-sale or securitization classification on the balance sheet. In
conjunction with the planned securitizations of credit card and automobile loans
in 2002, $22.7 million and $6.5 million, respectively, of attributed allowance
for loan losses was transferred to the bases of the loans upon their balance
sheet reclassification in 2001 from portfolio loans to loans held for
securitization. In 2000, $42.4 million of allowance for loan losses was
transferred to the bases of credit card loans either sold through securitization
during the year or held for securitization as of the end of the year.

Also in 2001, the Corporation decided to accelerate the disposition of certain
nonperforming and delinquent loans, which had been generated by the
aforementioned discontinued lending units of Altegra. During 2001, a $68.1
million charge to the provision increased the allowance for losses on these
loans. Loans totaling $149.5 million were sold from the

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2001 ANNUAL REPORT

22

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portfolio during the year with $45.7 million of related loan loss allowance
included in the bases of the loans sold, thereby covering the loss on sale. Also
during the year, $13.9 million of loans in this segregated portfolio were
charged off and principal of $16.0 million was collected. At December 31, 2001,
assets totaling $44.9 million remained in this segregated portfolio with an
associated allowance of $8.5 million.

During 2001, the Corporation sold credit card receivables that had previously
been charged off. The sales generated gains of $7.3 million, $5.9 million of
which were allocated to credit card receivables owned by the Corporation and
recorded as a recovery to the allowance for loan losses, with the remaining $1.4
million allocated to securitized receivables and included in card-related fees
on the income statement.

An allocation of the ending allowance for loan losses by portfolio type follows:

(a)Includes allowance allocated to both real estate - commercial and real
estate - residential loan categories.

The allowance is allocated to the individual loan portfolios based on the
specific risks and loss factors associated with each loan type. The events of
September 11, 2001, combined with the economic downturn already in progress at
that time give rise to greater uncertainty as to the magnitude and duration of
the deterioration of economic conditions across all business and portfolio
sectors, and the resulting impact on credit losses. The allowance allocated to
the commercial loan portfolio increased in both 2001 and 2000, reflecting
increased risk in certain sectors, such as leveraged transactions, deterioration
in the economy, and portfolio growth.

Additional allowance was also allocated to the residential real estate portfolio
through a charge to the provision for loan losses to reflect estimated inherent
losses in the overall Altegra portfolio in light of continuing economic weakness
and the related effect on this subset of the nonconforming residential loan
portfolio. Allocations to the consumer and credit card portfolios were based on
multiple factors, the most significant being changes in credit quality and
portfolio size.

The unallocated portion of the allowance has declined over the last three years
as more allowance has been allocated for the aforementioned weakness in
commercial credits, particularly leveraged transactions, softer economic
conditions, increased loss experience as portfolios have seasoned, as well as
other factors.The unallocated portion of the allowance reflects estimated
probable inherent but undetected losses within the portfolio due to
uncertainties in economic conditions, delays in obtaining information, including
unfavorable information about a borrower's financial condition, the difficulty
in identifying triggering events that correlate perfectly to subsequent loss
rates, and risk factors that have not yet manifested themselves in loss
allocation factors. In addition, the unallocated allowance includes a component
that explicitly accounts for the inherent imprecision in loan loss migration
models. The Corporation has grown through acquisition, expanded the geographic
footprint in which it operates, and changed its portfolio mix in recent years.
As a result, historical loss experience data used to establish allocation
estimates may not precisely correspond to the current portfolio. Also, loss data
representing a complete economic cycle is not available for some sectors. The
uncertainty following September 11th and the recessionary environment also
affect the precision of the allocation model's estimates of loss. The losses in
the historical testing period, given these recent factors, may not be
representative of the actual losses inherent in the portfolio that have not yet
been recognized.

CAPITAL

The Corporation has consistently maintained regulatory capital ratios at or
above the "well-capitalized" standards. For further detail on capital and
capital ratios, see Notes 14 and 15 to the Consolidated Financial Statements.

Total stockholders' equity was $7.4 billion at December 31, 2001, up 9.0% from
$6.8 billion at December 31, 2000. Book value per common share rose to $12.15 at
December 31, 2001, up from $11.06 at December 31, 2000.

In October 1999, the Corporation's Board of Directors authorized the repurchase
of up to 30 million shares of National City common stock, subject to an
aggregate purchase limit of $1.0 billion. In connection with this repurchase
authorization, the Corporation entered into an agreement in 2000 with a third
party that provides the Corporation with an option to purchase up to $300
million of National City common stock through the use of forward transactions.
The forward transactions can be settled from time to time, at the Corporation's
election, on a physical, net cash, or net share basis. In the case of net cash
or net share settlement, the amount at which these forward purchases can be
settled depends primarily on the number of shares to be settled and the future
market price of the Corporation's common stock as compared with the forward
purchase price per share. At December 31, 2000, the Corporation had open forward
transactions involving 9.3 million shares of its common stock. These forward
transactions were settled in

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January 2001 through physical share settlement whereby National City paid cash
of $166.2 million, or $17.84 per share, to the third party in exchange for
taking physical delivery of the 9.3 million shares. On the settlement date,
common shares outstanding and stockholders' equity were reduced. The Corporation
may, but is not obligated to, enter into forward transactions with the third
party until the agreement's final maturity date of April 19, 2002. As of
December 31, 2001, the Corporation had no open forward contracts under this
agreement.

During 2000 and 1999, the Corporation repurchased 2.5 million and 52.6 million
shares, respectively, of its common stock. As of December 31, 2001, 15.6 million
shares remained authorized for repurchase under the October 1999 repurchase
authorization.

At December 31, 2001, the Corporation's market capitalization was $17.8 billion,
and there were 64,631 common stockholders of record. National City's common
stock is traded on the New York Stock Exchange under the symbol "NCC."
Historical stock price information for National City's common stock is presented
in tabular form on the inside back cover of this report.

The Corporation paid dividends per common share of $1.16 in 2001 and $1.14 in
2000.

The dividend payout is continually reviewed by management and the Board of
Directors. The dividend payout ratio, which shows the percentage of earnings per
share declared to stockholders as dividends, has averaged over 50% for the past
five years. It is management's intention to migrate to a lower payout ratio over
time.

LIQUIDITY MANAGEMENT

Effective liquidity management ensures the cash flow requirements of depositors
and borrowers, as well as the operating cash needs of the Corporation, are met.

Funds are available from a number of sources, including the securities
portfolio, the core deposit base, the ability to acquire large deposits and
issue bank notes in the local and national markets, and the capability to
securitize or package loans for sale.

The parent company has five major sources of funding to meet its liquidity
requirements: dividends and returns of investment from its subsidiaries, a line
of credit with its bank subsidiaries, the commercial paper market, a revolving
credit agreement, and access to the capital markets.

The main sources for parent company cash requirements have been dividends and
returns of investment from its subsidiaries. At January 1, 2002, the amount of
dividends the bank subsidiaries can pay to the parent company without prior
regulatory approval was $848.0 million, versus $1.2 billion at January 1, 2001.
The subsidiary banks declared dividends to the parent company of $775.0 million
in 2001, $950.0 million in 2000, and $432.8 million in 1999. The bank
subsidiaries also provided liquidity to the parent company in the form of
returns of capital totaling $465.0 million in 2001 and $1.4 billion in 1999.

As discussed in Note 14 to the Consolidated Financial Statements and Item 1 of
Form 10-K, subsidiary banks are subject to regulation and, among other things,
may be limited in their ability to pay dividends or transfer funds to the parent
company. Accordingly, consolidated cash flows as presented in the Consolidated
Statements of Cash Flows on page 32 may not represent cash immediately available
for the payment of cash dividends to stockholders.

Funds raised in the commercial paper market through the Corporation's
subsidiary, National City Credit Corporation, support the short-term cash needs
of the parent company and nonbank subsidiaries. At December 31, 2001 and 2000,
$322.0 million and $360.5 million, respectively, of commercial paper were lent
to the parent company.

In 2001, the parent company established a $500 million line of credit with its
banking subsidiaries to provide an additional source of liquidity.
Collateralized borrowings under this facility were $310.0 million at December
31, 2001.

The Corporation has a $350 million revolving credit agreement with a group of
unaffiliated banks which serves as a back-up liquidity facility. The agreement
expires April 12, 2005, with a provision to extend the expiration date under
certain circumstances. No borrowings have occurred under this facility.

National City also has in place a $300 million shelf registration with the
Securities and Exchange Commission permitting ready access to the public debt
markets.

NATIONAL CITY
2001 ANNUAL REPORT

24

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MARKET RISK MANAGEMENT

Market risk is the risk of loss arising from adverse changes in the fair value
of financial instruments due to changes in interest rates, exchange rates, or
equity prices. Interest rate risk is National City's primary market risk and
results from timing differences in the repricing of assets and liabilities,
changes in relationships between rate indices, and the potential exercise of
explicit or embedded options. The Asset/ Liability Management Committee (ALCO)
meets monthly and is responsible for reviewing the interest-rate-sensitivity
position of the Corporation and establishing policies to monitor and limit
exposure to interest rate risk. The guidelines established by ALCO are reviewed
by the Investment Committee of the Corporation's Board of Directors.

ASSET/LIABILITY MANAGEMENT: The primary goals of asset/liability management are
to maximize net interest income and the net value of the Corporation's future
cash flows within authorized interest rate risk limits.

Interest Rate Risk Measurement: Interest rate risk is monitored primarily
through the use of two complementary measures: earnings simulation modeling and
net present value estimation. While each of these interest rate risk
measurements has limitations, taken together they represent a reasonably
comprehensive view of the magnitude of interest rate risk in the Corporation,
the distribution of risk along the yield curve, the level of risk through time,
and the amount of exposure to changes in certain interest rate relationships.
Both models assume a parallel shift in the yield curve. The key assumptions
employed by these measures are analyzed periodically and reviewed by ALCO.

Earnings Simulation Modeling: The Corporation's net income is affected by
changes in the absolute level of interest rates. Net income is also subject to
changes in the shape of the yield curve. In general, a flattening of the yield
curve would result in a decline in earnings due to the compression of earning
asset yields and funding rates, while a steepening would result in increased
earnings as investment margins widen. Earnings are also affected by changes in
spread relationships between certain rate indices, such as the prime rate and
the London Interbank Offering Rate (LIBOR).

The earnings simulation model forecasts the effects on income under a variety of
scenarios that incorporate changes in the absolute level of interest rates,
changes in the shape of the yield curve, and changes in interest rate
relationships against earnings in a stable rate environment. This model includes
assumptions about how the balance sheet is likely to evolve through time in
different interest rate environments. Loan and deposit growth rate assumptions
are derived from historical analysis and management's outlook, as are the
assumptions used to project yields and rates for new loans and deposits.
Securities portfolio maturities and prepayments are assumed to be reinvested in
similar instruments. Mortgage loan prepayment assumptions are developed from
industry median estimates of prepayment speeds in conjunction with the
historical prepayment performance of the Corporation's own loans. Noncontractual
deposit growth rates and pricing are modeled on historical patterns.

The most recent earnings simulation model projects net income would increase by
approximately .1% of stable-rate net income if rates were to rise gradually by
200 basis points over the next year. The model projects a decrease in net income
of 4.7% if rates were to fall gradually by 200 basis points over the same
period. The projected decrease in net income is slightly above the ALCO
guideline of minus 4.0%, however, management believes an additional decline of
two full percentage points from the current low level of market interest rates
is unlikely and anticipates that interest rates will rise in 2002.

Net Present Value Estimation: The Net Present Value (NPV) measure is used for
discerning levels of risk present in the balance sheet that might not be taken
into account in the earnings simulation model due to the shorter time horizon
used by that model. The NPV of the balance sheet, at a point in time, is defined
as the discounted present value of asset cash flows and derivative cash flows
minus the discounted value of liability cash flows. Interest rate risk analysis
using NPV involves changing the interest rates used in determining the cash
flows and in discounting the cash flows. The resulting percentage change in NPV
is an indication of the longer-term repricing risk and options risk embedded in
the balance sheet. In contrast to the earnings simulation model, which assumes
rates will experience a gradual change and then stabilize at a particular level
after one year, implied forward rates are used for the NPV measure. The NPV
measure also assumes a static balance sheet, versus the growth assumptions that
are incorporated into the earnings simulation measure and an unlimited time
horizon instead of the one-year horizon applied in the earnings simulation. As
with earnings simulation modeling, assumptions about the timing and variability
of balance sheet cash flows are critical in NPV analysis. Particularly important
are the assumptions driving mortgage prepayments and the assumptions about
expected growth in the core deposit portfolios. These assumptions are applied
consistently in both models.

Based on the most recent net present value estimation, a 150 basis point
immediate increase in rates was estimated to reduce NPV by .5%. NPV was
projected to decline by 2.5% if rates immediately decreased by 150 basis points.
Both measures are within the ALCO guideline of minus 7.0%.

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2001 ANNUAL REPORT

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FINANCIAL REVIEW CONTINUED
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Summary information about the interest-rate risk measures follows:

At the end of 2000 and during the first half of 2001, the Corporation's
interest-rate-risk position reflected a higher level of liability sensitivity,
which was continuing to increase as the current and projected mix of core
deposits shifted to a higher level of market-indexed products and a lower level
of administered-rate deposit products. Because management expects market
interest rates to rise in 2002, steps were taken to reduce liability
sensitivity, primarily by the use of derivative instruments to decrease the
interest rate risk associated with certain variable-rate funding products.

Interest Rate Risk Management: Financial instruments used to manage interest
rate risk include investment securities and interest rate derivatives, which
include interest rate swaps, interest rate caps and floors, interest rate
forwards, and exchange-traded futures and options contracts. Interest rate
derivatives have characteristics similar to securities but possess the
advantages of customization of the risk-reward profile of the instrument,
minimization of balance sheet leverage, and improvement of the liquidity
position. See Notes 1, 2, and 22 to the Consolidated Financial Statements for
further discussion of derivative instruments.

TRADING RISK MANAGEMENT: The Corporation maintains a trading account primarily
to provide investment products and risk management services to its customers.
Trading risk is monitored on a regular basis through the use of the
value-at-risk methodology (VAR). The Corporation primarily uses the historical
simulation VAR method. VAR is defined as the potential overnight dollar loss
from adverse market movements, with 97.5% confidence, based on historical prices
and market rates. During 2001, the average, high, and low VAR amounts were $.5
million, $.7 million and $.3 million, respectively, and within the limit
established by ALCO of $2.3 million. During 2000, the average, high, and low VAR
amounts were $.3 million, $.4 million and $.2 million, respectively. Month-end
VAR estimates are monitored regularly. Income from these activities, including
interest income, totaled $29.2 million in 2001 and $11.1 million in 2000.

NATIONAL CITY
2001 ANNUAL REPORT

26

QUARTERLY DATA
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FOURTH QUARTER SUMMARY

For the fourth quarter of 2001, net income was $346.6 million, or $.57 per
diluted share, compared to net income of $308.0 million, or $.50 per diluted
share, for the fourth quarter of 2000. The better 2001 results reflected strong
growth in net interest income and fee income, offset partially by lower
securities gains, an increased provision for loan losses, and a higher level of
noninterest expense. The growth in net interest income was driven primarily by
strong loan volumes, improved loan spreads, and successful deposit-gathering
efforts. The loan loss provision increased due to a higher level of actual loan
losses in the quarter and to greater credit risk in a subset of the
Corporation's nonconforming mortgage loan portfolio. Fee income grew mostly due
to increases in deposit service charges, item processing revenue, and
risk-management-related derivative gains. Noninterest expense rose principally
because of higher volume-driven personnel and card processing expenses.

Returns on average common equity and assets were 18.8% and 1.40%, respectively,
for the 2001 fourth quarter, compared to returns of 18.8% and 1.44%,
respectively, for the same period last year.

QUARTERLY FINANCIAL INFORMATION

Unaudited quarterly results are summarized as follows:

NATIONAL CITY
2001 ANNUAL REPORT

27

REPORT ON CONSOLIDATED FINANCIAL STATEMENTS
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REPORT OF MANAGEMENT

The management of National City Corporation has prepared the accompanying
financial statements and is responsible for their integrity and objectivity. The
statements have been prepared in conformity with accounting principles generally
accepted in the United States and necessarily include amounts that are based on
management's best estimates and judgments. Management also prepared the other
information in the annual report and is responsible for its accuracy and
consistency with the financial statements.

National City Corporation maintains a system of internal control over financial
reporting designed to produce reliable financial statements. The system contains
self-monitoring mechanisms, and compliance is tested and evaluated through an
extensive program of internal audits. Actions are taken to correct potential
deficiencies as they are identified. Any internal control system has inherent
limitations, including the possibility that controls can be circumvented or
overridden. Further, because of changes in conditions, internal control system
effectiveness may vary over time.

The Audit Committee, consisting entirely of outside directors, meets regularly
with management, internal auditors and independent auditors, and reviews audit
plans and results, as well as management's actions taken in discharging
responsibilities for accounting, financial reporting, and internal controls.
Ernst & Young LLP, independent auditors, and the internal auditors have direct
and confidential access to the Audit Committee at all times to discuss the
results of their examinations.

National City Corporation assessed its internal control system as of December
31, 2001, in relation to criteria for effective internal control over financial
reporting described in "Internal Control - Integrated Framework," issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on this
assessment, management believes that, as of December 31, 2001, its system of
internal control met those criteria.

/s/ David A. Daberko /s/ Jeffrey D. Kelly
DAVID A. DABERKO JEFFREY D. KELLY
Chairman and Chief Chief Financial Officer
Executive Officer

Cleveland, Ohio

January 23, 2002

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Stockholders

National City Corporation

Cleveland, Ohio

We have audited the accompanying consolidated balance sheets of National City
Corporation and subsidiaries as of December 31, 2001 and 2000, and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 2001. These
financial statements are the responsibility of National City's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform our
audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of National City
Corporation and subsidiaries at December 31, 2001 and 2000, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States.

Cleveland, Ohio /s/ Ernst & Young LLP

January 23, 2002

NATIONAL CITY
2001 ANNUAL REPORT

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CONSOLIDATED FINANCIAL STATEMENTS
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CONSOLIDATED BALANCE SHEETS

See Notes to Consolidated Financial Statements

NATIONAL CITY
2001 ANNUAL REPORT
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CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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CONSOLIDATED STATEMENTS OF INCOME

See Notes to Consolidated Financial Statements

NATIONAL CITY
2001 ANNUAL REPORT
30

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

See Notes to Consolidated Financial Statements

NATIONAL CITY
2001 ANNUAL REPORT
31

CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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CONSOLIDATED STATEMENTS OF CASH FLOWS

See Notes to Consolidated Financial Statements

NATIONAL CITY
2001 ANNUAL REPORT
32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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NATURE OF OPERATIONS

National City Corporation (National City or the Corporation) is a financial
holding company headquartered in Cleveland, Ohio. National City operates banks
and other financial services subsidiaries principally in Ohio, Michigan,
Pennsylvania, Indiana, Kentucky, and Illinois. Principal activities include
commercial and retail banking, consumer finance, asset management, mortgage
financing and servicing, and item processing. The Corporation also has a
national presence through its subsidiaries National City Mortgage Co. and First
Franklin Financial Corporation, who originate residential mortgage and home
equity loans to consumers through retail offices and wholesale networks
throughout the United States.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of National City conform with accounting
principles generally accepted in the United States. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual realized amounts could
differ from those estimates.

PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION: The Consolidated
Financial Statements include the accounts of the Corporation and its
subsidiaries. All significant intercompany transactions and balances have been
eliminated. Certain prior year amounts have been reclassified to conform with
the current year presentation.

STATEMENT OF CASH FLOWS: Cash and due from banks are considered "cash and cash
equivalents" for financial reporting purposes.

BUSINESS COMBINATIONS: Business combinations accounted for under the purchase
method of accounting include the results of operations of the acquired business
from the date of acquisition. Net assets of the companies acquired are recorded
at their estimated fair value as of the date of acquisition.

Business combinations accounted for under the pooling-of-interests method of
accounting retroactively combine the assets, liabilities, stockholders' equity,
and results of operations of the merged entity with the Corporation's respective
accounts at historical amounts. Prior period financial statements are restated
to give effect to business combinations accounted for under this method. Further
discussion of business combinations is included in Note 2.

LOANS: Loans are generally reported at the principal amount outstanding, net of
unearned income. Loans held for sale or securitization are valued on an
aggregate basis at the lower of carrying cost or fair value.

Interest income is recognized on an accrual basis. Loan origination fees,
certain direct costs, and unearned discounts are amortized as an adjustment to
the yield over the term of the loan. Loan commitment fees are generally deferred
and amortized into fee income on a straight-line basis over the commitment
period. Other credit-related fees, including letter and line of credit fees and
loan syndication fees, are recognized as fee income when earned.

Income on direct financing leases is recognized on a basis that achieves a
constant periodic rate of return on the outstanding investment. Income on
leveraged leases is recognized on a basis that achieves a constant rate of
return on the outstanding investment in the lease, net of the related deferred
tax liability, in the years in which the net investment is positive. Residual
values on leased assets are reviewed regularly for other-than-temporary
impairment. When there is other-than-temporary impairment in the estimated fair
value of the Corporation's interest in the residual value of a leased asset, the
carrying value is reduced to the estimated fair value with the write-down
recognized in the current period.

Commercial loans and leases and loans secured by real estate are designated as
nonperforming when either principal or interest payments are 90 days or more
past due unless the loan or lease is sufficiently collateralized such that full
repayment of both principal and interest is expected and is in the process of
collection, terms are renegotiated below market levels, or when an individual
analysis of a borrower's creditworthiness indicates a credit should be placed on
nonperforming status. When a loan is placed on nonperforming status, uncollected
interest accrued in prior years is charged against the allowance for loan
losses, while uncollected interest accrued in the current year is charged
against interest income. Future interest income may only be recorded on a cash
basis after recovery of principal is reasonably assured. Commercial loans and
leases and commercial loans secured by real estate are generally charged off to
the extent principal and interest due exceed the net realizable value of the
collateral, with the charge-off occurring when the loss is reasonably
quantifiable but not later than when the loan becomes 180 days past due. Loans
secured by residential real estate are generally charged off to the extent
principal and interest due exceed 90% of the current appraised value of the
collateral and the loan becomes 180 days past due.

Commercial and commercial real estate loans exceeding $1 million are evaluated
for impairment in accordance with the provisions of Statement of Financial
Accounting Standards (SFAS) 114, Accounting by Creditors for Impairment of a
Loan, which requires an allowance to be established as a component of the
allowance for loan losses when it is probable that all amounts due pursuant to
the contractual terms of the

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loan will not be collected and the recorded investment in the loan exceeds its
fair value. Fair value is measured using either the present value of expected
future cash flows discounted at the loan's effective interest rate, the
observable market price of the loan, or the fair value of the collateral if the
loan is collateral dependent. All loans considered impaired are included in
nonperforming assets.

Consumer loans are subject to mandatory charge-off at a specified delinquency
date and are usually not classified as nonperforming prior to being charged off.
Closed-end consumer loans, which include installment and student loans and
automobile leases, are generally charged off in full no later than when the loan
becomes 120 days past due. Open-end unsecured consumer loans, such as credit
card loans, are generally charged off in full no later than when the loan
becomes 150 days past due.

ALLOWANCE FOR LOAN LOSSES: The allowance for loan losses is maintained at a
level believed adequate by management to absorb probable losses inherent in the
loan portfolio and is based on the size and current risk characteristics of the
loan portfolio, an assessment of individual problem loans, actual and
anticipated loss experience, current economic events in specific industries and
geographical areas, including unemployment levels, and other pertinent factors,
including regulatory guidance and general economic conditions. Determination of
the allowance is inherently subjective as it requires significant estimates,
including the amounts and timing of expected future cash flows on impaired
loans, estimated losses on pools of homogeneous loans based on historical loss
experience, and consideration of current economic trends, all of which may be
susceptible to significant change. Loan losses are charged off against the
allowance, while recoveries of amounts previously charged off are credited to
the allowance. A provision for loan losses is charged to operations based on
management's periodic evaluation of the factors previously mentioned, as well as
other pertinent factors. When loans are identified for sale or securitization,
attributed loan loss allowance is reclassified as a direct reduction to the
carrying value of the loans.

The allowance for loan losses consists of an allocated component and an
unallocated component. The components of the allowance for loan losses represent
an estimation done pursuant to either SFAS 5, Accounting for Contingencies, or
SFAS 114. The allocated component of the allowance for loan losses reflects
expected losses resulting from analysis developed through specific credit
allocations for individual loans and historical loss experience for each loan
category. The specific credit allocations are based on a regular analysis of all
loans over a fixed-dollar amount where the internal credit rating is at or below
a predetermined classification. The historical loan loss element is determined
statistically using a loss migration analysis that examines loss experience and
the related internal gradings of loans charged off. The loss migration analysis
is performed quarterly and loss factors are updated regularly based on actual
experience. The allocated component of the allowance for loan losses also
includes consideration of the amounts necessary for concentrations and changes
in portfolio mix and volume.

The unallocated portion of the allowance reflects management's estimate of
probable inherent but undetected losses within the portfolio due to
uncertainties in economic conditions, delays in obtaining information, including
unfavorable information about a borrower's financial condition, the difficulty
in identifying triggering events that correlate perfectly to subsequent loss
rates, and risk factors that have not yet manifested themselves in loss
allocation factors. In addition, the unallocated allowance includes a component
that explicitly accounts for the inherent imprecision in loan loss migration
models. The Corporation has grown through acquisition, expanded the geographic
footprint in which it operates, and changed its portfolio mix in recent years.
As a result, historical loss experience data used to establish allocation
estimates may not precisely correspond to the current portfolio. Also, loss data
representing a complete economic cycle is not available for all sectors. The
uncertainty following the events of September 11th and the recessionary
environment also impact the allocation model's estimates of loss. The historical
losses used in the migration analysis may not be representative of actual losses
inherent in the portfolio that have not yet been realized.

SECURITIES: Securities purchased with the intention of realizing short-term
profits are considered trading securities, carried at fair value and included in
other investments. Realized and unrealized gains and losses are included in
other income. Interest on trading account securities is recorded in interest
income. As of December 31, 2001 and 2000, trading account securities totaled
$121.0 million and $52.5 million, respectively.

Securities are classified as held to maturity when management has the positive
intent and ability to hold the securities to maturity. Securities held to
maturity, when present, are carried at amortized cost.

Securities not classified as held to maturity or trading are classified as
available for sale. Securities available for sale are carried at fair value with
unrealized gains and losses reported separately in other comprehensive income,
net of tax.

Interest and dividends on securities, including amortization of premiums and
accretion of discounts using the effective-interest method over the period to
maturity are included in interest income. Gains and

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losses on the sales of securities are determined using the
specific-identification method and recognized on a trade-date basis.

VENTURE CAPITAL INVESTMENTS: Venture capital investments are carried at
estimated fair value with changes in fair value recognized in other noninterest
income. The fair values of publicly traded investments are determined using
quoted market prices. The fair values of investments that are not publicly
traded are estimated by management. Management's estimate of fair value
generally approximates cost together with any other-than-temporary valuation
adjustments determined appropriate by management. Venture capital investments in
debt and preferred equity securities are included in other investments on the
balance sheet, while investments in partnerships and other equity interests are
included in other assets.

SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL AND SECURITIES SOLD UNDER
AGREEMENTS TO REPURCHASE: Securities purchased under agreements to resell and
securities sold under agreements to repurchase are generally treated as
collateralized financing transactions and are recorded at the amounts at which
the securities were acquired or sold plus accrued interest. Securities,
generally U.S. government and Federal agency securities, pledged as collateral
under these financing arrangements cannot be sold or repledged by the secured
party. The fair value of collateral either received from or provided to a third
party is continually monitored and additional collateral obtained or requested
to be returned to the Corporation as deemed appropriate.

INTANGIBLE ASSETS: Goodwill and other intangible assets, net of accumulated
amortization, are included in other assets on the balance sheet and totaled
$1,086.0 million and $81.4 million, respectively, at December 31, 2001, and
$1,124.0 million and $77.3 million, respectively, at December 31, 2000.
Goodwill, which represents the excess of the cost of an acquisition over the
fair value of the net assets acquired, is amortized on a straight-line basis
over varying periods generally not exceeding 25 years. Certain goodwill related
to purchase acquisitions at the Corporation's 86%-owned item processing
subsidiary, National Processing, Inc. (National Processing), is amortized over
40 years. Other intangibles are amortized on a straight-line basis over varying
periods not exceeding 10 years. When certain events or other changes occur,
management evaluates goodwill and other intangible assets for recoverability. In
circumstances that indicate the carrying value of these assets may not be
recoverable, an impairment charge is recorded.

Effective January 1, 2002, National City adopted SFAS 142, Goodwill and Other
Intangible Assets, which changes the way goodwill and certain other intangible
assets are recognized and accounted for in the Consolidated Financial
Statements. See Note 2 for further discussion of the impact of this new
accounting pronouncement on the Corporation's financial statements.

DEPRECIABLE ASSETS: Properties and equipment are stated at cost less accumulated
depreciation and amortization. Buildings and equipment, including costs related
to developing or obtaining software for internal use, are depreciated on a
straight-line basis over their estimated useful lives. Leasehold improvements
are amortized over the lives of the leases. Maintenance and repairs are charged
to expense as incurred, while improvements which extend the useful life are
capitalized and depreciated over the estimated remaining life.

DERIVATIVE INSTRUMENTS: The Corporation enters into derivative transactions
principally to protect against the risk of adverse price or interest rate
movements on the value of certain assets and liabilities and on future cash
flows. The Corporation is also required to recognize certain contracts and
commitments as derivatives when the characteristics of those contracts and
commitments meet the definition of a derivative.

As discussed in Note 2, effective January 1, 2001, the Corporation adopted SFAS
133, Accounting for Derivative Instruments and Hedging Activities, as amended,
which requires all derivative instruments to be carried at fair value on the
balance sheet. SFAS 133 provides special hedge accounting provisions, which
permit the change in the fair value of the hedged item related to the risk being
hedged to be recognized in earnings in the same period and in the same income
statement line as the change in fair value of the derivative.

Derivative instruments designated in a hedge relationship to mitigate exposure
to changes in the fair value of an asset, liability, or firm commitment
attributable to a particular risk, such as interest rate risk, are considered
fair value hedges under SFAS 133. Derivative instruments designated in a hedge
relationship to mitigate exposure to variability in expected future cash flows,
or other types of forecasted transactions, are considered cash flow hedges. The
Corporation formally documents all relationships between hedging instruments and
hedged items, as well as its risk-management objective and strategy for
undertaking each hedge transaction.

Fair value hedges are accounted for by recording the fair value of the
derivative instrument and the fair value related to the risk being hedged of the
hedged asset or liability on the balance sheet with corresponding offsets
recorded in the income statement. The adjustment to the hedged asset or
liability is included in the basis of the hedged item, while the fair value of
the derivative is recorded as a freestanding asset or liability. Actual cash
receipts or

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payments and related amounts accrued during the period on derivatives included
in a fair value hedge relationship are recorded as adjustments to the interest
income or expense recorded on the hedged asset or liability.

Cash flow hedges are accounted for by recording the fair value of the derivative
instrument on the balance sheet as either a freestanding asset or liability,
with a corresponding offset recorded in other comprehensive income within
stockholders' equity, net of tax. Amounts are reclassified from other
comprehensive income to the income statement in the period or periods the hedged
forecasted transaction affects earnings.

Under both the fair value and cash flow hedge scenarios, derivative gains and
losses not considered highly effective in hedging the change in fair value or
expected cash flows of the hedged item are recognized immediately in the income
statement. At the hedge's inception and at least quarterly thereafter, a formal
assessment is performed to determine whether changes in the fair values or cash
flows of the derivative instruments have been highly effective in offsetting
changes in the fair values or cash flows of the hedged items and whether they
are expected to be highly effective in the future. If it is determined a
derivative instrument has not been or will not continue to be highly effective
as a hedge, hedge accounting is discontinued prospectively and the derivative
instrument continues to be carried at fair value but with no corresponding
offset being recorded on the hedged item.

Prior to January 1, 2001, unrealized gains and losses on derivatives used for
hedging purposes were generally not required to be recorded in the financial
statements. Realized gains and losses on contracts either settled or terminated
were recorded as an adjustment to the basis of the on-balance sheet asset or
liability being hedged and amortized into the income statement over either the
remaining life of the derivative instrument or the expected life of the asset or
liability. Net amounts receivable or payable on contracts hedging either
interest earning assets or interest bearing liabilities were accrued as an
adjustment to either interest income or interest expense.

STOCK-BASED COMPENSATION: The Corporation's stock-based compensation plans are
accounted for based on the intrinsic value method set forth in Accounting
Principles Board (APB) Opinion 25, Accounting for Stock Issued to Employees, and
related interpretations. Compensation expense for stock options is generally not
recognized if the exercise price of the option equals or exceeds the fair value
of the stock on the date of grant. Compensation expense for restricted share
awards is recognized over the period of service, usually the restricted period,
based on the fair value of the stock on the date of grant.

INCOME TAXES: The Corporation and its subsidiaries file a consolidated Federal
income tax return. The provision for income taxes is based upon income in the
financial statements, rather than amounts reported on the Corporation's income
tax return.

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized as income or
expense in the period that includes the enactment date.

TREASURY STOCK: Acquisitions of treasury stock are recorded on the par value
method, which requires the cash paid to be allocated to common or preferred
stock, capital surplus, and retained earnings.

ASSET SECURITIZATION: Asset securitization involves the sale, generally to a
trust, of a pool of loan receivables. The Corporation continues to own the
accounts, which generate the loan receivables. In addition, the Corporation
sells the rights to new loan receivables, including most fees generated by and
payments received from the accounts. The trust sells undivided interests in the
trust to investors, while the Corporation retains the remaining undivided
interest. The senior classes of the asset-backed securities receive an AAA or A
credit rating at the time of issuance. These ratings are generally achieved
through the creation of lower-rated subordinated classes of asset-backed
securities. The Corporation continues to service the accounts and receives a
servicing fee.

For credit card securitizations, during the revolving period, which generally
approximates 48 months, the trust is not required to make principal payments to
the investors. Instead, the trust uses principal payments received on the
accounts to purchase new loan receivables. Therefore, the principal dollar
amount of the investor's undivided interest remains unchanged. Once the
revolving period ends, the trust distributes principal payments to the investors
according to the terms of the transaction.

Distribution of principal to the investors in the credit card trust may begin
earlier if the average annualized yield on the receivables securitized
(generally including interest income, interchange and other fees, less principal
credit losses during the period) for three consecutive months drops below a
minimum yield (generally equal to the sum of the coupon rate payable to
investors plus contractual servicing fees), or certain other events occur.

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In accordance with SFAS 140, Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities, gains are recognized in income at the
time of initial sale and each subsequent sale of loan receivables in an asset
securitization.

2. RECENT ACCOUNTING PRONOUNCEMENTS

ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES: Effective January
1, 2001, the Corporation adopted SFAS 133, Accounting for Derivative Instruments
and Hedging Activities, as amended, which requires all derivative instruments to
be carried at fair value on the balance sheet. At the time of adoption, the
Corporation designated anew certain derivative instruments used for risk
management into hedging relationships in accordance with the requirements of the
new standard. Derivative instruments used to hedge changes in the fair value of
assets and liabilities due to changes in interest rates were designated in fair
value hedge relationships. Derivative instruments used to hedge the variability
of forecasted cash flows attributable to interest rate risk were designated in
cash flow hedge relationships. As a result of adopting the new standard, the
Corporation recorded transition amounts associated with establishing the fair
values of the derivatives and hedged items on the balance sheet. A pretax
transition loss of $1.6 million, or $1.0 million after tax, was recorded in
other noninterest income on the income statement in relation to establishing the
fair value hedge relationships, while a $26.0 million after-tax transition loss
was recorded in other comprehensive income within stockholders' equity in
relation to recording the fair value of the derivatives designated in cash flow
hedge relationships.

SFAS 133, as applied to the Corporation's risk management strategies, has caused
reported net income and stockholders' equity to be different from what they
otherwise would have been under the prior accounting rules, with the impact in
any period depending on levels of interest rates and other variables affecting
the fair values of derivative instruments and hedged items. Although reported
results are affected, SFAS 133's requirements do not change the cash flows or
economic risk associated with any derivatives the Corporation is holding.

Notes 1 and 22 provide additional detail on the accounting for derivative
instruments and on derivative instruments held by the Corporation during 2001.

ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS
OF LIABILITIES: SFAS 140, Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities, was issued in September 2000 and
replaced SFAS 125. The guidance in SFAS 140, while not changing most of the
guidance originally issued in SFAS 125, revised the standards for accounting for
securitizations and other transfers of financial assets and collateral and
requires certain additional disclosures related to transferred assets.

Certain provisions of the statement related to the recognition,
reclassification, and disclosure of collateral, as well as the disclosure of
securitization transactions, became effective for the Corporation for 2000
year-end reporting. Other provisions related to the transfer and servicing of
financial assets and extinguishments of liabilities became effective for
transactions occurring after March 31, 2001.

Application of the new rules did not have a material impact on the Corporation's
results of operations, financial position, or liquidity.

BUSINESS COMBINATIONS: In June 2001, the Financial Accounting Standards Board
(FASB) issued SFAS 141, Business Combinations, which replaces APB Opinion 16.
SFAS 141 requires all business combinations to be accounted for by the purchase
method and eliminates the pooling-of-interests method of accounting for business
combinations initiated after June 30, 2001.

While SFAS 141 will affect how future business combinations, if undertaken, are
accounted for and disclosed in the financial statements, the issuance of the new
guidance had no effect on the Corporation's results of operations, financial
position, or liquidity during 2001.

GOODWILL AND OTHER INTANGIBLE ASSETS: In conjunction with the issuance of the
new guidance for business combinations, the FASB also issued SFAS 142, Goodwill
and Other Intangible Assets, which addresses the accounting and reporting for
acquired goodwill and other intangible assets and supersedes APB Opinion 17.

Under the provisions of SFAS 142, goodwill and certain other intangible assets,
which do not possess finite useful lives, will no longer be amortized into net
income over an estimated life but rather will be tested at least annually for
impairment based on specific guidance provided in the new standard. Intangible
assets determined to have finite lives will continue to be amortized over their
estimated useful lives and also continue to be subject to impairment testing.

The provisions of SFAS 142 were adopted by the Corporation as required effective
January 1, 2002. Application of the nonamortization provisions of the statement
is expected to reduce noninterest expense by approximately $65 million,
resulting in an increase in net income of approximately $55 million, or $.09 per
diluted share, in 2002 as compared to 2001. SFAS 142, as part of its adoption
provisions, requires a transitional impairment test be applied to all goodwill
and other indefinite-lived intangible assets within the

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first half of 2002 and any resulting impairment loss be reported as a change in
accounting principle. Management has performed a preliminary transitional
impairment test on its goodwill assets and at this time does not expect an
impairment loss to be recorded in 2002 as a result of this test. The Corporation
currently does not have any other indefinite-lived intangible assets on its
balance sheet. It is also anticipated there will not be any material categorical
reclassifications or adjustments to the useful lives of finite-lived intangible
assets as a result of adopting the new guidance.

In general, application of the new provisions may result in more income
statement volatility due to the potential periodic recognition of impairment
losses, which are likely to vary in amount and regularity, for goodwill and
other indefinite-lived intangible assets, versus reducing those assets through
the recognition of recurring, consistent amortization amounts.

ASSET RETIREMENT OBLIGATIONS: In August 2001, the FASB issued SFAS 143,
Accounting for Asset Retirement Obligations. SFAS 143 requires an entity to
record a liability for an obligation associated with the retirement of an asset
at the time the liability is incurred by capitalizing the cost as part of the
carrying value of the related asset and depreciating it over the remaining
useful life of that asset. The standard is effective for the Corporation
beginning January 1, 2003, and its adoption is not expected to have a material
impact on the Corporation's results of operations, financial position, or
liquidity.

ACCOUNTING FOR LONG-LIVED ASSETS: SFAS 144, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of, was issued in
October 2001 and addresses how and when to measure impairment on long-lived
assets and how to account for long-lived assets that an entity plans to dispose
of either through sale, abandonment, exchange, or distribution to owners. The
new provisions supersede SFAS 121, which addressed asset impairment, and certain
provisions of APB Opinion 30 related to reporting the effects of the disposal of
a business segment and requires expected future operating losses from
discontinued operations to be recorded in the period in which the losses are
incurred rather than the measurement date. Under SFAS 144, more dispositions may
qualify for discontinued operations treatment in the income statement. The
provisions of SFAS 144 became effective for the Corporation January 1, 2002 and
are not expected to have a material impact on the Corporation's results of
operations, financial position, or liquidity.

3. ACQUISITIONS, DIVESTITURES, AND REALIGNMENT CHARGES

In April 2001, National City sold its preferred share interest in National Asset
Management Corporation (NAMCO), a Louisville, Kentucky-based investment advisor,
to AMVESCAP PLC (AVZ) for a gain of $88.8 million pretax, or $57.7 million after
tax. The gain is included in other noninterest income on the income statement.
The carrying value of National City's investment in the NAMCO preferred shares
was $1.5 million. Cash proceeds of $49.0 million and 2.8 million shares of AVZ
stock, with a value of $41.3 million, were received in connection with the sale.
The AVZ shares were sold later in the second quarter.

On June 28, 2001, National Processing acquired a 70% interest in ABN AMRO
Merchant Services, LLC (AAMS) for cash of $48.5 million. Under the terms of the
agreement, National Processing provides AAMS with all merchant-processing
services, including both authorization and settlement of all card-based
transactions. The acquisition was accounted for as a purchase under APB Opinion
16, with the results of operations of AAMS included in the Corporation's income
statement from the date of acquisition. Goodwill of $27.1 million with an
estimated useful life of 20 years was recorded in connection with the
acquisition. The remainder of the purchase price was allocated to other
intangible assets, primarily acquired-merchant contracts, which are being
amortized on a straight-line basis over 10 years.

In July 2001, National Processing sold its Business Process Outsourcing business
unit for $43.0 million in cash. This business unit primarily processed
healthcare claims, credit card applications, and airline lift tickets. In
connection with the disposal, a pretax impairment loss, net of minority interest
benefit, of $2.7 million was recorded in other noninterest expense on the income
statement.

During 2000, National City divested certain assets as part of a balance sheet
restructuring initiative intended to improve asset returns and capital position,
reduce reliance on purchased funding, and lessen interest rate sensitivity.
These transactions included the sales of $3.7 billion of fixed-rate debt
securities, $2.0 billion of thin-spread student loans, and $1.0 billion of
low-spread adjustable-rate mortgage loans.

Losses totaling $56.3 million pretax, or $36.6 million after tax, were incurred
on the disposition of the debt securities and are included in net securities
gains. A pretax gain of $74.2 million, or $48.2 million after tax, was
recognized on the sale of the student loans and is included in other noninterest
income. The sale of the adjustable-rate mortgage loans generated a pretax gain
of $10.6 million, or $6.9 million after tax, which is included in mortgage
banking revenue.

In December 2000, the Corporation announced that, as part of a realignment of
National City's consumer finance business, it was closing its 69 Loan Zone(R)
retail stores, exiting the wholesale loan

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origination business of Altegra Credit Company, a wholly-owned Pittsburgh-based
subsidiary, and ceasing to originate automobile leases. Charges recorded in
connection with this realignment totaled $44.0 million pretax, or $28.6 million
after tax, and consisted of $26.0 million for residual value write-downs on the
Corporation's automobile lease portfolio, $3.7 million for severance costs, $9.0
million for goodwill impairment, $2.9 million for facility closures and lease
obligations, and $2.4 million for fixed asset impairment and other costs. The
employees affected by this realignment were individually notified of their
status prior to December 31, 2000. These charges are included in other
noninterest expense.

Also in 2000, National Processing divested a small operating unit and recorded a
pretax charge of $6.5 million, net of minority interest benefit, for goodwill
and fixed-asset impairment.

The following discusses certain acquisitions and divestitures included in the
Corporation's 1999 results:

National City acquired the retail, wholesale, and telemarketing production units
of AccuBanc Mortgage Corporation, a single-family residential mortgage lender
headquartered in Dallas, Texas, for $42.3 million. Goodwill of $40.1 million
with an estimated useful life of 20 years was recorded on November 1, 1999, the
date of acquisition.

National City acquired First Franklin Financial Companies, Inc., a wholesale
originator of nonconforming residential mortgage loans headquartered in San
Jose, California, for $266.1 million. The acquisition was accounted for as a
purchase and included in the Corporation's income statement from the date of
acquisition, August 31, 1999. Goodwill of $233.2 million with an estimated
useful life of 20 years was recorded in connection with the acquisition.

National City sold its 20% ownership interest in Electronic Payment Services,
Inc. (EPS), a provider of transaction processing services, to Concord EFS, Inc.
(Concord) and recognized a pretax gain of $95.7 million, or $62.2 million after
tax. The gain on the sale of EPS is included in other noninterest income. The
transaction was effected by exchanging common shares of EPS for shares of
unregistered Concord common stock. The shares were subsequently registered by
Concord and National City sold its holdings in Concord in the open market and
recognized a pretax gain of $32.1 million, or $20.8 million after tax, which is
included in net securities gains.

National Processing sold its freight payables, payables outsourcing, remittance,
and merchant check services business lines. As a result, National City
recognized a loss, net of minority interest, of $60.8 million pretax, or $61.2
million after tax. The larger after-tax loss was the result of nondeductible
goodwill. The pretax impact of the National Processing business line
divestitures is included in other noninterest income.

National City also sold its interest in Stored Value Systems, Inc., a subsidiary
involved in the development of smart card technology, for a gain of $6.1 million
pretax, or $4.0 million after tax. The gain is included in other noninterest
income.

4. OFF-BALANCE SHEET ARRANGEMENTS

ASSET SECURITIZATION: In January 2001, the Corporation sold $397.4 million of
credit card receivables in a securitization transaction and recognized a pretax
gain of $20.6 million, which was recorded in other noninterest income, and was
comprised of $16.2 million, representing the attributed allowance for loan
losses, and $4.4 million, reflecting the Corporation's recognition of its
retained interest in the cash flows of the trust. Transaction costs of $1.8
million incurred in connection with the securitization were deferred and are
being amortized over the five-year term of the trust.

In August 2000, the Corporation sold $600.0 million of credit card receivables
in a securitization transaction and recognized a pretax gain of $27.2 million,
which was also recorded in other noninterest income, and was comprised of $25.0
million, representing the attributed allowance for loan losses, and $2.2
million, reflecting the Corporation's recognition of its retained interest in
the cash flows of the trust. Transaction costs of $3.0 million were deferred and
are also being amortized over the five-year term of the trust.

In both the 2001 and 2000 securitization transactions, the Corporation retained
servicing responsibilities and subordinated interests. The Corporation receives
annual servicing fees approximating 2% of the outstanding credit card balances
and the right to future cash flows arising after the investors in the
securitization trust have received the return for which they contracted. The
right to these future cash flows represent the retained interest in the trust.
The retained interest is subordinate to investors' interests. Also, in
conjunction with the 2001 securitization, the investors and the trust have
recourse to $27.6 million of credit card balances owned by the Corporation for
failure of debtors to pay when due.

Retained interests are included in other assets on the balance sheet and are
carried at fair value with changes in estimated value considered temporary
recorded, net of tax, through other comprehensive income within stockholders'
equity. The Corporation uses certain assumptions and estimates in determining
the fair value allocated to the retained interests at the time of sale and each
subsequent sale in accordance with SFAS 140. These assumptions and estimates
include projections concerning rates charged to customers, the expected life of
the receivables,

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2001 ANNUAL REPORT

39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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credit loss experience, loan repayment rates, the cost of funds, and discount
rates commensurate with the risks involved. These assumptions are reviewed
regularly by management and are revised to reflect current conditions as
appropriate.

Servicing fees, amortized transaction costs, and gains and losses considered
other than temporary related to changes in the fair value of retained interests
are included in card-related fee income on the income statement.

Key economic assumptions and the sensitivity of the December 31, 2001 fair
values of residual cash flows on credit card receivables to immediate 10% and
20% adverse changes in those assumptions follow:

These sensitivities are hypothetical and should be used with caution. As the
figures indicate, changes in fair value based on a 10% variation in assumptions
generally cannot be extrapolated because the relationship of the change in the
assumption to the change in fair value may not be linear. Also, the effect of a
variation in a particular assumption on the fair value of the retained interests
is calculated without changing any other assumption; in reality, changes in one
factor may result in changes in another (for example, increases in market
interest rates may result in lower prepayments and increased credit losses),
which might either magnify or counteract the sensitivities.

The average annualized yield and the minimum yield for the three-month period
ended December 31, 2001, presented on a cash basis, were 11.14% and 3.39%,
respectively, and included various credit card and other fees as specified in
the securitization agreements.

Certain cash flows received from and paid to the securitization trust follow:

During 2001, the Corporation sold credit card receivables that had previously
been charged off. The sales generated gains of $7.3 million, $5.9 million of
which were allocated to credit card receivables owned by the Corporation and
recorded as a recovery to the allowance for loan losses, with the remaining $1.4
million allocated to securitized receivables and included in card-related fees
on the income statement.

The investor principal in loan receivables related to the Series 2000-1 and
Series 2001-1 securitizations is scheduled to amortize back into the
Corporation's loan receivables in 2005 and 2006, respectively. The amounts are
based on estimated amortization periods, which are subject to change.

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Quantitative information about delinquencies, net credit losses, and components
of managed credit card loans follows. This information excludes certain
unsecured personal and business lines of credit included in the caption "credit
card loans" presented elsewhere in this annual report.

In conjunction with securitizations expected to occur in 2002, credit card loans
of $402.3 million, net of attributed loan loss allowance of $22.7 million, and
automobile loans of $824.4 million, net of attributed loan loss allowance of
$6.5 million, were classified as held for securitization on the balance sheet at
December 31, 2001.

ASSET-BACKED COMMERCIAL PAPER CONDUIT: The Corporation periodically sells
qualifying assets to an unconsolidated qualified special purpose entity (QSPE)
established in 2000. Through a receive-fixed interest rate swap, the Corporation
receives or pays the spread between the yield earned on the assets the
Corporation has sold to the conduit and the rate of interest paid on commercial
paper issued by the conduit and certain administrative expenses of the conduit.
The Corporation earns fee income for servicing the assets it has sold into the
QSPE and for providing a liquidity facility to the QSPE in the event funding
cannot be readily accessed. Further discussion on the liquidity commitment is
included in Note 18.

During 2001 and 2000, the Corporation sold high-grade fixed and variable
asset-backed securities to the QSPE having a principal balance of $1.5 billion
and $2.1 billion, respectively. As of December 31, 2001, the QSPE held assets of
$2.8 billion, consisting of the asset-backed securities purchased from the
Corporation and approximately $386 million of other collateralized assets
purchased from other parties. As of December 31, 2000, the QSPE held $2.0
billion of asset-backed securities.

5. LOANS AND ALLOWANCE FOR LOAN LOSSES

Total loans outstanding were recorded net of unearned income of $556.7 million
in 2001 and $706.2 million in 2000.

Activity in the allowance for loan losses follows:

As discussed in Note 4, in conjunction with the planned securitizations of
credit card loans and automobile loans in 2002, $22.7 million and $6.5 million,
respectively, of attributed allowance for loan losses was netted against the
bases of the loans upon their balance sheet reclassification in 2001 from
portfolio loans to loans held for securitization.

Also in 2001, the Corporation decided to accelerate the disposition of a
portfolio of nonperforming and delinquent loans, which had been generated by the
former wholesale and retail loan origination units of its consumer finance
subsidiary Altegra Credit Company (Altegra). During 2001, the allowance for loan
losses related to these loans was increased by $68.1 million through a charge to
provision. Loans totaling $149.5 million were sold from the portfolio during the
year with related loan loss allowance of $45.7 million included in the bases of
the loans sold, essentially covering the loss on sale. Also during the year, net
charge-offs of $13.9 million and principal repayments of $16.0 million were
recorded on loans in the segregated portfolio. At December 31, 2001, assets
totaling $44.9 million remained in this segregated portfolio with an associated
allowance of $8.5 million.

In 2000, $42.4 million of allowance for loan losses was transferred to the bases
of credit card loans either sold through securitization during the year or held
for securitization as of the end of the year.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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Nonperforming loans totaled $658.3 million and $369.0 million at December 31,
2001 and 2000, respectively. For loans classified as nonperforming at December
31, 2001, the contractual interest due and actual interest recognized on those
loans during 2001 was $58.8 million and $14.8 million, respectively. Included in
nonperforming loans were impaired loans aggregating $170.1 million and $85.4
million at December 31, 2001 and 2000, respectively. Average impaired loans for
2001, 2000, and 1999 totaled $122.3 million, $59.4 million, and $30.7 million,
respectively. The majority of the loans deemed impaired were evaluated using the
fair value of the collateral as the measurement method. The related allowance
allocated to impaired loans for 2001 and 2000 was $62.9 million and $45.1
million, respectively. All impaired loans at December 31, 2001 and 2000 had an
associated allowance. There was no interest recognized in 2001, 2000, and 1999
on impaired loans while such loans were considered impaired.

6. SECURITIES

Securities available for sale follow:

The other category includes the Corporation's internally managed equity
portfolio of bank and thrift common stock investments, which had an amortized
cost and fair value of $399.9 million and $444.8 million, respectively, at
December 31, 2001, and $569.7 million and $668.8 million, respectively, at
December 31, 2000.

The following table presents the amortized cost, fair value, and
weighted-average yield of securities at December 31, 2001 by maturity:

(a) Yield on debt securities only; equity securities excluded.

Weighted-average yields are based on amortized cost. Yields on tax-exempt
securities are calculated on a tax-equivalent basis using the marginal Federal
income tax rate of 35%. Mortgage-backed securities are assigned to maturity
categories based on their estimated average lives. Equity securities are
included in other securities in the "after 10 years" category.

At December 31, 2001, the carrying value of securities pledged to secure public
and trust deposits, U.S. Treasury demand notes, security repurchase agreements,
and derivative instruments totaled $6.8 billion.

At December 31, 2001, there were no securities of a single issuer, other than
U.S. Treasury debentures and other U.S. government-sponsored agency securities,
which exceeded 10% of stockholders' equity.

In 2001, 2000, and 1999, gross securities gains of $146.4 million, $124.3
million, and $148.5 million and gross securities losses of $1.6 million, $67.4
million, and $10.1 million were recognized, respectively.

7. MORTGAGE SERVICING ASSETS

The Corporation recognizes as separate assets rights to service mortgage loans
it does not own but services for others. The total cost of loans sold is
allocated between the loans sold and the servicing assets retained based on the
relative fair values of each. Mortgage servicing assets, when purchased, are
initially recorded at cost. Mortgage servicing assets are carried at the lower
of the initial carrying value, adjusted for amortization, or estimated fair
value. For purposes of determining impairment, the mortgage servicing assets are
stratified by product type and interest rate. Certain mortgage servicing assets
hedged with derivative instruments as part of SFAS 133 hedge relationships are
carried at fair value and consequently may be adjusted above their initial
carrying value.

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Changes in the carrying value of mortgage servicing assets follows:

The fair value of mortgage servicing assets is estimated by calculating the
present value of estimated future net servicing cash flows, taking into
consideration expected mortgage loan prepayment rates, discount rates, servicing
costs, and other economic factors. The expected and actual rate of mortgage loan
prepayments is the most significant factor driving the value of mortgage
servicing assets. Increases in mortgage loan prepayments reduce estimated future
net servicing cash flows because the underlying life of the loan is reduced.
Risk associated with declines in the estimated fair value of mortgage servicing
assets due to increases in mortgage prepayment rates is managed using derivative
instruments.

The Corporation hedges portions of the risk associated with declines in the fair
value of its mortgage servicing assets by designating derivative instruments and
certain mortgage servicing assets into SFAS 133 fair value hedge relationships.
The Corporation also uses other derivative instruments, not designated in SFAS
133 hedge relationships, to protect against declines in the estimated fair value
of the mortgage servicing assets. The interest rate risk associated with
mortgage servicing assets is closely monitored and reported on monthly as part
of the Corporation's overall interest rate risk management process. Interest
rate risk associated with mortgage servicing assets is measured through analyses
which compute the expected value change of the mortgage servicing assets and the
hedging derivatives at various parallel interest rate shifts. At December 31,
2001, the expected net value changes were within the Corporation's established
preset interest rate risk limits for the mortgage servicing assets and
associated hedging derivatives.

During 2001, $328.4 million of net ineffective hedge and other derivative gains
were generated related to derivatives used to protect the estimated fair value
of the mortgage servicing assets. These net gains more than offset impairment
losses on the mortgage servicing assets of $291.8 million. Further discussion on
derivative instruments and hedging activities is included in Notes 1, 2, and 22.

Prior to the January 1, 2001 adoption of SFAS 133, the fair values of derivative
instruments used to protect changes in the estimated fair value of mortgage
servicing assets were considered in determining impairment but were not included
on the balance sheet, and any cash gains and losses on these instruments were
included as basis adjustments to the carrying value of mortgage servicing
assets. In the table on the left, changes in the derivative basis adjustments in
2000 are presented as other activity.

At December 31, 2001 and 2000, the carrying value of the mortgage servicing
assets approximated the estimated fair value.

8. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value estimates are made as of a specific point in time based on the
characteristics of the financial instruments and relevant market information.
Where available, quoted market prices are used. In other cases, fair values are
based on estimates using present value or other valuation techniques. These
techniques are significantly affected by the assumptions used, including
discount rates and estimates of future cash flows. As such, the derived fair
value estimates cannot be substantiated by comparison to independent markets
and, further, may not be realizable in an immediate settlement of the
instruments.

The following table presents the estimates of fair value of financial
instruments at December 31, 2001 and 2000. Excluded are certain items not
defined as financial instruments, including non-financial assets, intangibles,
and future business growth, as well as certain liabilities such as obligations
for pension and other postretirement benefits, deferred compensation
arrangements, and leases. Accordingly, the aggregate fair value amounts
presented do not purport to represent the underlying market value of the
Corporation.

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2001 ANNUAL REPORT

43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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The following methods and assumptions were used to estimate the fair value of
each class of financial instrument:

CASH AND CASH EQUIVALENTS: Due to their short-term nature, the carrying amounts
reported in the balance sheet approximate fair value for these assets. For
purposes of this disclosure only, cash equivalents include Federal funds sold,
security resale agreements, accrued interest receivable, and other short-term
investments.

LOANS AND LOANS HELD FOR SALE OR SECURITIZATION: For performing variable-rate
loans that reprice frequently, estimated fair values are based on carrying
values. For conforming residential mortgage loans held for sale that are hedged
with derivative instruments in a SFAS 133 relationship, the carrying value of
the loans equals the fair value. The fair value of credit card loans held for
securitization is based on the principal amount of the loans to be securitized,
net of attributed loan loss allowance. The fair values for all other loans,
including the automobile loans held for securitization, are estimated using a
discounted cash flow calculation that applies interest rates used to price new,
similar loans to a schedule of aggregated expected monthly maturities, adjusted
for market and credit risks.

SECURITIES: The fair values of securities are based primarily upon quoted market
prices.

DERIVATIVE ASSETS AND LIABILITIES: Fair values for derivative instruments are
based either on cash flow projection models acquired from third parties or
observable market prices.

DEPOSITS: The fair values disclosed for demand deposits (e.g., interest and
noninterest bearing checking, savings, and certain types of money market
accounts) are equal to the amounts payable on demand at the reporting date
(i.e., their carrying amounts). The carrying amounts for variable-rate money
market accounts and certificates of deposit approximate their fair values at the
reporting date. Fair values for fixed-rate certificates of deposit are estimated
using a discounted cash flow calculation that applies interest rates currently
being offered on certificates to a schedule of aggregated expected monthly
maturities on time deposits.

SHORT-TERM BORROWINGS: The carrying amounts of Federal funds borrowed, security
repurchase agreements, commercial paper, and other short-term borrowings
approximate their fair values.

LONG-TERM DEBT: The fair values of long-term borrowings (other than deposits)
are based on quoted market prices, where available, or are estimated using
discounted cash flow analyses based on the Corporation's current incremental
borrowing rates for similar types of borrowing arrangements.

OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS: The amounts shown under carrying value
represent accruals or deferred income (fees) arising from the related
off-balance-sheet financial instruments. Fair values for off-balance-sheet
instruments are based on cash flow projection models acquired from third
parties, observable market prices, or fees currently charged to enter into
similar agreements, taking into account the remaining terms of the agreements
and the counterparties' credit standing.

9. PROPERTIES, EQUIPMENT, AND LEASES

Properties and equipment follow:

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2001 ANNUAL REPORT
44

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The Corporation and certain of its subsidiaries occupy their respective
headquarters offices and other facilities under long-term operating leases and,
in addition, lease certain software and data processing and other equipment. The
aggregate minimum annual rental commitments under these leases total
approximately $125.5 million in 2002, $110.6 million in 2003, $94.7 million in
2004, $71.9 million in 2005, $51.5 million in 2006, and $270.3 million
thereafter. The Corporation also subleases and receives rental income on certain
leased properties. As of December 31, 2001, aggregate future minimum rentals to
be received under noncancelable subleases totaled $22.6 million.

Total expense recorded under all operating leases in 2001, 2000, and 1999 was
$122.6 million, $120.9 million, and $103.2 million, respectively.

10. FEDERAL FUNDS BORROWED AND SECURITY REPURCHASE AGREEMENTS

Detail of Federal funds borrowed and security repurchase agreements follows:

Federal funds borrowed and security repurchase agreements generally mature
within 30 days of the transaction date.

11. BORROWED FUNDS

Detail of borrowed funds follows:

U.S. Treasury demand notes represent secured borrowings from the U.S. Treasury.
These borrowings are collateralized by qualifying securities and commercial and
residential real estate loans. The funds are placed with the banks at the
discretion of the U.S. Treasury and may be called at any time.

12. LONG-TERM DEBT

The composition of long-term debt follows:

The amounts above represent the par value of the debt adjusted for any
unamortized discount or other basis adjustments related to hedging the debt with
derivative instruments. The Corporation uses derivative instruments, primarily
interest rate swaps, to manage interest rate risk and match fund the rates on
certain assets by hedging the fair value of certain fixed-rate debt by
converting the debt to variable rate and by hedging the cash flow variability
associated with certain variable-rate debt by converting the debt to fixed rate.
Further discussion on derivative instruments is included in Notes 1, 2, and 22.

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2001 ANNUAL REPORT

45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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At December 31, 2001, the par values of subordinated debt, senior bank notes,
long-term advances from the Federal Home Loan Bank (FHLB), and other debt
totaled $3,585.0 million, $9,754.0 million, $3,747.0 million, and $3.5 million,
respectively.

All subordinated notes of the parent company and bank subsidiaries were issued
at fixed rates, pay interest semi-annually, and may not be redeemed prior to
maturity. Through the use of interest rate swaps, $2,325.0 million of fixed-rate
subordinated debt at December 31, 2001, had been converted to variable-rate debt
based on the three-month London Interbank Offering Rate (LIBOR).

At December 31, 2001, senior bank notes totaling $575.0 million were
contractually based on a fixed rate of interest and $9,179.0 million were
contractually based on a variable rate of interest. The weighted average
contractual interest rates for fixed-and variable-rate senior bank notes at
December 31, 2001 were 3.76% and 2.25%, respectively. Through the use of
interest rate swaps, as of year-end 2001, $190.0 million of the fixed-rate
senior bank notes had been converted to variable-rate notes based on either the
one- or three- month LIBOR rate and $3,750.0 million of the variable-rate senior
bank notes had been converted to fixed-rate notes with a weighted average fixed
rate of 5.10%.

FHLB advances at December 31, 2001 contractually consisted of $197.0 million of
fixed-rate obligations and $3,550.0 million of variable-rate obligations. The
weighted-average contractual interest rates for fixed-and variable-rate advances
at December 31, 2001 were 5.74% and 2.15%, respectively. As of December 31,
2001, fixed-rate advances with a par value of $100.0 million had been converted
to a variable rate based on one-month LIBOR and variable-rate advances with a
par value of $1,300.0 million had been converted to fixed-rate advances with a
weighted average fixed rate of 3.42%. FHLB advances are collateralized by
qualifying residential real estate loans.

Long-term debt maturities for the next five years are as follows: $5,481.2
million in 2002, $4,057.3 million in 2003, $1,295.5 million in 2004, $1,391.5
million in 2005, $1,407.4 million in 2006, and $3,456.6 million thereafter. The
senior bank notes and long-term FHLB advances have maturities ranging from 2002
to 2078 and from 2002 to 2023, respectively.

A credit agreement dated April 12, 2001 with a group of unaffiliated banks
allows the Corporation to borrow up to $350 million until April 12, 2005 with a
provision to extend the expiration date under certain circumstances. The
Corporation pays a variable annual facility fee based on the Corporation's
long-term debt rating. The fee is currently ten basis points on the amount of
the credit facility. There were no borrowings outstanding under this agreement
at December 31, 2001.

13. CORPORATION-OBLIGATED MANDATORILY REDEEMABLE CAPITAL SECURITIES OF
SUBSIDIARY TRUSTS HOLDING SOLELY DEBENTURES OF THE CORPORATION

The composition of capital securities follows:

The corporation-obligated mandatorily redeemable capital securities (the
"capital securities") of subsidiary trusts holding solely junior subordinated
debt securities of the Corporation (the "debentures") were issued by two
statutory business trusts - First of America Capital Trust I and Fort Wayne
Capital Trust I, of which 100% of the common equity is owned by the Corporation.
The trusts were formed for the purpose of issuing the capital securities and
investing the proceeds from the sale of such capital securities in the
debentures. The debentures held by each trust are the sole assets of that trust.
Distributions on the capital securities issued by each trust are payable
semi-annually at a rate per annum equal to the interest rate being earned by the
trust on the debentures held by that trust and are recorded as interest expense
by the Corporation. The capital securities are subject to mandatory redemption,
in whole or in part, upon repayment of the debentures. The Corporation has
entered into agreements which, taken collectively, fully and unconditionally
guarantee the capital securities subject to the terms of each of the guarantees.

The debentures held by First of America Capital Trust I and Fort Wayne Capital
Trust I qualify as Tier 1 capital under Federal Reserve Board guidelines and are
first redeemable, in whole or in part, by the Corporation on January 31, 2007
and April 15, 2007, respectively.

14. REGULATORY RESTRICTIONS AND CAPITAL RATIOS

The Corporation and its banking subsidiaries are subject to various regulatory
capital requirements administrated by the federal banking agencies that involve
quantitative measures of assets, liabilities, and certain off-balance-sheet
items as calculated under regulatory accounting practices. The capital amounts
and classifications are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors. Failure to meet minimum
capital requirements can result in certain mandatory and possible additional
discretionary actions

NATIONAL CITY
2001 ANNUAL REPORT

46

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by regulators that could have a material effect on the Corporation's financial
position and operations.

Regulatory and various other capital measures at December 31 follow:

The tangible common equity ratio excludes intangible assets from both the
numerator and denominator.

Tier 1 capital consists of total equity plus qualifying capital securities and
minority interest, less unrealized gains and losses accumulated in other
comprehensive income, certain intangible assets and adjustments related to the
valuation of mortgage servicing assets.

Total risk-based capital is comprised of Tier 1 capital plus qualifying
subordinated debt and allowance for loan losses and a portion of unrealized
gains on certain equity securities.

Both the Tier 1 and the total risk-based capital ratios are computed by dividing
the respective capital amounts by risk-weighted assets, as defined.

The leverage ratio reflects Tier 1 capital divided by average total assets for
the period. Average assets used in the calculation excludes certain intangible
and mortgage servicing assets.

National City's Tier 1, total risk-based capital, and leverage ratios for the
current period are based on preliminary data. Such ratios are above the required
minimum levels of 4.00%, 8.00%, and 3.00%, respectively. The capital levels at
all of National City's subsidiary banks are maintained at or above the well-
capitalized minimums of 6.00%, 10.00%, and 5.00% for the Tier 1 capital, total
risk-based capital, and leverage ratios, respectively. As of December 31, 2001
and 2000, National City and each of its affiliate banks were categorized as
well-capitalized under the regulatory framework for prompt corrective action.
There are no conditions or events since December 31, 2001 that management
believes have changed any subsidiary bank's capital category.

The Corporation's subsidiary banks are required to maintain noninterest bearing
reserve balances with the Federal Reserve Bank. The consolidated average reserve
balance was $227.5 million for 2001.

Under current Federal Reserve regulations, the banking subsidiaries are limited
in the amount they may loan to the parent company and its nonbank subsidiaries.
Loans to a single affiliate may not exceed 10% and loans to all affiliates may
not exceed 20% of the bank's capital stock, surplus and undivided profits, plus
the allowance for loan losses. Loans from subsidiary banks to nonbank
affiliates, including the parent company, are also required to be
collateralized.

Dividends that may be paid by subsidiary banks to the parent company are also
subject to certain legal and regulatory limitations and also may be affected by
capital needs, as well as other factors. Without regulatory approval, the
subsidiary banks can pay dividends in 2002 of $848.0 million, plus an additional
amount equal to their net profits for 2002, as defined by statute, up to the
date of any such dividend declaration.

15. STOCKHOLDERS' EQUITY

National City's preferred stock has a stated value of $50 per share. The holders
of the preferred shares are entitled to receive cumulative preferred dividends
payable quarterly at the annual rate of 6%. The preferred shares may be redeemed
by National City at its option at any time, or from time to time, on or after
April 1, 2002 at $50 per share, plus unpaid dividends. Such redemption may be
subject to prior approval by the Federal Reserve Bank. Holders of the preferred
shares have the right, at any time at their option, to convert each share of
preferred stock into 3.0291 shares of National City common stock. Except in
certain circumstances, the holders of the preferred stock have no voting rights.
During 2001 and 2000, 585,396 and 5,287 shares of preferred stock, respectively,
were converted to common shares.

On January 1, 2001, the Corporation recorded a transition loss of $26.0 million
after tax, presented as a cumulative effect of a change in accounting principle,
associated with establishing the fair values of derivatives designated into cash
flow hedging relationships on the balance sheet in accordance with the adoption
of SFAS 133.

In October 1999, the Corporation's Board of Directors authorized the repurchase
of up to 30 million shares of National City common stock, subject to an
aggregate purchase limit of $1.0 billion. In connection with this repurchase
authorization, the Corporation entered into an agreement in 2000 with a third
party that provides the Corporation with an option to purchase up to $300
million of National City common stock through the use of forward transactions.
The forward transactions can be settled from time to time, at the Corporation's
election, on a physical, net cash, or net share basis. In the case of net cash
or net share settlement, the amount at which these forward purchases can be
settled depends primarily on the number of shares to be settled and the future
market price of the Corporation's common stock as compared with the forward
purchase price per share. At December 31, 2000, the Corporation had open

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forward transactions involving 9.3 million shares of its common stock. These
forward transactions were settled in January 2001 through physical share
settlement whereby National City paid cash of $166.2 million, or $17.84 per
share, to the third party in exchange for taking physical delivery of the 9.3
million shares. On the settlement date, common shares outstanding and
stockholders' equity were reduced. The Corporation may, but is not obligated to,
enter into forward transactions with the third party until the agreement's final
maturity date of April 19, 2002. As of December 31, 2001, the Corporation had no
open forward contracts under this agreement.

During 2000 and 1999, the Corporation repurchased 2.5 million and 52.6 million
shares, respectively, of its common stock. As of December 31, 2001, 15.6 million
shares remained authorized for repurchase under the October 1999 repurchase
authorization.

On June 30, 1999, the Corporation declared a two-for-one stock split of its
common stock, which became effective July 26, 1999, to stockholders of record
July 9, 1999. The stock split was accounted for by a transfer of $1.2 billion
from capital surplus to common stock.

A summary of activity in accumulated other comprehensive income (loss) follows:

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16. NET INCOME PER COMMON SHARE

Basic and diluted net income per common share calculations follow:

Basic net income per common share is calculated by dividing net income, less
dividend requirements on convertible preferred stock, by the weighted-average
number of common shares outstanding for the period.

Diluted net income per common share takes into consideration the pro forma
dilution assuming the Corporation's outstanding convertible preferred stock and
in-the-money stock options were converted or exercised into common shares.
Unsettled forward transactions to purchase the Corporation's common stock may
also affect diluted net income per common share. The forward transactions
entered into in 2000 and discussed in Note 15 had no impact on diluted net
income per common share during the period they were outstanding. Net income is
not adjusted for preferred dividend requirements since the preferred shares are
assumed to be converted from the beginning of the period. The average price of
the Corporation's common stock for the period is used to determine the dilutive
effect of outstanding stock options.

17. INCOME TAXES

The composition of income tax expense follows:

Income tax expense for 2001 included a $40.0 million charge related to tax
exposure for corporate-owned life insurance deductions. Further discussion is
included in Note 18.

The effective tax rate differs from the statutory Federal tax rate applicable to
corporations as a result of permanent differences between accounting and taxable
income as shown below:

Significant components of deferred tax liabilities and assets as of December 31
follow:

For the years ended 2001, 2000, and 1999, income tax benefits of $26.8 million,
$6.7 million and $36.4 million, respectively, were credited to stockholders'
equity related to the exercise of nonqualified employee stock options.

NATIONAL CITY
2001 ANNUAL REPORT

49

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------

18. COMMITMENTS AND CONTINGENT LIABILITIES

A summary of the contract amount of significant commitments follows:

Commitments to extend credit are agreements to lend, generally having fixed
expiration dates or other termination clauses that may require payment of a fee.
Since many of the commitments to extend credit may expire without being drawn
upon, the total commitment amounts do not necessarily represent future cash flow
requirements. Fixed-rate commitments are subject to market risk resulting from
fluctuations in interest rates, and the Corporation's exposure is limited to the
replacement value of those contracts. Certain lending commitments for conforming
residential mortgage loans to be sold into the secondary market are considered
derivative instruments under the guidelines of SFAS 133, and changes in the fair
value of those commitments due to interest rate risk are recorded on the balance
sheet as either derivative assets or derivative liabilities. Further discussion
of derivative instruments is included in Notes 1, 2, and 22.

Standby and commercial letters of credit are conditional commitments issued to
guarantee the performance of a customer to a third party. Standby letters of
credit generally are contingent upon the failure of the customer to perform
according to the terms of the underlying contract with the third party, while
commercial letters of credit are issued specifically to facilitate commerce and
typically result in the commitment being drawn on when the underlying
transaction is consummated between the customer and the third party.

The credit risk associated with loan commitments and standby and commercial
letters of credit is essentially the same as that involved in extending loans to
customers and is subject to normal credit policies. Collateral may be obtained
based on management's credit assessment of the customer.

The Corporation also enters into forward contracts for the future delivery or
purchase of fixed-rate conforming residential mortgage loans and mortgage-
backed securities at a specified interest rate to reduce the interest rate risk
associated with loans held for sale, commitments to fund loans, and mortgage
servicing assets. These contracts are also considered derivative instruments
under SFAS 133 and changes in the fair value of these contracts due to interest
rate risk are recorded on the balance sheet as either derivative assets or
derivative liabilities. Further discussion of derivative instruments is included
in Notes 1, 2, and 22.

Under an agreement with an unconsolidated QSPE into which the Corporation has
sold assets, National City has an unfunded commitment to provide liquidity to
the QSPE in the event funding cannot be readily accessed in the commercial paper
market. During September 2001, following the events of September 11, which
caused disruption in the commercial paper markets, the QSPE drew upon the
liquidity facility in the amount of $855.0 million. Amounts drawn were repaid
shortly after the commercial paper markets resumed. No amounts were outstanding
under this liquidity facility at December 31, 2001 and 2000. Further discussion
of this QSPE is included in Note 4.

National City also has commitments under long-term operating leases. Disclosures
regarding these commitments are included in Note 9.

During late 1999, the Corporation was notified by the Internal Revenue Service
(IRS) of adjustments relating to its corporate-owned life insurance (COLI)
programs proposed in the Revenue Agent's Reports for the Corporation's Federal
income tax returns for the years 1990 through 1995. These proposed adjustments
involved the disallowance of certain deductions, which, with the expected effect
on tax returns for years subsequent to 1995, represented an exposure for tax and
interest of approximately $200 million. In the first quarter of 2000, the
Corporation made payments of taxes and interest attributable to COLI interest
deductions for years 1990 through 1995 to avoid the potential assessment by the
IRS of any additional above-market rate interest on the contested amount. The
payments to the IRS were included on the balance sheet in other assets, pending
the resolution of this matter. In February 2001, the Corporation recorded a
$40.0 million charge related to the tax exposure on the COLI deductions.
Subsequently, in May 2001, the Corporation reached a final settlement through
negotiations with the IRS for all tax years containing such deductions. The
first quarter charge when combined with previous accruals covered the full
settlement amount. As a result, the Corporation has no further balance sheet or
income statement exposure related to this matter.

NATIONAL CITY
2001 ANNUAL REPORT

50

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The Corporation, through merchant card services provided by its National
Processing subsidiary and under the rules governing Visa(R) and MasterCard(R)
transactions, may be contingently liable for certain amounts disputed between a
customer and a merchant for which the Corporation credits or refunds the
customer but is unable to collect the amount from the merchant due to bankruptcy
or other reasons. In most cases, a contingent liability is unlikely to arise
because most products and services are delivered when purchased and credits are
issued on returned items. However, where the product or service is not provided
until some later time following the purchase, a contingent liability could arise
in the event the Corporation is unable to collect from the merchant. In the
opinion of management, the probability of material loss to the Corporation
arising from any potential contingent liability is remote.

National City or its subsidiaries are also involved in a number of legal
proceedings arising out of their businesses and regularly face various claims,
including unasserted claims, which may ultimately result in litigation. It is
management's opinion the Consolidated Financial Statements would not be
materially affected by the outcome of any present legal proceedings,
commitments, or claims.

19. PARENT COMPANY

At December 31, 2001 and 2000, retained earnings of the parent company included
$5.6 billion and $5.0 billion, respectively, of equity in undistributed net
income of subsidiaries.

Condensed parent company financial statements, which include transactions with
subsidiaries, follow:

BALANCE SHEETS

STATEMENTS OF INCOME

NATIONAL CITY
2001 ANNUAL REPORT

51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------

STATEMENTS OF CASH FLOWS

20. STOCK OPTIONS AND AWARDS

National City maintains various incentive and non-qualified stock option plans
and also maintains various restricted stock plans. These plans provide for the
granting of stock options, stock appreciation rights, and restricted shares to
eligible employees and directors. All of the Corporation's stock option and
restricted stock plans were approved by National City's stockholders with the
exception of the 150th anniversary commemorative grant in 1995.

STOCK OPTION PLANS: The stock option plans under which options may currently be
granted authorize the issuance to officers and key employees of up to 80,000,000
options to purchase shares of common stock at the fair value of the common stock
on the date of grant. These options generally become exercisable to the extent
of 50% annually beginning one year from the date of grant and expire not later
than 10 years from the date of grant. In addition, stock options may be granted
that include the right to receive additional options if certain criteria are
met. The exercise price of an additional option is equal to the fair value of
the common stock on the date the additional option is granted. Additional
options vest six months from the date of grant and have a contractual term equal
to the remaining term of the original option.

In 1995, National City granted a total of 5.6 million options to purchase common
stock at the fair value of the common stock on the date of grant to virtually
all employees in commemoration of National City's 150th anniversary. The options
became exercisable to the extent of 33% per year beginning two years from the
date of grant. As of December 31, 2001, 903,200 of these options remained
outstanding and all were exercisable.

RESTRICTED STOCK PLANS: National City's restricted stock plans provide for the
issuance of up to 5,000,000 shares of common stock to officers, key employees,
and outside directors. In general, restrictions on outside directors' shares
expire after nine months and restrictions on shares granted to key employees and
officers expire within a four-year period. The Corporation generally recognizes
compensation expense over the restricted period. The weighted-average grant-date
fair value of restricted share awards granted during 2001, 2000, and 1999 was
$29.30, $19.16, and $30.35, respectively. Compensation expense recognized in
2001, 2000, and 1999 totaled $8.0 million, $6.9 million, and $9.8 million
respectively, related to shares issued under these plans. Compensation expense
in 1999 included $4.3 million related to certain one-time executive contract
obligations.

NATIONAL CITY
2001 ANNUAL REPORT

52

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OPTION AND RESTRICTED STOCK AWARD ACTIVITY: Stock option and restricted stock
award activity follow:

Cancelled activity includes both forfeited and expired awards and options.

Information about stock options outstanding at December 31, 2001 follows:

At December 31, 2001, 2000, and 1999, options for 33,723,522, 28,913,644, and
22,289,080 shares of common stock, respectively, were exercisable.

PRO FORMA DISCLOSURES: For purposes of providing the pro forma disclosures
required under SFAS 123, Accounting for Stock-Based Compensation, the fair
values of stock options granted from 1995 through 2000 were estimated at the
date of grant using a Black-Scholes option pricing model. The Black-Scholes
option pricing model was originally developed for use in estimating the fair
value of traded options, which have different characteristics from the
Corporation's employee stock options. The model is also sensitive to changes in
subjective assumptions, which can materially affect the fair value estimate. As
a result, management believes the Black-Scholes model may not necessarily
provide a reliable single measure of the fair value of employee stock options.

The following weighted-average assumptions were used in the option pricing model
for options granted in each of the last three years: a risk-free interest rate
of 5.55%, 5.01%, and 6.33% for 2001, 2000, and 1999, respectively; an expected
life of the option of four years for 2001, 2000, and 1999; an expected dividend
yield of 3.50% for 2001 and 2000, and 4.00% for 1999; and expected volatility of
23.6% for 2001 and 22.1% for 2000 and 1999. The weighted-average grant-date fair
value of options granted during 2001, 2000, and 1999 was $6.07, $3.11, and
$4.97, respectively. For purposes of the pro forma disclosures, the estimated
fair value of the options is amortized to expense over the options' vesting
period.

Had compensation cost for the Corporation's stock option plans been determined
consistent with SFAS 123, net income and net income per share would have been as
follows:

21. PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

National City has a noncontributory, defined benefit pension plan covering
substantially all employees. Pension benefits are derived from a cash balance
formula, whereby credits based on salary, age, and years of service are credited
to employee accounts. Actuarially-determined pension costs are charged to
current operations. The funding policy is to pay at least the minimum amount
required by the Employee Retirement Income Security Act of 1974.

National City also has a benefit plan offering post-retirement medical and life
insurance benefits. The medical portion of the plan is contributory and the life
insurance coverage is noncontributory to the participants. The Corporation has
no plan assets attributable to the plan and funds the benefits as claims arise.
Benefit costs related to this plan are recognized in the periods employees
provide service for such benefits. The Corporation reserves the right to
terminate or make plan changes at any time.

NATIONAL CITY
2001 ANNUAL REPORT

53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------

Using an actuarial measurement date of October 31, plan asset and benefit
obligation activity for each of the plans follows:

Plan assets of the defined benefit pension plan consisted primarily of
marketable equity securities and bonds, including $146.7 million and $144.2
million of National City common stock at December 31, 2001 and 2000,
respectively.

Using an actuarial measurement date of October 31(a), components of net periodic
benefit and net periodic cost follow:

(a) In 1999, a measurement date of December 31, 1999 was used for the
postretirement plan.

The health care trend rate assumption affects only those participants retired
under the plan prior to April 1, 1989. The 2001 health care trend rate is
projected to be 10.0%. The rate is assumed to decrease incrementally each year
until it reaches 5.0% and remain at that level thereafter. The health care trend
rate assumption does not have a significant effect on the medical plan;
therefore, a one percentage point change in the trend rate is not material in
the determination of the accumulated postretirement benefit obligation or the
ongoing expense.

The Corporation also maintains nonqualified supplemental retirement plans for
certain key employees. All benefits provided under these plans are unfunded and
any payments to plan participants are made by the Corporation. At December 31,
2001 and 2000, obligations of $75.3 million and $64.3 million, respectively,
were included in accrued expenses and other liabilities for these plans. For the
years ended December 31, 2001, 2000, and 1999, expense related to these plans
was $15.0 million, $16.1 million, and $12.3 million, respectively.

NATIONAL CITY
2001 ANNUAL REPORT

54

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Substantially all employees are eligible to contribute a portion of their pretax
compensation to a defined contribution plan. The Corporation may make
contributions to the plan for employees with one or more years of service in the
form of National City common stock in varying amounts depending on participant
contribution levels. Prior to 2001, the Corporation provided up to a 5% matching
contribution and a discretionary profit-sharing component. Beginning in 2001,
the Corporation provided up to a 6.9% matching contribution. For the years ended
2001, 2000, and 1999, the expense related to the plan was $53.2 million, $35.5
million, and $44.4 million, respectively.

22. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Corporation uses derivative instruments primarily to protect against the
risk of adverse price or interest rate movements on the value of certain assets
and liabilities and on future cash flows. It also executes derivative
instruments with its commercial banking customers to facilitate their risk
management strategies. Derivative instruments represent contracts between
parties that usually require no initial net investment and result in one party
delivering cash or another type of asset to the other party based on a notional
amount and underlying as specified in the contract. A notional amount represents
the number of units of a specific item, such as currency units or shares. An
underlying represents a variable, such as an interest rate, security price, or
price index. The amount of cash or other asset delivered from one party to the
other is determined based on the interaction of the notional amount of the
contract with the underlying. Derivatives are also implicit in certain contracts
and commitments.

The Corporation's primary market risk is interest rate risk. Management uses
derivative instruments to protect against the risk of interest rate movements on
the value of certain assets and liabilities and on future cash flows. These
instruments primarily include interest rate swaps, interest rate futures,
forward agreements, and interest rate caps and floors with indices that relate
to the pricing of specific assets and liabilities. The nature and volume of the
derivative instruments used to manage interest rate risk depend on the level and
type of assets and liabilities on the balance sheet and the risk management
strategies for the current and anticipated rate environment.

As discussed in Note 2, on January 1, 2001, the Corporation adopted SFAS 133,
Accounting for Derivative Instruments and Hedging Activities, which requires all
derivative instruments to be carried at fair value on the balance sheet. Prior
to 2001, unrealized gains and losses on derivatives used for hedging purposes
were generally not required to be reported in the financial statements. In order
to reduce the earnings volatility that would result from having to recognize in
earnings the fair value of certain derivative instruments used to hedge risks
associated with financial instruments not carried at fair value, SFAS 133
provides special hedge accounting provisions. These provisions permit the change
in the fair value of the hedged item related to the risk being hedged to be
recognized in earnings in the same period and in the same income statement line
as the change in fair value of the derivative. Note 1 provides further detail on
how derivative instruments are accounted for in the financial statements. The
Corporation usually designates derivative instruments used to manage interest
rate risk into SFAS 133 hedge relationships with the specific assets,
liabilities, or cash flows being hedged. Some derivative instruments used for
interest rate risk management are not designated in a SFAS 133 hedge
relationship. Such will be the case if the derivative instrument is being used
to offset risk related to an asset or liability that is accounted for at fair
value in the financial statements, if the derivative instrument has been moved
out of a SFAS 133 relationship because the hedge was deemed not effective, or if
operational or cost constraints make it prohibitive to apply hedge accounting.

As with any financial instrument, derivative instruments have inherent risks.
Market risk is the adverse effect a change in interest rates, currency, or
implied volatility has on the value of a financial instrument. National City
manages market risk associated with derivative instruments by establishing and
monitoring limits as to the degree of risk that may be undertaken. The risk is
periodically measured as part of the Corporation's overall market risk
monitoring process, which includes the use of earnings simulation, net present
value estimation, and value-at-risk methodologies.

Credit risk is the risk that a counterparty to a derivative contract with an
unrealized gain fails to perform according to the terms of the agreement. Credit
risk is managed by limiting the aggregate

NATIONAL CITY
2001 ANNUAL REPORT

55

NATIONAL CITY
2001 ANNUAL REPORT

56

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------

amount of net unrealized gains in agreements outstanding, monitoring the size
and the maturity structure of the derivative portfolio, applying uniform credit
standards maintained for all activities with credit risk, and collateralizing
gains. The Corporation has established bilateral collateral agreements with its
major derivative dealer counterparties that provide for exchanges of marketable
securities or cash to collateralize either party's net gains. On December 31,
2001, these collateral agreements covered 99.7% of the notional amount of the
total dealer derivative portfolio, excluding futures and forward commitments to
sell or purchase mortgage-backed securities, and the Corporation held cash, U.S.
government and U.S. government-sponsored agency securities with a fair value of
$104.2 million to collateralize net gains with counterparties. The Corporation
had also pledged and delivered to counterparties U.S. government and U.S.
government-sponsored agency securities with a fair value of $129.2 million to
collateralize net losses with counterparties. The Corporation typically does not
have collateral agreements covering open commitments to sell or purchase
mortgage-backed securities due to the fact that these contracts usually mature
within 90 days. Open futures contracts are also not covered by collateral
agreements since the contracts are cash settled with counterparties daily.

The credit risk associated with derivative instruments executed with the
Corporation's commercial banking customers is essentially the same as that
involved in extending loans and is subject to normal credit policies. Collateral
may be obtained based on management's assessment of the customer.

FAIR VALUE HEDGES: During 2001, the Corporation used pay-fixed interest rate
swaps, interest rate futures, interest rate caps and floors, and interest rate
forwards to hedge the fair values of mortgage servicing assets, certain
fixed-rate residential and commercial loans, and U.S. Treasury securities for
changes in interest rates.

The Corporation also used receive-fixed interest rate swaps to hedge the fair
values of certain fixed-rate funding products against changes in interest rates.
The funding products hedged included purchased deposits, long-term FHLB
advances, corporate and subordinated long-term debt, and senior bank notes.

The table on page 58 provides further information regarding the derivative
instruments designated in fair value hedge relationships at December 31, 2001.

In 2001, the Corporation recognized net ineffective fair value hedge gains of
$98.7 million. Ineffective hedge gains and losses are included in noninterest
income under the caption "ineffective hedge and other derivative gains, net" on
the income statement. No gains or losses were recognized during 2001 related to
components of derivative instruments which were excluded from the assessment of
hedge ineffectiveness.

CASH FLOW HEDGES: During 2001, the Corporation hedged cash flow variability
related to variable-rate funding products, specifically FHLB advances and senior
bank notes, through the use of pay-fixed interest rate swaps and interest rate
caps. The Corporation also held pay-fixed interest rate swaps to hedge
forecasted cash flows associated with debt instruments expected to be issued
subsequent to 2001.

Pay-fixed interest rate swaps and interest rate futures were entered into to
hedge the cash flows expected from the forecasted sale through securitization in
2002 of certain fixed-rate automobile loans classified as held for
securitization Corporation's balance sheet as of December 31, 2001.

During 2001, the Corporation recognized net ineffective cash flow hedge losses
of $.2 million. These losses are also included in the caption "ineffective hedge
and other derivative gains, net" on the income statement. No gains or losses
were recognized during 2001 related to components of derivative instruments
which were excluded from the assessment of hedge ineffectiveness.

Gains and losses on derivative instruments reclassified from accumulated other
comprehensive income to current-period earnings are included in the line item in
which the hedged cash flows are recorded. At December 31, 2001, accumulated
other comprehensive income included a deferred after-tax net loss of $33.4
million, consisting of a $34.6 million loss on derivatives used to hedge funding
cash flows, partially offset by a $1.2 million gain on derivatives used to hedge
the forecasted securitization of automobile loans. See Note 15 for further
detail of the amounts included in accumulated other comprehensive income. The
net after-tax derivative loss included in other comprehensive income as of
December 31, 2001 related to the derivatives used to hedge funding cash flows is
projected to be reclassified into earnings in conjunction with the recognition
of interest payments

- --------------------------------------------------------------------------------

through February 2005, with $66.9 million of net loss expected to be
reclassified within the next year. The $1.2 million after-tax gain on the
derivatives used to hedge the forecasted sale of the automobile loans will be
recognized in 2002 when those loans are sold through securitization. During
2001, pretax losses of $77.7 million were reclassified into interest expense as
adjustments to interest payments on variable-rate funding products. There were
no gains or losses reclassified into earnings in 2001 because it became probable
that the original forecasted transaction would not occur.

OTHER DERIVATIVE ACTIVITIES: The Corporation's derivative portfolio also
includes derivative instruments not included in SFAS 133 hedge relationships.
Those derivatives include purchased derivatives, primarily swaps, futures and
forwards, used for interest rate, foreign currency, and other risk management
purposes, as well as mortgage banking loan commitments defined as derivatives
under SFAS 133 and derivatives executed with customers, primarily interest rate
swaps and options, to facilitate their interest rate risk management strategies.
The Corporation generally does not enter into derivative transactions for purely
speculative purposes. At December 31, 2001, derivatives not used in SFAS 133
relationships (non-SFAS 133 derivatives) had a net fair value of $84.1 million.
At December 31, 2000, derivatives not used in hedging relationships had a net
fair value of $33.6 million. Net gains generated from non-SFAS 133 derivative
instruments in 2001 totaled $264.0 million and are included in the line
"ineffective hedge and other derivative gains, net" on the income statement.
Certain derivative instruments used to protect the estimated fair value of
mortgage servicing assets were not designated into SFAS 133 hedge relationships
in 2001 and generated net gains of $201.5 million, which represented the
majority of the gains generated from non-SFAS 133 derivative instruments in
2001. The gains served to offset impairment losses on the mortgage servicing
assets. See Note 7 for further discussion of these activities. During 2000,
derivative instruments not used in hedging relationships generated net gains of
$18.2 million.

All derivative contracts are valued using either cash flow projection models
acquired from third parties or observable market prices. Pricing models used for
valuing derivative instruments are regularly validated by testing through
comparison with other third parties. The valuations and expected lives presented
in the following tables are based on yield curves, forward yield curves, and
implied volatilities that were observable in the cash and derivatives markets on
December 31 of the respective year presented.

NATIONAL CITY
2001 ANNUAL REPORT

57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------

Summary information regarding interest rate derivatives used for interest rate
risk management purposes and designated as accounting hedges under SFAS 133 at
December 31, 2001 follows:

(a) Represents net ineffective hedge gain (loss) on hedging strategy in 2001
(b) The weighted-average rates are those in effect in the specified contracts at
December 31, 2001

NATIONAL CITY
2001 ANNUAL REPORT

58

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Summary information regarding interest rate derivatives used for interest rate
risk management purposes at December 31, 2000 follows:

(a) The weighted-average rates are those in effect in the specified contracts at
December 31, 2000

23. LINE OF BUSINESS RESULTS

National City operates six major lines of business: retail sales and
distribution, wholesale banking, consumer finance, asset management, National
City Mortgage, and National Processing.

Retail sales and distribution includes deposit gathering, direct consumer
lending, and small business banking services. Wholesale banking includes credit
and related financial services to large- and medium-sized corporations along
with syndicated lending, venture capital, structured finance, and investment
banking. Consumer finance is comprised of credit card lending, education
finance, dealer finance, national home equity lending, and nonconforming
residential lending and servicing. Asset management includes the institutional
trust, retail brokerage, and personal wealth management businesses. National
City Mortgage represents conforming mortgage banking activities conducted
through the Corporation's wholly-owned subsidiary, National City Mortgage Co.
National Processing consists of merchant card processing and payment services
conducted through National Processing, Inc., National City's 86%-owned
subsidiary.

The business units are identified by the product or services offered and the
channel through which the product or service is delivered. The accounting
policies of the individual business units are the same as those of the
Corporation. Prior period amounts have been reclassified to conform with the
current year's presentation.

The reported results reflect the underlying economics of the businesses.
Expenses for centrally provided services are allocated based upon estimated
usage of those services. The business units' assets and liabilities are
match-funded and interest rate risk is centrally managed. Asset sales and other
transactions between business units are primarily conducted at fair value,
resulting in gains or losses that are eliminated for reporting consolidated
results of operations.

Parent and other is primarily comprised of the results of investment funding
activities, intersegment revenue (expense) eliminations, and unallocated
corporate income and expense. Operating results of the business units are
discussed in the Line of Business Results section of Financial Review. Selected
financial information by line of business is included in the table on the next
page.

NATIONAL CITY
2001 ANNUAL REPORT

59

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
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(a) Includes tax-equivalent adjustment for tax-exempt interest income

NATIONAL CITY
2001 ANNUAL REPORT

60

FORM 10-K
- --------------------------------------------------------------------------------

The Annual Report includes the materials required in Form 10-K filed with the
Securities and Exchange Commission. The integration of the two documents gives
stockholders and other interested parties timely, efficient, and comprehensive
information on 2001 results. Portions of the Annual Report are not required by
the Form 10-K report and are not filed as part of the Corporation's Form 10-K.
Only those portions of the Annual Report referenced in the cross-reference index
are incorporated in the Form 10-K. The report has not been approved or
disapproved by the Securities and Exchange Commission, nor has the Commission
passed upon its accuracy or adequacy.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the fiscal year ended December 31, 2001

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

For the transition period from _____ to _____

Commission File Number 1-10074

NATIONAL CITY CORPORATION
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)

Delaware
---------------------------------------------------------
(State or Other Jurisdiction of Incorporation or Organization)
34-1111088
---------------------------------------------------------
(I.R.S. Employer Identification No.)

1900 East Ninth Street, Cleveland, Ohio
---------------------------------------------------------
(Address of Principal Executive Offices)
44114-3484
---------------------------------------------------------
(ZIP Code)

Registrant's telephone number, including area code: 216-222-2000

Securities registered pursuant to Section 12(b) of the Act:

National City Corporation Common Stock, $4.00 Per Share
- --------------------------------------------------------------------------------
(Title of Class)

New York Stock Exchange
- --------------------------------------------------------------------------------
(Name of Each Exchange on Which Registered)

Securities registered pursuant to Section 12(g) of the Act: none

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO ___

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate market value of the voting common stock held by nonaffiliates of
the Registrant as of December 31, 2001 - $17,630,529,932

The number of shares outstanding of each of the Registrant's classes of common
stock, as of December 31, 2001:

Common Stock, $4.00 Per Share - 607,354,729

Documents Incorporated By Reference:

Portions of the Registrant's Proxy Statement (to be dated approximately March 7,
2002) are incorporated by reference into Item 10. Directors and Executive
Officers of the Registrant; Item 11. Executive Compensation; Item 12. Security
Ownership of Certain Beneficial Owners and Management; and Item 13. Certain
Relationships and Related Transactions, of Part III.

NATIONAL CITY
2001 ANNUAL REPORT
61

FORM 10-K CONTINUED
- --------------------------------------------------------------------------------

FORM 10-K CROSS REFERENCE INDEX

Reports on Form 8-K filed in the fourth quarter of 2001:

October 18, 2001 - National City issued a news release announcing its financial
results for the third quarter and nine months ended September 30, 2001.

December 7, 2001 - Under Item 9 - Regulation FD Disclosure, National City
reaffirmed its earnings per share guidance for 2001.

Exhibits - The index of exhibits has been filed as separate pages of the 2001
Form 10-K and is available to stockholders on request from the Secretary of the
Corporation at the principal executive offices. Copies of exhibits may be
obtained at a cost of 30 cents per page.

Financial Statement Schedules - Omitted due to inapplicability or because
required information is shown in the Financial Statements or the Notes thereto.
- ----------------------------------------------------------

Note (1) - Incorporated by reference from the Corporation's Proxy Statement to
be dated approximately March 7, 2002.

- ----------------------------------------------------------

BUSINESS

National City Corporation (National City or the Corporation) is a $106 billion
financial holding company headquartered in Cleveland, Ohio. The company provides
a full range of banking and financial services to individuals and businesses,
including commercial and retail banking, consumer finance, asset management,
mortgage financing and servicing, and item processing. Operations are primarily
conducted through more than 1,100 branch banking offices in Ohio, Pennsylvania,
Indiana, Kentucky, Illinois, and Michigan and over 240 retail mortgage offices
located throughout the United States. National City and its subsidiaries had
32,360 full-time equivalent employees at December 31, 2001.

COMPETITION

The financial services business is highly competitive. The banking subsidiaries
of National City compete actively with national and state banks, thrift
institutions, securities dealers, mortgage bankers, finance companies, insurance
companies, and other financial service entities.

SUPERVISION AND REGULATION

National City is a financial holding company and, as such, is subject to
regulation under the Bank Holding Company Act of 1956, as amended (the BHC Act).
The BHC Act requires the prior approval of the Federal Reserve Board for a
financial holding company to acquire or hold more than a 5% voting interest in
any bank, and restricts interstate banking activities. The BHC Act allows
interstate bank acquisitions anywhere in the country and interstate branching by
acquisition and consolidation in those states that had not opted out by January
1, 1997.

The BHC Act restricts National City's nonbanking activities to those which are
determined by the Federal Reserve Board to be financial in nature, incidental to
such financial activity, or complementary to a financial activity. The BHC Act
does not place territorial restrictions on the activities of nonbank
subsidiaries of bank holding companies. National City's banking subsidiaries are
subject to limitations with respect to transactions with affiliates.

NATIONAL CITY
2001 ANNUAL REPORT

62

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The enactment of the Graham-Leach-Bliley Act of 1999 (the GLB Act) represented a
pivotal point in the history of the financial services industry. The GLB Act
swept away large parts of a regulatory framework that had its origins in the
Depression Era of the 1930s. Effective March 11, 2000, new opportunities became
available for banks, other depository institutions, insurance companies, and
securities firms to enter into combinations that permit a single financial
services organization to offer customers a more complete array of financial
products and services. The GLB Act provides a new regulatory framework for
regulation through the financial holding company, which has as its umbrella
regulator the Federal Reserve Board. Functional regulation of the financial
holding company's separately regulated subsidiaries is conducted by their
primary functional regulator. The GLB Act requires "satisfactory" or higher
Community Reinvestment Act compliance for insured depository institutions and
their financial holding companies in order for them to engage in new financial
activities. The GLB Act provides a federal right to privacy of non-public
personal information of individual customers. National City and its subsidiaries
are also subject to certain state laws that deal with the use and distribution
of non-public personal information.

A substantial portion of the Corporation's cash revenue is derived from
dividends paid by its subsidiary banks. These dividends are subject to various
legal and regulatory restrictions as summarized in Note 14 to the Corporation's
Consolidated Financial Statements.

The subsidiary banks are subject to the provisions of the National Bank Act or
the banking laws of their respective states, are under the supervision of, and
are subject to periodic examination by, the Comptroller of the Currency (the
OCC) or the respective state banking departments, and are subject to the rules
and regulations of the OCC, Board of Governors of the Federal Reserve System,
and the Federal Deposit Insurance Corporation (FDIC).

National City's subsidiary banks are also subject to certain laws of each state
in which such bank is located. Such state laws may restrict branching of banks
within the state and acquisition or merger involving banks located in other
states. Ohio, Kentucky, Illinois, Indiana, Michigan, and Pennsylvania have all
adopted nationwide reciprocal interstate banking.

The Financial Reform, Recovery and Enforcement Act of 1989 (FIRREA) provides
that a holding company's controlled insured depository institutions are liable
for any loss incurred by the FDIC in connection with the default of any
FDIC-assisted transaction involving an affiliated insured bank or savings
association.

The monetary policies of regulatory authorities, including the Federal Reserve
Board and the FDIC, have a significant effect on the operating results of banks
and holding companies. The nature of future monetary policies and the effect of
such policies on the future business and earnings of National City and its
subsidiaries cannot be predicted.

PROPERTIES

National City and its significant subsidiaries occupy their headquarters offices
under long-term leases. The Corporation also owns freestanding operations
centers in Columbus and Cleveland, Ohio and Kalamazoo and Royal Oak, Michigan
and leases operations centers in Pittsburgh, Pennsylvania and Chicago, Illinois.
Branch office locations are variously owned or leased.

LEGAL PROCEEDINGS

The information contained in Note 18 to the Consolidated Financial Statements of
this Annual Report is incorporated herein by reference.

EXECUTIVE OFFICERS

The Executive Officers of National City (as of January 23, 2002) are as follows:

The term of office for executive officers is one year.

There is no family relationship between any of the executive officers.

Except as noted below and on the next page, each of the officers listed above
has been an executive officer of the Corporation or one of its subsidiaries
during the past five years.

Mr. Ted M. Parker was appointed an executive vice president and president and
chief executive officer of National City Bank of Kentucky in 2001. Prior to that
time he was senior vice president of Corporate Banking of National City Bank.

NATIONAL CITY
2001 ANNUAL REPORT

63

FORM 10-K CONTINUED
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Mr. Lathe was appointed president and chief executive officer of National City
Bank of Michigan/Illinois in 2000. Prior to that time he was executive vice
president of National City Bank for the Syndications Division from 1998 to 2000
and the structured finance division from 1997 to 1998. Prior to 1997, he was
senior vice president of the Multinational Division.

Mr. Ramirez was appointed an executive vice president in 2000. Prior to that
time he was senior vice president of Corporate Planning.

Mr. Raskind was appointed an executive vice president in 2000. Prior to that
time he was vice chairman of U.S. Bancorp.

Mr. Rice was appointed an executive vice president and president of National
City Bank in 2000. Prior to that time, he was executive vice president of the
Northcoast Region from 1997 to 2000. Prior to 1997, he was senior vice president
of the Metro/Ohio division of National City Bank.

Ms. Seifert was appointed an executive vice president of Corporate Human
Resources in 2000. Prior to that time, she was senior vice president of
Corporate Human Resources.

Mr. Stitle was appointed an executive vice president in 1999. Since 1995, he has
been chairman, president and chief executive officer of National City Bank of
Indiana.

Mr. A. Joseph Parker was appointed an executive vice president in 1998. Prior to
that time he was the Retail Business Line Manager of the Corporation.

Mr. Clark was appointed an executive vice president in 1998. Prior to that time,
he was president and chief executive officer of National City Bank of Michigan/
Illinois. Prior to 1998, he was executive vice president of National City Bank
of Pennsylvania.

Mr. Martens was appointed an executive vice president in 1997. He has been
chairman of NatCity Investments, Inc. since 1995.

SIGNATURES

Pursuant to the Requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on January 23, 2002.

National City Corporation

/s/ David A. Daberko
- ---------------------------------------

David A. Daberko

Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities indicated, on January 23, 2002.

/s/ David A. Daberko
- ---------------------------------------

David A. Daberko

Chairman and Chief Executive Officer

/s/ William E. MacDonald III
- ---------------------------------------

William E. MacDonald III

Vice Chairman

/s/ Robert G. Siefers
- ---------------------------------------

Robert G. Siefers

Vice Chairman

/s/ Jeffrey D. Kelly
- ---------------------------------------

Jeffrey D. Kelly

Executive Vice President and Chief Financial Officer

/s/ Thomas A. Richlovsky
- ---------------------------------------

Thomas A. Richlovsky

Senior Vice President and Treasurer

The Directors of National City Corporation (listed on page 8, except Duane E.
Collins and Sandra Austin Crayton) executed a power of attorney appointing David
L. Zoeller, Carlton E. Langer, and Thomas A. Richlovsky their attorneys-in-fact,
empowering them to sign this report on their behalf.

/s/ David L. Zoeller
- ---------------------------------------

By David L. Zoeller

Attorney-in-fact

NATIONAL CITY
2001 ANNUAL REPORT

64

CORPORATE INFORMATION
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CORPORATE HEADQUARTERS
National City Center
1900 East Ninth Street
Cleveland, Ohio 44114-3484
(216) 222-2000
www.NationalCity.com

TRANSFER AGENT AND REGISTRAR
National City Bank
Corporate Trust Operations
Department 5352
P.O. Box 92301
Cleveland, Ohio 44193-0900
E-mail: shareholder.inquiries@nationalcity.com

Stockholders of record may access their accounts via the Internet to review
account holdings and transaction history through National City's Stock Access at
www.ncstockaccess.com. Stockholders can also download frequently used forms from
this Web site. For log-in assistance or other inquiries, call 1-800-622-6757.

INVESTOR INFORMATION
Derek Green, Vice President
Investor Relations
Department 2101
P.O. Box 5756
Cleveland, Ohio 44101-0756
1-800-622-4204

COMMON STOCK LISTING

National City Corporation common stock is traded on the New York Stock Exchange
under the symbol NCC. The stock is abbreviated in financial publications as
NtlCity.

National City's 86%-owned item processing subsidiary, National Processing, Inc.,
is traded on the New York Stock Exchange under the symbol NAP. The stock is
abbreviated in financial publications as NtlProc.

ANNUAL MEETING

The Annual Meeting of Stockholders will be on Monday, April 22, 2002 at 10:00
a.m. Eastern Time

National City Corporation
National City Center
1900 East Ninth Street
Cleveland, Ohio 44114

DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN

National City Corporation offers stockholders a convenient way to increase their
investment through the National City Corporation Amended and Restated Dividend
Reinvestment and Stock Purchase Plan (the Plan). Under the Plan, investors can
elect to acquire National City shares in the open market by reinvesting
dividends and through optional cash payments. National City absorbs the fees and
brokerage commissions on shares acquired through the Plan. To obtain a Plan
prospectus and authorization card, call 1-800-622-6757.

DIRECT DEPOSIT OF DIVIDENDS

The direct deposit program, which is offered at no charge, provides for
automatic deposit of quarterly dividends directly to a checking or savings
account. For information regarding this program, call 1-800-622-6757.

NAIC

National City is a proud sponsor of the National Association of Investors
Corporation (NAIC) and participates in its Low-Cost Investment Plan. To receive
more information on NAIC, call (248) 583-NAIC.

DEBT RATINGS

COMMON STOCK INFORMATION

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