NATIONAL CITY CORP - 10-K Annual Report

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2004

ANNUAL REPORT

NATIONAL CITY(R)

About us

National City Corporation (NYSE: NCC), headquartered in Cleveland, Ohio, is one
of the nation's largest financial holding companies. We operate through an
extensive banking network primarily in Ohio, Illinois, Indiana, Kentucky,
Michigan, Missouri and Pennsylvania, and serve customers in selected markets
nationally. Our core businesses include commercial and retail banking, mortgage
financing and servicing, consumer finance and asset management.

CONTENTS

1 Financial Highlights

2 Chairman's Letter

4 Overview

5 2004 Timeline

8 Board of Directors and Officers

9 Financial Review

Consolidated Financial Statements and Notes

Form 10-K

Certifications of Chief Executive Officer and Chief Financial Officer

FINANCIAL HIGHLIGHTS

[PHOTO OF CHAIRMEN]

(Left to Right)

Peter E. Raskind
Vice Chairman

William E. MacDonald III
Vice Chairman

David A. Daberko
Chairman and CEO

Jeffrey D. Kelly
Vice Chairman and CFO

TO OUR STOCKHOLDERS:

By any standard, 2004 was another highly successful year for National City.
Financially, we surpassed previous record levels of assets, equity, net income
and related measures. Organizationally, we actively acquired and divested
businesses in line with strategic objectives and made several important
management changes. Operationally, we executed well against our brand promise
- -- doing what's right for our customers -- and continued to make substantial
investments for the long-term health of our core businesses. This performance
is beginning to be reflected in the stock price, which reached an all-time high
of $39.66 in October.

Particularly gratifying in 2004 was the performance of the core banking and
consumer finance businesses outside of National City Mortgage. While we are
proud of the results of National City Mortgage and value its ability to
prosper during periods of low interest rates, we know that solid, sustainable
growth from the rest of National City, or "RONC" as we have called it, will
create the greatest shareholder value over time. We have effectively utilized
the extraordinarily strong profits generated by National City Mortgage during
the 2001-2004 refinancing booms to make significant growth-oriented investments
in the core businesses comprising RONC. The results of these investments became
evident in 2004 and will be increasingly visible in 2005 and beyond.

As expected, National City Mortgage experienced a decline in net income in 2004
from the record level of 2003, consistent with lower origination volumes
associated with reduced refinancing activity. RONC, however, saw a substantial
gain in earnings, obviously including the benefit of some unusual items, but
still quite strong on an operating basis. The Wholesale Banking unit doubled
its earnings, derived largely from reduced credit costs but also reflecting new
customer acquisition. National Consumer Finance, which includes our First
Franklin nonconforming lending business as well as National Home Equity, saw a
54% gain in earnings from strong growth in originations and outstandings.
Consumer and Small Business Financial Services, our retail banking business,
had a solid 10% gain.

Our acquisition and divestiture activity in the past year is consistent with
this focus on the core businesses comprising RONC. The acquisition of Allegiant
Bancorp, completed in April and fully converted to National City systems and
products in July, provides us with a solid base for growth in St. Louis. We
will be expanding the existing 36-branch network to around 55 branches over the
next several years. Likewise, the acquisition of Provident, closed in July and
scheduled for systems conversion this March, provides entree into Cincinnati
and Northern Kentucky, an area in the heart

2 2004 Annual Report

of our franchise where we have long sought a presence. As in St. Louis, we will
expand the existing 52-branch network to about 70 over the next few years.
Provident brought with it an attractive corporate leasing business,
strengthening National City's product capability for corporate customers. Both
the Provident and Allegiant acquisitions offer excellent opportunities for
revenue growth, bringing National City's superior products and proven consumer,
small business and middle market banking models to new markets. We also
completed and converted a smaller acquisition, Wayne Bancorp, enhancing our
branch network in several Northeastern Ohio markets. These transactions are
in addition to an ongoing program of targeted de novo expansion of our branch
network throughout the rest of the footprint, especially Chicago, where we now
have 46 branches.

At the same time, we divested two units, both profitable, where we concluded
that we did not have, nor could we reasonably achieve, the scale necessary to be
best in class on a long-term basis. The Bond Administration unit within Asset
Management was sold in June for a pre-tax gain of $62 million or $.06 per share
after-tax. In October, the National Processing line of business was sold for
$1.2 billion in cash, resulting in a pre-tax gain of $714 million or $.74 per
share after-tax. In both cases we believe that the capital freed up by these
sales can be put to more effective use by targeted reinvestment in our core
businesses and in acquisitions similar to Provident and Allegiant. To the extent
that opportunities meeting our return criteria are not available, we will return
the capital to stockholders by way of share repurchases, while maintaining a
strong balance sheet, superior risk profile, and consistent dividend policy.

The opportunities to grow and expand our business are real, but, as is almost
always the case, so are the challenges we confront. Our core Midwestern markets
are, on average, growing more slowly than the country as a whole, and we face
stiff competition and margin pressure virtually across the board. To be
successful in this environment, we must clearly differentiate ourselves, take
market share, and operate with highly effective cost and organizational
structures. To that end, we've initiated an internal project, named "Best in
Class," to systematically seek out and implement revenue, cost and
organizational improvements throughout the company. We anticipate that
initiatives identified from this project will be implemented in 2005 with
meaningful enhancements to earnings in 2006 and beyond.

Management strength and consistency have long been a National City hallmark, and
in the past year we've taken a number of steps to strengthen the management
team. Of particular note were the promotions of Jeffrey D. Kelly and Peter E.
Raskind to vice chairmen in December. While they have different backgrounds,
career paths and responsibilities, they have both made outstanding contributions
and are highly respected both inside and outside the company. They have joined
Bill MacDonald and me as members of the Office of the Chairman, our senior
policy-setting group. We've also installed new leadership and added talent in
our asset management businesses, as well as elsewhere in the company, with an
emphasis on performance and development.

The pages that follow highlight some of the more noteworthy milestones and
events of 2004. They are reflective of a company that strives to do what's
right for its customers, cares about its employees and the communities it
serves, and is dedicated to being an effective steward of the capital entrusted
to it by the stockholders. We look forward with excitement and optimism to more
of the same in the year ahead.

Thank you for your continued support and investment.

(-s- David A. Daberko)

David A. Daberko
Chairman and Chief Executive Officer

2004 Annual Report 3

At National City, we want to make

banking simple for lives that aren't.

Keeping true to our brand promise: "At National City, we
care about doing what's right for our customers," we made
great strides in 2004 to strengthen our company, our
solutions and our service. We extended our brand with
strategic acquisitions in Ohio and Missouri, offering
greater value to new customers in new markets. In our
continuing effort to "make banking simple," we streamlined
procedures and processes, advanced customer service,
developed new products and services, and remerchandised our
branches -- all to ensure clarity, cohesiveness and, of
course, simplicity. The following timeline charts some of
our most notable accomplishments in the last 12 months.

2004 Annual Report 4

STRATEGIC ACQUISITIONS AND SALES
AWARDS AND ACCOLADES
INNOVATIONS AND INVESTMENTS

1/7

(PICTURE OF ATM MACHINE)

EASIER-TO-USE ATMS WITH ENHANCED FUNCTIONS AND SECURITY -- This $30 million
investment will allow us to upgrade or replace all National City ATMs by
mid-2006. The "next generation" equipment provides touch screens, faster
processing speeds, plus improved security features such as safety mirrors, and
recessed keypads and display areas. In addition, 100% of the ATM network will
offer voice guidance -- in English or Spanish -- for the visually impaired.

2/19

(PICTURE OF PEOPLE ATTENDING WORKSHOP)

OUR VENDOR DIVERSITY PROGRAM DEVELOPS "CAPITAL IDEAS FOR SMALL BUSINESS GROWTH"
WORKSHOP SERIES -- Our Vendor Diversity Program, in partnership with the Urban
League of Greater Cleveland, begins hosting a series of quarterly workshops
piloted in Northeast Ohio. Results include accolades from business owners and
community partners, as well as solid vendor/client referrals and new business
for National City.

2/19

(PICTURE OF PEOPLE AT JOB SITE)

TOP SMALL BUSINESS ADMINISTRATION LENDER -- For the third consecutive year,
National City ranks as the top SBA lender in Ohio and for the sixth consecutive
year, we're the leading SBA lender in the Cleveland market. The SBA also rates
us as the top cumulative lender in our footprint and the ninth largest SBA
lender in the country.

3/30

(PICTURE OF HOUSE)

NATIONAL CITY MORTGAGE CUSTOMER CALL CENTER RANKS "BEST IN CLASS" --
BenchmarkPortal and the Center for Customer-Driven Quality at Purdue University
names our call center as a "Certified Center of Excellence," placing it among
the top 10% of call centers evaluated. Among the factors evaluated are
operational efficiency, service level standards, process management, customer
satisfaction and employee training.

4/9

(PICTURE OF ST. LOUIS ARCH)

ALLEGIANT ACQUISITION EXTENDS FOOTPRINT INTO SEVENTH STATE -- As part of our
growth strategy, National City acquires Allegiant Bancorp, Inc. of St. Louis,
Missouri. The purchase adds 36 locations to our branch network and we begin
preparations to build 23 new offices. In addition to providing St. Louis
customers an enhanced array of financial solutions, we establish a charitable
fund of $3 million for the local community.

4/12

(PICTURE OF BUSINESSWOMAN)

COMMERCIAL LOAN FUND INCREASES MORE THAN TWOFOLD FOR WOMEN BUSINESS OWNERS --
After achieving our previous goal of $1.5 billion, we increase our commercial
loan fund for women entrepreneurs to $3.5 billion over the next five years.

5 2004 Annual Report

5/17

[PICTURE OF BUSINESSMAN]

WE OUTPERFORM ALL COMPANIES IN THE S&P 500 IN CORPORATE GOVERNANCE RATING --
Institutional Shareholder Services, Inc. gives National City a corporate
governance score of 100 -- the highest possible score -- placing us above every
S&P 500 member. Our rating results from adopting state-of-the-art governance
practices that are deemed to be in the best interests of our stockholders.

5/25

[PICTURE OF VARIOUS CERTIFICATES]

SALE OF CORPORATE TRUST BOND ADMINISTRATION STRENGTHENS SERVICE QUALITY -- We
reach a definitive agreement to sell our Corporate Trust Bond Administration
business, part of Institutional Asset Management at National City. This sale
enables us to redeploy resources to provide enhanced services to clients in the
areas of investment management, charitable and endowment services, retirement
plan services, custody and stock transfer.

6/7

[PICTURE OF WOMAN IN CAR]

WOMEN'S ECONOMIC DEVELOPMENT OUTREACH (WEDO(SM)) TOUR HELPS WOMEN BUSINESS
OWNERS SUCCEED -- National City Women Business Advocates, working with economic
resource partners in 82 counties throughout PA, MI, IL and KY, share valuable
information with more than 2,000 women business owners during weeklong WEDO
tours. The tours include discussions on sales strategies, financing,
certification and e-commerce.

7/1

[PICTURE OF CITYSCAPE]

PROVIDENT MERGER ESTABLISHES PRESENCE IN SOUTHWEST OHIO AND NORTHERN KENTUCKY --
This acquisition adds 65 branches and 480 ATMs to our network. We also open the
headquarters for our national leasing business in Cincinnati and begin to expand
banking operations throughout the region. To underscore our commitment to the
greater Cincinnati community, we establish a $10 million charitable fund.

9/24

[PICTURE OF COMPUTER]

NATIONALCITY.COM RANKS AMONG THE BEST WEB SITES -- BtoB magazine names
NationalCity.com as one of the 10 Great Web Sites for Business. Our site also
ranks second in the July 2004 Gomez SOHO/Micro Banker scorecard of bank Web
sites which measures how well bank sites serve small businesses. From an
"overall" perspective, NationalCity.com moves from eighth to seventh in the
mid-year Watchfire/Gomez ranking of bank Web sites.

10/4

[PICTURE OF BREAST CANCER AWARENESS RIBBON]

"A SIMPLE ACT" HELPS SUPPORT THE FIGHT AGAINST BREAST CANCER -- This
company-wide campaign makes a $5 donation to the National Breast Cancer
Foundation (NBCF) each time a new personal or small business account is opened
during the month of October. "A Simple Act" augments our ongoing Diamond
Edition(R) Elite Visa(R) card commitment which donates a portion of every
transaction to the NBCF.

10/05

[PICTURE OF NATIONAL CITY BANKING LOCATION]

PURCHASE OF WAYNE BANCORP FURTHER STRENGTHENS OUR OHIO NETWORK -- With the
addition of Wayne Bancorp of Wooster, Ohio, we extend our reach into several
counties adjacent to our existing branch network in Northern Ohio. We also match
the value of a previously established $500,000 community foundation, bringing
the fund total to $1 million.

10/18

[PICTURE OF CREDIT CARD SCANNER]

NATIONAL CITY SELLS NATIONAL PROCESSING INC. -- In a strategic move supporting
our goal of expanding our core banking business, National City sells National
Processing for $1.2 billion. The sale results from a review of various strategic
alternatives and was overwhelmingly approved by National Processing's
shareholders.

10/25

(PICTURE OF BANK'S WEB SITE)

OUR ONLINE BANKING RATES NO. 1 FOR EASE OF USE -- In a competitive industry
comparison, Change Sciences Group reviews the top 10 personal online banking
sites and ranks National City as the No. 1 online banking Web site overall. The
organization cites the superior ease of use and exceptional interface design of
our online banking service.

11/16

(PICTURE OF TWO WOMEN)

TOOLS AND PEOPLE IN PLACE TO SERVE THE LATINO MARKET -- Our Hispanic Summit,
held in Cleveland, reviews our Latino market accomplishments and presents future
goals. The year's highlights include completing Spanish-language versions of our
IVR system, Web site, ATMs, merchandising materials, small business prospecting
tools, product brochures, pricing schedules, along with TV, radio and print
advertising.

11/30

(PICTURE OF TEXT)

WE TAKE TOP HONORS IN NATIONAL CUSTOMER PRIVACY POLL -- A nationwide survey of
thousands of consumers by the Ponemon Institute positions National City as the
"most trusted guardian of customer privacy." The organization, which conducts
its research independent of any sponsorship, asked survey participants how
confident they are sharing personal information with their banks. National City
scores 1.67 out of a possible 2.0, ranking us No. 1 among banks.

12/1

(PICTURE OF WOMAN WEARING HEADSET)

CUSTOMER CONNECTIONS INVESTMENT SHOWS PROMISING RETURNS -- Our new system of
technology, equipment and processes continues to enhance performance by
improving the speed and accuracy of customer transactions. Benefits include
reduced attrition, increased referrals and operational unit savings.

12/15

(PICTURE OF NEWSPAPER)

NATIONAL CITY STOCK TRANSFER GROUP REMAINS NO. 1 IN AMERICA -- For the seventh
consecutive year, our Stock Transfer Group achieves the highest rating in
overall transfer agent satisfaction in the annual Group Five Transfer Agent
Services Satisfaction Survey. In addition to this achievement, we score a
perfect 100 in two categories -- dividend disbursement and proxy tabulation.

12/22

(PICTURE OF MAN IN FRONT OF AIRPLANE)

NEWLY EXPANDED RECREATION FINANCE UNIT FLIES HIGH -- After expanding our
recreation finance division nationwide, it posts $1.16 billion in annual retail
originations. Contributing to the number was a $155 million month of June and
the addition of Aviation Finance, which provides funding to recreational pilots
purchasing single- or twin-engine planes.

12/31

(PICTURE OF TWO MEN)

EMERGING MIDDLE MARKET POSTS IMPRESSIVE NUMBERS -- This new delivery model,
launched in Michigan at the beginning of the year, has increased in-person calls
by over 90% and generated a 50% increase in the number of new clients (as
compared to 2003). It enables our sales force to invest more time on service,
sales and revenue-producing activities.

BOARD OF DIRECTORS
- --------------------------------------------------------------------------------

DAVID A. DABERKO (3,6) S. CRAIG LINDNER (1,4) COMMITTEES:
Chairman & CEO Co-CEO & Co-President
National City Corporation American Financial Group, Inc. (1) Audit

JON E. BARFIELD (1,6) PAUL A. ORMOND (2,6) (2) Compensation
Chairman & President Chairman, President & CEO
The Bartech Group, Inc. Manor Care, Inc. (3) Dividend

JAMES S. BROADHURST (1,4) ROBERT A. PAUL (1,3,4,6) (4) Risk and Public Policy
Chairman & CEO Chairman & CEO
Eat'n Park Hospitality Group, Inc. Ampco-Pittsburgh Corporation (5) Nominating

JOHN W. BROWN (2,5,6) GERALD L. SHAHEEN (2,5) (6) Executive
Chairman & CEO Group President
Stryker Corporation Caterpillar Inc.

CHRISTOPHER M. CONNOR (2,5,6) JERRY SUE THORNTON, PH.D. (1,3)
Chairman & CEO President
The Sherwin-Williams Company Cuyahoga Community College

JOSEPH T. GORMAN (2,5) MORRY WEISS (1,3,4)
Retired Chairman Chairman
TRW Inc. American Greetings Corporation

BERNADINE P. HEALY, M.D. (4,6)
Medicine and Health Columnist
and Senior Writer
U.S. News and World Report

OFFICE OF THE CHAIRMAN

David A. Daberko Jeffrey D. Kelly William E. MacDonald III Peter E. Raskind
Chairman and CEO Vice Chairman and CFO Vice Chairman Vice Chairman

OFFICERS

EXECUTIVE VICE PRESIDENTS SENIOR VICE PRESIDENTS
James R. Bell III Paul E. Bibb, Jr. Thomas C. Kaylor
Paul G. Clark Jeffrey M. Biggar J. Michael Kearney
John D. Gellhausen E. Kennedy Carter, Jr. Janis E. Lyons
Paul D. Geraghty Jon N. Couture W. Robert Manning, Jr.
Thomas W. Golonski Robert B. Crowl Joseph T. McCartin
Jon L. Gorney Comptroller Bruce A. McCrodden
Timothy J. Lathe Richard J. DeKaser Chameli Naraine
Herbert R. Martens, Jr. J. Andrew Dunham L. Andrew Pollock
Ted M. Parker Daniel J. Frate Thomas A. Richlovsky
Richard B. Payne, Jr. Kenneth M. Goetz Treasurer
J. Armando Ramirez Jane Grebenc William H. Schecter
Philip L. Rice Mary H. Griffith Karin L. Stone
Shelley J. Seifert James P. Gulick
Stephen A. Stitle General Auditor
David L. Zoeller James Hughes
General Counsel and Secretary Gregory M. Jelinek

STATE CEOS

ILLINOIS MICHIGAN OHIO
Joseph A. Gregoire J. Michael Davis Philip L. Rice

INDIANA MISSOURI PENNSYLVANIA
Stephen A. Stitle Shaun R. Hayes Thomas W. Golonski

KENTUCKY
Charles P. Denny

8 2004 Annual Report

2004 ANNUAL REPORT

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9

FINANCIAL REVIEW

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FINANCIAL REVIEW

This Annual Report contains forward-looking statements. See page 31 for further
information on the risks and uncertainties associated with forward-looking
statements.

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 37
through 84.

OVERVIEW

The primary source of National City's revenue is net interest income from loans
and deposits, and fees from financial services provided to customers. Business
volumes tend to be influenced by overall economic factors including market
interest rates, business spending, and consumer confidence, as well as
competitive conditions within the marketplace.

During 2004, the Corporation completed the acquisition of three financial
institutions: Allegiant Bancorp (Allegiant), located in St. Louis, Missouri;
Provident Financial Group (Provident), based in Cincinnati, Ohio; and Wayne
Bancorp (Wayne), in northeastern Ohio. In addition, the Corporation sold its
payment processing business, National Processing, Inc., in the fourth quarter of
2004 and its bond administration business in the second quarter of 2004. The
financial results of the acquisitions are included in the consolidated financial
results from their respective acquisition dates. The financial results of
National Processing and the bond administration business are included up to
their respective sale dates. Comparisons to prior years' results are affected by
the current year acquisition and divestiture activity.

Net interest income was $4.5 billion in 2004, up 3% over 2003 and 12% over 2002.
The increase in net interest income reflects growth in earning assets including
contributions from acquisitions. Net interest margin was 4.09% in 2004 in
comparison to 4.11% and 4.34% in 2003 and 2002, respectively. A decrease in net
interest margin was expected in 2004 relating to the anticipated decline in
mortgage loans held for sale as these loans have a larger margin than other loan
categories. However, mortgage loans held for sale declined less than originally
anticipated due to interest rates remaining relatively low for much of the year.

Home equity and nonconforming mortgage originations and outstandings set records
in 2004. Consumer and small business lending turned in strong growth in both
balances and revenue. Commercial loans grew during 2004, albeit more slowly than
expected, due to new borrowers and loans obtained with acquisitions. As
expected, conforming mortgage originations declined in 2004 from the record
levels set in the prior year. Industry expectations are that mortgage
originations will continue to decline in 2005. Successful hedging strategies
protected the value of mortgage servicing rights. We anticipate that home equity
lines and loans will continue to grow in 2005.

Deposit service fees increased to $656 million in 2004, up 16% over 2003 and 28%
over 2002. The increase in deposit service fees reflects a higher number of
transaction accounts and increased transaction activity. Core deposit growth in
2004, excluding the impact of mortgage escrow deposits, was largely from
acquisitions. Core deposit balance growth slowed in 2004 as the strategy shifted
to place less emphasis on short-term promotional rates in favor of longer-term
household acquisition and retention.

Credit quality improved in 2004, particularly in commercial credit. Charge-offs
in 2004 were down approximately 40% in comparison to 2003 and 2002. The
provision for loan losses in 2004 decreased as credit quality continued to
strengthen. Nonperforming assets at year end were $563 million compared to $657
million at the close of 2003, inclusive of acquisitions. We expect credit
quality will remain stable in 2005, consistent with current economic conditions.

FINANCIAL REVIEW continued
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2004 ANNUAL REPORT

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10

(a)Includes both portfolio loans and loans held for sale or securitization.

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 on 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 funds (principally demand deposits and stockholders' equity) also
support earning assets, the net interest margin exceeds the interest spread.

The table above presents net interest income, interest spread, and net interest
margin for the five years 2000 through 2004, comparing daily average outstanding
balances of earning assets and interest bearing liabilities

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2004 ANNUAL REPORT

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11

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 2004, 2003, and 2002 were $28 million, $28 million, and $30 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 exclude 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 effects of derivative instruments
used to manage interest rate risk associated with earning assets and interest
bearing liabilities are included in interest income or expense of the hedged
item and consequently affect the yields on those assets and liabilities. Further
discussion of the derivative instruments used to manage interest rate risk and
the accounting for these instruments is included in Notes 1 and 25 to the
consolidated financial statements. A discussion of the effects of changing
interest rates is included in the Market Risk section beginning on page 25.

FINANCIAL REVIEW continued
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2004 ANNUAL REPORT

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12

Net interest income and net interest margin were also affected by amortization
of valuation adjustments to earning assets and liabilities of acquired
businesses. Refer to Note 3 of the consolidated financial statements for further
discussion on acquisitions. Under the purchase method of accounting, assets and
liabilities of acquired businesses are required to be recognized at their
estimated fair value at the date of acquisition. Valuation adjustments are
recognized at the time of acquisition and represent the difference between the
estimated fair value and the carrying value of assets and liabilities acquired.
These adjustments are amortized into interest income and expense based upon the
estimated remaining lives of the assets and liabilities acquired.

The growth in net interest income in 2004 resulted from loan growth in the
mortgage and home equity portfolios, higher levels of noninterest bearing core
deposits, lower funding costs, and the effects of earning assets and liabilities
acquired through acquisition, offset by lower levels of mortgage loans held for
sale. The increase in net interest income in 2003 over 2002 was also influenced
by mortgage and home equity portfolio growth and lower funding costs, coupled
with record levels of mortgage loans held for sale.

The net interest margin decline in 2004 and 2003 primarily resulted from the
ongoing effects of a low interest rate environment, which resulted in reduced
asset yields and narrower spreads on deposits. Additionally, lower balances of
mortgage loans held for sale reduced net interest margin in 2004.

The low interest rate environment over most of the past three years benefited
mortgage-related loan production. Additionally, management's focus on the
national market drove consecutive year growth in the home equity portfolio, with
record volumes of home equity production in 2004.

Sustained growth in core deposits over the past several years, fueled by
strategic initiatives to strengthen this funding source, also aided net interest
income growth. The Corporation considers noninterest bearing deposits, NOW and
money market accounts, savings accounts, and consumer time deposits to be core
deposits.

Further discussion of trends in the loan and securities portfolios and detail on
the mix of funding sources are included in the Financial Condition section
beginning on page 17.

The following table shows changes in tax-equivalent interest income, interest
expense, and tax-equivalent 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:

Included in noninterest income in 2004 was a $714 million gain on the sale of
National Processing and other nonrecurring gains described in further detail
below.

Mortgage banking revenue includes mortgage loan servicing, hedging, origination,
and sales activity conducted through National City Mortgage Co. (National City
Mortgage or NCMC), and nonconforming mortgage loan origination and sales
activity conducted through First Franklin Financial Corporation (First
Franklin), both wholly owned subsidiaries of the Corporation. The subprime loan
servicing business of PCFS was sold during December 2004.

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2004 ANNUAL REPORT

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13

Details of mortgage banking revenue follow:

Substantially all of National City Mortgage's loan production is sold into the
secondary market with servicing rights retained. Historically, around half of
the loans originated by First Franklin have been sold as whole loans (with
servicing released) to third parties. Approximately 33% of First Franklin's
originations were retained in portfolio in 2004 compared to approximately 50%
retained in portfolio in both 2003 and 2002. In 2004, First Franklin began
selling loans with servicing retained, with further retention of servicing
expected in 2005.

Information on mortgage loan originations and sales follows:

The decrease in mortgage banking revenue during 2004 was due primarily to lower
levels of mortgage originations and sales compared to the record levels
experienced in 2003. Mortgage loan originations declined during 2004 as a result
of higher interest rates, which decreased demand for refinancing. Mortgage
banking revenue for 2004 also included $105 million of mortgage servicing right
(MSR) impairment charges compared to recoveries of $195 million in 2003, and a
$36 million deferral of revenue related to the adoption of the Securities and
Exchange Commission Staff Accounting Bulletin (SAB) 105. Refer to Note 2 for
further details on the adoption of SAB 105. In 2003, mortgage banking revenue
reflected strong levels of mortgage originations driven by the historically low
interest rate environment and record sales of mortgages into the secondary
market. In all three years, successful hedging strategies protected the value of
MSRs. Pretax net gains on hedging of MSRs were $388 million in 2004 compared to
$371 million in 2003 and $197 million in 2002.

The Corporation typically retains the right to service the NCMC loans it sells.
Upon sale, the Corporation recognizes an MSR, which represents the present value
of the estimated future net servicing cash flows to be realized over the
estimated life of the underlying loan. The unpaid principal balance of loans
serviced for third parties increased to $154.3 billion at December 31, 2004, up
from $141.1 billion at December 31, 2003, and $101.9 billion at December 31,
2002. The carrying value of MSRs grew to $1.5 billion at December 31, 2004, up
from $1.3 billion at December 31, 2003.

The value of MSRs is sensitive to changes in interest rates. In a rising rate
environment, mortgage loan refinancings generally decline, causing actual and
expected loan prepayments to decrease, which drives up the estimated value of
MSRs. In a low rate environment, mortgage loan refinancings generally increase,
causing actual and expected loan prepayments to increase, which drives down the
estimated carrying value of existing MSRs. The Corporation manages the risk
associated with declines in the estimated value of MSRs by using derivative
instruments. Further detail on MSRs, including a sensitivity analysis of the
effect changes in assumptions have on the estimated value of servicing assets,
is included in Note 12 to the consolidated financial statements.

In October 2004, the Corporation sold its payment processing business, National
Processing, and realized a gain on sale of $714 million. Payment processing
revenue, which was associated with National Processing, has declined due to the
exit of this business. As a result, the Corporation will not have significant
payment processing revenue in future periods.

Deposit service charges grew by $88 million in 2004 as a result of increases in
fee revenue on deposits from acquisitions, overdraft fees and non-sufficient
funds (NSF) fees. Growth in overdraft and NSF fees resulted from increases in
the number of transaction accounts and increased transaction activity in 2004.
Deposit service charges also grew in 2003 compared in 2002 due to growth in core
deposits and deposit accounts, a higher level of customer debit card usage, and
fewer waived fees.

Leasing revenue represents rental income and fees primarily from the portfolio
of commercial equipment and automobile leases acquired with Provident. In
December 2000, the Corporation made a strategic decision to cease originations
of automobile leases. Auto leases are no longer being originated, which will
result in a decline in this revenue in future periods. However, management
anticipates that growth in commercial lease revenue will more than offset the
decline in auto lease revenue.

Trust and investment management fees include both institutional and personal
accounts and are based primarily on the market value of assets under
administration. These fees increased in 2004 due mainly to higher assets under
management over the course of the year, reflecting both market appreciation and
acquisitions. At December 31, 2004, the Corporation had total assets under
administration of $108.8 billion compared to $111.8 billion at December 31,
2003, and $131.3 billion at December 31, 2002. The sale of the Corporate Trust
Bond Administration business reduced non-managed assets under administration by
$10.8 billion which more than offset account growth in 2004. Approximately $6
million of fee revenue was associated with this business in 2004.

FINANCIAL REVIEW continued
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2004 ANNUAL REPORT

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14

Managed assets increased to $63.0 billion at December 31, 2004 compared to $59.7
billion at December 31, 2003, and $57.6 billion at December 31, 2002. The net
growth in managed assets in 2004 primarily represents accounts acquired with
acquisitions, mainly Provident. Proprietary Armada(R) mutual fund balances,
included in assets under management, totaled $13.5 billion, $15.3 billion, and
$16.0 billion at December 31, 2004, 2003 and 2002, respectively.

Card-related fees decreased during 2004 due to higher amortization of net
origination costs attributable to the increased production of home equity lines
of credit during this period. Brokerage revenue increased due to better
integration of brokers in the retail branch network.

Other fee income increased in 2004 due to a $62 million gain on the sale of the
Corporate Trust Bond Administration business and a $14 million gain on the sale
of seven branches located in the Upper Peninsula of Michigan. Other fee income
for 2004 also included $62 million of higher gains on principal investments, $18
million of higher insurance revenue, and commercial mortgage servicing fees of
$33 million, compared to 2003. Principal investments are carried at estimated
fair value with gains or losses resulting from adjusting the carrying values to
the most recent estimation of fair value recognized in earnings. Further detail
on the principal investments portfolio is included in Notes 1 and 10 to the
consolidated financial statements. The increase in insurance revenues reflects
increases in private mortgage and title insurance. The commercial mortgage
servicing fees relate to businesses acquired with Provident; therefore, there
were no similar fees in prior periods.

Other fee income increased in 2003 due to growth in insurance revenue, increased
derivative gains, and higher principal investment gains. Insurance revenue
increased to $73 million in 2003 from $45 million in 2002 as a result of title
insurance commissions and private mortgage insurance contract premiums.
Derivative gains were $100 million in 2003, up from $24 million in 2002. Gains
recognized on principal investments were $7 million in 2003 compared to losses
of $23 million in 2002. Partially offsetting increases in other fee income were
asset securitization gains of $50 million recognized in 2002 that did not recur
in 2003.

Net securities gains are summarized as follows:

Gains and losses on debt securities are generated mainly from the investment
portfolio maintained for asset/liability management purposes, while equity
securities gains are generated primarily from the Corporation's bank stock fund,
an internally managed equity portfolio of bank and thrift common stock
investments.

Pretax gains from the bank stock fund were $3 million, $40 million, and $74
million in 2004, 2003, and 2002, respectively. Of the total bank stock gains
recognized in 2003 and 2002, $15 million and $14 million, respectively,
represented appreciation on securities donated to the Corporation's charitable
foundation.

NONINTEREST EXPENSE

Details of noninterest expense follow:

Details of salaries, benefits, and other personnel expense follow:

Salaries and wages increased in 2004 compared to 2003 due to employees retained
from acquisitions completed during 2004. At December 31, 2004, approximately
3,100 employees were associated with those acquisitions. Acquired employees who
work in certain back office functions are generally retained through system
conversion dates. System conversions were completed for Allegiant and Wayne in
July and December 2004, respectively. Provident's system conversion is scheduled
for March 2005. Salaries and benefits will generally be higher during these
transition periods than on an ongoing basis, other things being equal.

Also contributing to increased personnel costs in 2004 were higher stock-based
compensation, higher contract labor costs, and increased pension expense. The
increase in stock compensation expense over the three year period reflects the
phase in of expensing stock options

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2004 ANNUAL REPORT

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15

beginning in 2003, and $11 million of expense for the acceleration of vesting of
National Processing's stock awards triggered by the sale of this business in
2004. Contract labor increased in 2004 due to personnel hired to assist with
system conversion activities related to acquisitions. Pension costs increased
due to lowering the discount rate and expected long-term rate of return used to
estimate pension expense in 2004.

Partially offsetting the increases in salary and benefits described above were
lower severance expense and lower incentive compensation costs. Severance and
related expense in 2004 consisted of severance incurred in the normal course of
business and $19 million of incentives to retain employees of acquired companies
for specific periods. Severance costs for planned terminations of acquired
employees were included in the allocation of the purchase price for
acquisitions. Severance costs in 2003 included $77 million of costs associated
with a voluntary early retirement program and position eliminations across all
business lines. The decrease in incentive compensation in 2004 was primarily
related to lower mortgage loan originations.

In 2003, salaries and incentive costs increased compared to 2002 primarily due
to increases in mortgage-banking staff resulting from record mortgage
origination and sales volume. The increase in contract labor in 2003 was also
mainly driven by mortgage activity. Severance expenses reflect the previously
mentioned severance program. The increase in third party services in 2003 over
the prior year was primarily due to increased outsourcing activities related to
mortgage banking volumes, and to a lesser extent, increased payment processing
referral fees and professional services.

The increase in equipment costs and leasing expense in 2004 reflects
depreciation expense on owned and leased assets obtained with acquisitions,
primarily Provident, which had a large portfolio of leased automobiles. Losses
recognized on auto lease residual values continue to decrease. Auto lease
residual value (recoveries)/charges were $(6) million, $14 million and $51
million in 2004, 2003 and 2002, respectively. Equipment costs also increased in
2004 as a full year of depreciation expense was recognized on Customer
Connections, the Corporation's new retail delivery system, which began
implementation in 2003.

Card processing expense decreased in 2004 due to the previously described sale
of National Processing in October 2004. As a result of this sale, no significant
card processing expense will be recognized in future periods.

Marketing and public relations expense decreased in 2004 compared to prior years
primarily due to donations of appreciated investment securities to the
Corporation's charitable foundation of $40 million and $53 million in 2003 and
2002, respectively, with no similar contribution in 2004. Offsetting this
decrease, advertising and promotional expenses increased in 2004 due to
promotional activities in the St. Louis and Cincinnati markets to introduce
National City to Allegiant and Provident customers. Excluding the aforementioned
contributions, marketing and public relations expense increased in 2003 in
comparison to 2002 due to costs associated with a brand awareness campaign,
comprised of targeted television and print advertising across the National City
footprint.

Travel and entertainment costs rose in 2004 due to employee travel associated
with acquisition integration activities. Intangibles amortization expense
increased in 2004 as a result of intangible assets recognized in connection with
acquisitions. See Note 11 for further information on intangible assets and their
useful lives.

Other noninterest expense increased in 2004 due to $23 million of higher
insurance expense, primarily private mortgage insurance expense associated with
mortgage production, $14 million of losses from the revaluation of community
development and civic partnerships investments, and $13 million of higher
minority interest expense, primarily a result of minority ownership interests in
subsidiaries acquired through current year acquisitions. Offsetting these higher
costs was an $18 million decline in asset impairments and other losses in 2004.
In 2003, other noninterest expense decreased compared to 2002 due to lower
non-credit related fraud losses and a $16 million loss recognized in 2002 on the
consolidation of a commercial paper conduit.

The efficiency ratio, which expresses noninterest expense as a percentage of
tax-equivalent net interest income and total fees and other income, was 50.87%
for 2004, 51.46% for 2003, and 57.12% in 2002. The lower efficiency ratio in
2004 was due to revenue growth resulting from higher levels of earning assets
and gains on sales of business units which more than offset the impact of higher
salaries, benefits and other costs associated with acquisitions. The lower
efficiency ratio in 2003 compared to 2002 was due to revenue growth and cost
management across all business lines.

INCOME TAXES

The Corporation's effective tax rate for 2004, 2003 and 2002 was 31.8%, 34.6%
and 33.3%, respectively. The lower effective tax rate in 2004 reflects tax
benefits of $67 million recognized in 2004 from the reduction of deferred taxes
due to the favorable conclusion of tax examinations and the regular reassessment
of certain tax exposures. In addition, the rate applied to the gain on the sale
of National Processing lowered the Corporation's overall tax rate in 2004. This
gain was taxed at an effective rate of 32% due to permanent differences between
the tax and book bases of this subsidiary. In 2003, the effective tax rate
increased slightly in comparison to 2002, mainly due to higher state taxes
resulting largely from increased mortgage banking activities. A reconciliation
of the effective tax rate to the statutory tax rate is included in Note 21 to
the consolidated financial statements.

FINANCIAL REVIEW continued
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2004 ANNUAL REPORT

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LINE OF BUSINESS RESULTS

At December 31, 2004, National City was organized and managed along five major
business lines, as described in Note 27 to the consolidated financial
statements. The Corporation sold its National Processing business during 2004.
Net income (loss) by line of business follows:

Consumer and Small Business Financial Services: Net income growth over the past
three years was a result of loan and deposit growth, both internally generated
and arising from acquisition activity. Loan growth has been greatest in home
equity lines and loans. Deposit balances have grown due to acquisitions and from
a variety of product enhancements and promotional strategies, as well as from
small business. Less promotional pricing was offered on new accounts in 2004,
reflecting a shift in focus to longer-term household retention and
profitability. The persistence of low market interest rates for most of this
period compressed deposit spreads, resulting in a decline in net interest
margin. Noninterest income increased due to increased deposit-related service
charges and fees, reflecting growth in the number of transaction accounts and
increased transaction activity, and auto lease rental income acquired with the
Provident acquisition. Noninterest income for 2004 also included a $14 million
pretax gain ($9 million after tax) on the sale of seven branches in the Upper
Peninsula of Michigan. Noninterest expense increased in comparison to the prior
year due to compensation costs of employees retained from acquisitions, lease
expense associated with the revenue previously mentioned, and amortization of
core deposit intangibles. In 2004, net pretax recoveries were recognized of
previously accrued auto lease residual losses in the amount of $6 million in
comparison to charges of $14 million in 2003 and $51 million in 2002. Credit
quality has been stable.

Wholesale Banking: Net income growth in 2004 reflects improved credit quality,
which resulted in a lower provision for loan losses in 2004 in comparison to
each of the two previous years. Average loan balances have grown due to new
customers and acquisitions. Deposit volumes have also been strong. Net interest
margin increased in 2004 due to higher spreads on loans. Noninterest income
includes revenue from treasury management and capital market activities which
have shown improvement in 2004. Principal investment gains were $69 million in
2004 and $7 million in 2003, versus losses of $23 million in 2002. Noninterest
expense increased in 2004 compared to the prior years due primarily to
compensation costs of employees retained from acquisitions. Noninterest expense
for 2004 benefited from no significant write-downs on residual values of
commercial leases in comparison to write-downs of $16 million in 2003 and $9
million in 2002.

National City Mortgage Co: The decline in net income in 2004 compared to 2003
reflects a decline in origination and sales volumes from the record levels of
2003. Loans originated for sale were $60.5 billion in 2004, down from $101.0
billion in 2003 and $77.7 billion in 2002. As volume and therefore production
revenue declined, net interest income from loans held for sale declined as well,
with some offset from reduced noninterest expenses associated with incentive
compensation and other variable costs of production. After-tax gains from
hedging strategies, designed to protect the value of MSRs, contributed $240
million to 2004's results compared to $229 million in 2003 and $126 million in
2002. Also negatively affecting comparisons between years was the implementation
of SAB 105 in 2004 which deferred $36 million of revenue into future periods.
See Note 2 for further details on SAB 105.

National Consumer Finance (NCF): Results for the past two years reflect strong
growth trends in origination volumes at both of NCF's major divisions, First
Franklin and National Home Equity, with an associated increase in net interest
income from a larger loan portfolio and in noninterest income from gains on the
sale of loans. First Franklin loans retained in portfolio grew to $18.3 billion
at December 31, 2004, up from $15.1 billion at the beginning of the year and
$9.4 billion a year earlier. Margins realized on the sale of First Franklin
loans declined over the course of 2004, offsetting some of the increase. The
National Home Equity portfolio, including both lines and loans, grew to $11.8
billion at December 31, 2004, up from $6.0 billion at the beginning of the year
and $3.2 billion a year earlier. All National Home Equity production is retained
in portfolio. Credit quality has been stable.

Asset Management: Net income for 2004 included a $62 million pretax ($40 million
after tax) gain on the sale of the Bond Administration unit. Fee revenue
associated with this unit was approximately $6 million in 2004 with no material
ongoing effect on net income. Excluding this gain, net income has been
relatively flat over the past three years.

National Processing: Net income decreased in 2004 compared to the prior year due
to the sale of this business segment in October 2004. Noninterest expense for
2004 included $19 million pretax ($11 million after tax) of costs related to the
sale of this business including stock compensation for acceleration of stock
awards, as well as legal and other professional fees. In future periods, there
will be no revenues or net income associated with this segment due to its sale.
See Note 3 for further details.

Parent and Other: This category includes the results of investment funding
activities, certain unallocated corporate income and expense items, and
intersegment revenue and expense eliminations. Positive net income in 2004 in
comparison to losses in the prior year was the result of a $714 million pretax
gain on the sale of National Processing ($487 million after tax) and a $67
million tax benefit associated with a reduction in deferred taxes. Lower
severance and related charges were also recognized in 2004 ($39 million in 2004
vs.

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2004 ANNUAL REPORT

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$81 million in 2003) due to a voluntary early retirement and position
eliminations program which occurred in the prior year. In addition, the parent
incurred expenses of $40 million and $53 million in 2003 and 2002, respectively,
upon donation of securities to the Corporation's charitable foundation, with no
similar contribution in 2004. Partially offsetting these positive items, higher
intangibles amortization ($34 million in 2004 vs. $9 million in 2003) was
recorded in 2004 as a result of intangibles recognized in connection with
acquisitions. Lower bank stock fund gains ($3 million in 2004 vs. $40 million in
2003) were recognized in 2004. In general, net interest expense was higher in
2004 compared to 2003, due to the cost of maintaining an asset-sensitive
interest rate risk position and from internal crediting rates on new deposits
being higher than the immediately available investment opportunities for those
funds.

FINANCIAL CONDITION

PORTFOLIO LOANS: End-of-period and average portfolio loan balances by category
at December 31 follow:

National City's commercial, commercial construction, and commercial real estate
portfolios represent a broad and diverse customer base comprising over 880
different standard industrial classifications. The customer base is
geographically dispersed within National City's seven-state footprint and in
selected national accounts. The Corporation has no commercial, commercial
construction, or commercial real estate loans to borrowers in similar industries
that exceed 10% of total portfolio loans. The following table as of December 31,
2004 summarizes the major industry categories and exposure to individual
borrowers.

(a) Represents certain commercial and commercial real estate loans acquired in
the Provident acquisition that did not yet have Standard Industrial Codes
assigned to them.

Commercial: The Commercial loan category includes loans to a wide variety of
businesses across many industries and regions. Included in this category are
loans directly originated by National City and syndicated transactions
originated by other financial institutions. The Corporation's commercial lending
policy requires all loans, regardless of whether directly originated or
purchased through syndication, to have viable repayment sources. The risks
associated with loans in which National City participates as part of a syndicate
of financial institutions are similar to those of directly originated commercial
loans, however, additional risks may arise from National City's limited ability
to control actions of the syndicate.

Commercial loans are evaluated for the adequacy of repayment sources at the time
of approval and are regularly reviewed for any possible deterioration in the
ability of the borrower to repay the loan. In certain instances, collateral is
required to provide an additional source of repayment in the event of default by
a commercial borrower. The structure of the collateral package, including the
type and amount of the collateral, varies from loan to loan depending on the
financial strength of the borrower, the amount and terms of the loan, and the
collateral available to be pledged by the borrower. Credit risk for commercial
loans arises from borrowers lacking the ability or willingness to pay principal
or interest, and in the case of secured loans, by a shortfall in the collateral
value in relation to the outstanding loan balance in the event of a default and
subsequent liquidation of collateral.

Commercial loan outstandings increased in 2004 primarily through acquisitions
and to a lesser extent, an increase in overall borrowing activity reflective of
an improved economy. Commercial outstandings are expected to grow in 2005
consistent with an improving economy. Prior to 2004, commercial outstandings
decreased for several years as the prolonged effect of a weak economy

FINANCIAL REVIEW continued
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2004 ANNUAL REPORT

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reduced loan demand, and corporate borrowers remained cautious in their spending
and investment decisions. In addition, in the fourth quarter of 2002, $1.5
billion of commercial loans and $400 million of loans secured by real estate
collateral were reclassified from the commercial to the commercial real estate
and commercial construction portfolios, respectively. These reclassifications
were made for consistency with bank regulatory definitions.

The commercial lease portfolio, included in commercial loans, was $2.8 billion,
$1.4 billion, and $1.7 billion at December 31, 2004, 2003, and 2002,
respectively. The increase in the commercial lease portfolio in 2004 was due to
the Provident acquisition. The lease portfolio represents a diversified customer
base in energy, steel, automotive, manufacturing, transportation, and other
capital-intensive industries, covering a broad range of equipment, including
transportation, manufacturing, technology, aircraft, material handling,
construction, office equipment and other equipment types. Commercial leasing
activities are conducted principally within the Corporation's seven-state
footprint. The Corporation also has selective investments in lease transactions
that are national in scope and originated from secondary sources.

A distribution of total commercial loans by maturity and interest rate at
December 31, 2004 follows:

Commercial Construction: The commercial construction loan category includes
loans originated to developers of real estate to finance the construction of
commercial properties. Commercial construction loans are transferred to the
commercial real estate portfolio upon completion of the property under
construction and satisfaction of all terms in the loan agreement. Lending
activities are based primarily on relationships with developers who are active
in National City's seven-state footprint. Commercial construction loans are
governed by the same lending policies and are subject to the same credit risk as
described for commercial loans. The increase in the commercial construction
balances in 2004 was primarily due to balances acquired through acquisitions.
The commercial construction increase in 2003 resulted from increased loan demand
and was also affected by the aforementioned reclassification of $400 million of
loans from the commercial loan portfolio in 2002.

A distribution of total commercial construction loans by maturity and interest
rate at December 31, 2004 follows:

Commercial Real Estate: The commercial real estate category includes mortgage
loans to developers and owners of commercial real estate. Origination activities
for commercial real estate loans are similar to those described above for the
commercial construction portfolio. Lending and credit risk policies for
commercial real estate loans are governed by the same policies as for the
commercial portfolio. The growth in commercial real estate balances resulted
from increased demand for credit and business development efforts, coupled with
balances acquired through acquisition. The 2003 increase in commercial real
estate also reflected higher loan demand as well as the aforementioned
reclassification of $1.5 billion of loans from the commercial portfolio in 2002.

Residential real estate: The residential real estate category consists of loans
to consumers secured by residential real estate, including home equity
installment loans. These loans are originated by the National City Mortgage,
First Franklin, and National Home Equity business units as well as through the
retail branch system. The Corporation's residential real estate lending policies
require all loans to have viable repayment sources. Residential real estate
loans are evaluated for the adequacy of these repayment sources at the time of
approval, using such factors as credit scores, debt-to-income ratios, and
collateral values. Credit risk for residential real estate loans arises from
borrowers lacking the ability or willingness to pay principal or interest, or by
a shortfall in the value of the residential real estate in relation to the
outstanding loan balance in the event of a default and subsequent liquidation of
the real estate collateral.

Balances in the residential real estate portfolio have increased over the past
several years primarily due to retention of loans originated by First Franklin,
reflective of high levels of production aided by a favorable interest rate
environment.

National City Mortgage's residential real estate production is primarily
originated in accordance with underwriting standards set forth by the
government-sponsored entities (GSEs) known as Federal National Mortgage
Association (FNMA), the Federal Home Loan Mortgage Corporation (Freddie Mac),
and the Government National Mortgage Association (GNMA). National City
Mortgage's production is sold in the secondary mortgage market primarily to the
GSEs, the Federal Home Loan Banks (FHLB), and jumbo loan investors. These loans
are generally collateralized by one-to-four family residential real estate, have
loan-to-collateral value ratios of 80% or less, and are made to borrowers in
good credit standing. National City Mortgage originates residential real estate
loans through retail branch offices located throughout the United States, a
wholesale network of brokers, and through National City banking offices located
within the Corporation's seven-state footprint. The substantial majority of
residential real estate loans originated by National City Mortgage are sold in
the secondary mortgage market. The right to service the loans and receive fee
income is generally retained when National City Mortgage sells the mortgage
loans. During 2004 and 2003, $286 million and $1.2 billion, respectively, of
adjustable-rate mortgage loans originated by National City Mortgage were
retained in portfolio.

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2004 ANNUAL REPORT

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Residential real estate loans originated by First Franklin are generally not
readily saleable in the secondary market to the GSEs for inclusion in
mortgage-backed securities due to the credit characteristics of the borrower,
the underlying documentation, the loan-to-value ratio, or the size of the loan,
among other factors. Mortgage loans originated by First Franklin are typically
saleable to other secondary market investors, and the percentage of First
Franklin loans sold versus retained varies based upon product mix and market
conditions. During 2004 and 2003, the Corporation sold 67% and 49%,
respectively, of the origination volume to third parties. The majority of First
Franklin loans are sold servicing released, however, the Corporation began
retaining some servicing in November 2004. During the past three years, $9.6
billion, $10.2 billion, and $5.5 billion, respectively, of First Franklin
originated loans were retained in portfolio. At December 31, 2004 and 2003, the
First Franklin residential real estate portfolio totaled $18.3 billion and $15.1
billion, respectively. First Franklin offers a variety of loan programs and
documentation levels for borrowers. First Franklin uses third-party credit
scores that are incorporated into the lending guidelines along with loan amount,
loan-to-value, and loan purpose. These loans are originated principally through
wholesale channels, including a national network of brokers and mortgage
bankers. No single source represents more than 1% of total production. Loan
production is primarily located on the West Coast (51% of volume, of which 38%
is California); however, expansion continues in the Midwest (25%) and East Coast
(24%) markets. Written agreements are in place with all brokers that require
them to be knowledgeable of all consumer protection laws and regulations, and
brokers are actively monitored for compliance.

The residential real estate portfolio also includes prime-quality home equity
installment loans. These loans are originated in National City's seven-state
footprint through the retail branch network of the Consumer and Small Business
Financial Services line of business and nationally through National Consumer
Finance's National Home Equity business unit. In December 2002, approximately
$3.2 billion of home equity installment loans were reclassified from the other
consumer portfolio to the residential real estate portfolio. This
reclassification was made for consistency with bank regulatory definitions.

Offsetting the increases in the residential real estate portfolio over the past
two years were sales of residential real estate loans originated by the former
Altegra and Loan Zone business units. During 2004 and 2003, $237 million and
$950 million, respectively, of these
loans were sold.

Home Equity Lines of Credit: The home equity category consists mainly of
revolving lines of credit secured by residential real estate. Home equity lines
are generally governed by the same lending policies and subject to credit risk
as described above for residential real estate loans. These loans are originated
on a nationwide basis through the National Home Equity division, as well as
through National City banking offices. The favorable interest rate environment,
coupled with management's focus on the national market, fueled strong home
equity production and portfolio growth over the past several years. Home equity
production reached record levels in 2004, and growth is expected to continue in
2005.

Credit Cards and Other Unsecured Lines of Credit: This category includes the
outstanding balances on open-ended credit card accounts and unsecured personal
and business lines of credit. Credit card loans are typically unsecured and are
generally governed by similar lending policies and credit risk as described for
residential real estate and consumer loans. The increase in credit cards and
other unsecured lines of credit over the past two years was due to new products,
marketing programs and higher levels of consumer spending.

Other Consumer: Other consumer loans include installment loans, primarily
originated through dealers, for the purchase of automobiles, boats, and
recreational vehicles; automobile leases; and student loans. These consumer
loans are generally governed by the same lending policies as described for
residential real estate. Credit risk for consumer loans arises from borrowers
lacking the ability or willingness to pay principal or interest, and in the case
of secured loans, by a shortfall in the value of the collateral in relation to
the outstanding loan balance in the event of a default and subsequent
liquidation of collateral. The average balance over the past three years was
affected by the $3.2 billion loan reclassification described in the residential
real estate discussion above, the continued runoff of the automobile lease
portfolio, and the securitization of automobile loans, offset by the impact of
acquisitions. The Corporation ceased the origination of automobile leases in
December 2000; however, additional automobile leases were acquired in connection
with the acquisition of Provident. No new automobile leases have been originated
since the acquisition of Provident and these balances will run off over time.
Automobile lease receivable balances at December 31, 2004, 2003, and 2002
totaled $530 million, $151 million, and $572 million, respectively. In addition,
during 2004 the Corporation securitized $890 million of automobile loans.

FINANCIAL REVIEW continued
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2004 ANNUAL REPORT

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LOANS HELD FOR SALE OR SECURITIZATION: End-of-period and average loans held for
sale or securitization at December 31 follow:

The decrease in average loans held for sale or securitization in 2004 was
primarily the result of lower volume of mortgage production at National City
Mortgage, reflective of lower refinancing activity. Partially offsetting the
lower National City Mortgage originations in 2004 were increases in mortgage
production volume at First Franklin. The low interest rate environment, which
fueled mortgage refinancings and home purchase activity, was the main driver
behind the higher levels of loans held for sale or securitization in 2003. Refer
to the Noninterest Income section of this Financial Review for a summary of
National City Mortgage and First Franklin mortgage originations. Balances for
commercial real estate loans held for sale represent loans originated by the Red
Mortgage Capital and Capstone Realty subsidiaries acquired in connection with
Provident.

SECURITIES: Securities balances at December 31 follow:

The securities portfolio increased in 2004 primarily from securities balances
associated with Provident. The decline in the securities portfolio in 2003 was
the result of runoff in the mortgage-backed securities portfolio through sales
and principal paydowns. At December 31, 2004, the securities portfolio included
net unrealized gains of $165 million. The weighted-average yield of debt
securities included in the portfolio at December 31, 2004 and 2003 was 4.99%,
computed on a tax equivalent basis.

FUNDING: Detail of average deposit and borrowed funds balances follows:

Average funding balances increased in 2004 due to acquisitions and to support
the growth in portfolio loans. Average funding balances increased in 2003 to
support growth in portfolio loans and loans held for sale.

The increase in core deposits in 2004 included balances acquired through
acquisitions, primarily Provident. Excluding acquisitions, core deposit growth
slowed in 2004 as the Corporation's strategy shifted away from reliance on
short-term promotional rates to longer-term household acquisition and retention.
Growth in core deposits over the past several years reflects investments in new
technology, new product offerings, and improved customer service. Mortgage
banking-related escrow deposits, which totaled $4.3 billion, $5.1 billion, and
$2.7 billion at December 31, 2004, 2003, and 2002, respectively, have also
influenced the trend in core deposit balances. The decrease in these balances
over the past year was the result of a decrease in mortgage production.

Excluding the impact of acquisitions, there has been a shift in mix within the
core deposit categories over the past three years 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 suited to their needs in order to promote
longer-term customer satisfaction and retention. Consumer time deposits consist
primarily of certificates of deposit sold to retail banking customers. Balances
grew in 2004 after several years of decline due to acquisitions and increases in
interest rates.

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2004 ANNUAL REPORT

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Other deposits consist principally of brokered deposits and other non-core
certificates of deposit. Brokered deposits represent certificates of deposit
acquired through third parties. Other certificates of deposit are issued
primarily to commercial customers, including trusts and state and political
subdivisions. Other deposits increased in 2004 primarily as a result of balances
acquired with Provident.

Certificates of deposit of $100,000 or more totaled $8.8 billion at December 31,
2004, of which $1.1 billion mature within three months, $.4 billion mature
between three and six months, $1.2 billion mature between six months and one
year, and $6.1 billion mature beyond one year.

Foreign deposits primarily represent U.S. dollar deposits in the Corporation's
Grand Cayman branches from institutional money managers and corporate customers.
A small portion of these balances also represents deposits denominated in
Canadian dollars used to support lending activity in Canada. The increase in
foreign deposits in 2004 was associated with the reduction in short-term
borrowings discussed in the following paragraph.

Short-term borrowings are comprised mainly of Federal funds purchased,
securities sold under agreements to repurchase, U.S. Treasury demand notes,
commercial paper, and short-term senior bank notes. Usage of these sources of
funds declined in 2004 due to lower balances of mortgages held for sale, coupled
with the increased use of other sources to fund portfolio growth. Balances of
short-term borrowings increased in 2003 over the previous year to fund the
record mortgage warehouse. At December 31, 2004 and 2003, short-term borrowings
included $1.0 billion and $5.7 billion, respectively, of U.S. Treasury demand
notes. These 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. Replacement funding through other short-term channels is available in the
event the notes are called.

Long-term debt includes senior and subordinated debt issued by the Corporation
or its bank subsidiaries and debt obligations related to capital securities
issued by the seven subsidiary trusts. A wholesale funding policy governs the
funding activity of all subsidiary banks. The policy identifies eligible funding
instruments and applicable constraints for gathering discretionary liabilities.
This policy requires compliance with Section 301 of the FDIC Improvement Act of
1991 regarding the issuance of brokered deposits. The Corporation conducts its
funding activities in compliance with the Bank Secrecy Act and other regulations
relating to money laundering activity.

The decrease in long-term debt in 2004 was primarily the result of principal
paydowns and maturities more than offsetting new debt issuances and balances
acquired through acquisitions. Long-term debt balances increased during 2003
principally through the issuance of senior and subordinated bank notes to take
advantage of the relatively attractive pricing of such funding.

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 18 and 19 to the consolidated financial statements.

Stockholders' equity was $12.8 billion at December 31, 2004, up from $9.3
billion at December 31, 2003. Equity as a percentage of assets was 9.19% at
December 31, 2004, compared to 8.18% a year ago. Book value per common share
rose to $19.80 at December 31, 2004, up from $15.39 at December 31, 2003.

The following table summarizes share repurchase activity for the fourth quarter
of 2004.

(a) Includes shares repurchased under the February 16, 2004 share repurchase
authorization and shares acquired under the Corporation's Long-term Cash and
Equity Compensation Plan (the Plan). Under the terms of the Plan, the
Corporation accepts common shares from employees when they elect to
surrender previously owned shares upon exercise of stock options or awards
to cover the exercise price of the stock options or awards or to satisfy tax
withholding obligations associated with the stock options or awards.

(b) Included in total number of shares purchased [column (a)].

(c) Shares available to be repurchased under the December 21, 2004 and February
16, 2004 share repurchase authorizations.

On December 21, 2004, the Corporation's Board of Directors authorized a share
repurchase program for the repurchase of 25 million shares of National City
Common stock, subject to an aggregate purchase limit of $1.1 billion. This new
authorization is incremental to the previous share repurchase authorization
approved by the Board of Directors on February 16, 2004. The February 16, 2004
share repurchase program replaced all previous share repurchase authorizations
and allowed for the repurchase of up to 50 million shares of common stock,
subject to an aggregate purchase limit of $2.0 billion. Shares repurchased under
these and all previous share repurchase programs were acquired on the open
market and are held for reissue in connection with the Corporation's
compensation plans and for general corporate purposes. The share repurchase
programs currently authorized by the Board of Directors have no date of
expiration. During 2004, 2003, and 2002, the Corporation repurchased 40,087,100,
11,462,200, and 1,264,000 shares, respectively, under these programs.

The Corporation's businesses typically generate significant amounts of capital
each year in excess of normal dividend and reinvestment requirements. Subject to
ongoing capital, investment, and acquisition considera-

FINANCIAL REVIEW continued
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2004 ANNUAL REPORT

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tions, management intends to continue share repurchases in 2005.

National City paid dividends per common share of $1.34 in 2004 and $1.25 in
2003, and has paid dividends in every year since its founding except 1868, 1934
and 1935. The dividend payout ratio, representing dividends per share divided by
earnings per share, was 31.1% and 36.4% for the years 2004 and 2003,
respectively. The decrease in the dividend payout ratio reflects the significant
increase in earnings in 2004 including gains from divestitures. The dividend
payout ratio is reviewed regularly by management and the Board of Directors, and
the current intention is to pay approximately 45% of earnings in dividends over
time.

At December 31, 2004, the Corporation's market capitalization was $24.3 billion
and there were 65,943 shareholders of record. National City common stock is
traded on the New York Stock Exchange under the symbol "NCC." Historical stock
price information for National City common stock is presented in tabular form on
the inside back cover of this report.
RISK MANAGEMENT

National City management, with the oversight of the Board of Directors, has in
place enterprise-wide structures, processes, and controls for managing and
mitigating risk. The following discussion addresses the three major risks facing
National City: credit, market, and liquidity.

CREDIT RISK

The Corporation's lending activities 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. Note 1 to the consolidated financial
statements describes the accounting policies related to nonperforming loans and
charge-offs and describes the methodologies used to develop the allowance for
loan losses and the allowance for losses on lending-related commitments. The
policies governing nonperforming loans and charge-offs are consistent with
regulatory standards.

Commercial loans evidenced substantial improvement in credit quality in 2004,
consistent with improving economic conditions. Consumer credit quality continued
to be stable. Management believes that credit quality will remain stable in
2005, given an outlook for a relatively strong economy.

The following tables summarize nonperforming assets and loans 90 days past due
accruing interest.

NONPERFORMING ASSETS: Nonperforming assets at December 31 follow:

Detail of loans 90 days past due accruing interest follows:

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2004 ANNUAL REPORT

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At December 31, 2004, nonperforming assets were $563 million, including $115
million of nonperforming assets from acquisitions, compared to $657 million at
the prior year end. The lower balance of commercial nonperforming assets reflect
improvements in credit quality and, to a lesser extent, sales of nonperforming
loans. During 2004, approximately $12 million of nonperforming loans were sold
to third parties. The increase in nonperforming commercial construction and
commercial real estate loans was primarily due to nonperforming loans acquired
with acquisitions. Loans 90 days past due accruing interest increased in 2004 to
$621 million from $565 million in the prior year. The increase in delinquent
commercial and commercial construction loans was also primarily due to
acquisitions. Delinquent residential real estate loans increased due primarily
to growth in the residential real estate portfolio and increased repurchases of
delinquent loans sold pursuant to indemnification agreements. The lower level of
delinquent loans in mortgage loans held for sale is primarily due to the
decrease in the size of this portfolio year-over-year. There were no particular
industry or geographic concentrations in nonperforming or delinquent loans in
2004.

Nonperforming assets and loans 90 days past due declined in 2003 compared to
2002, as loan charge-offs, sales, and paydowns outpaced the addition of new
loans to nonperforming and delinquent status. New additions of nonperforming and
delinquent loans slowed with the improvement in the economy. During 2003, $127
million of nonperforming commercial loans and approximately $7 million of
nonperforming residential real estate loans were sold to third parties.
Delinquent credit card and other unsecured lines of credit increased in 2003 as
a result of a change in the charge-off policy during the first quarter, which
extended the period of time before charging off delinquent balances from 120
days to 150 days. The change in policy was implemented to better manage
collection efforts and is consistent with bank regulatory guidelines. The
increase in nonperforming and delinquent mortgage loans held for sale in 2003
was related to the growth in mortgage lending.

ALLOWANCE FOR CREDIT LOSSES: To provide for the risk of loss inherent in
extending credit, National City maintains an allowance for loan losses and an
allowance for losses on lending-related commitments. In the fourth quarter of
2004, the allowance for losses on lending-related commitments was reclassified
from the allowance for loan losses to other liabilities. Previously reported
periods were restated to conform to the current presentation. The
reclassifications had no effect on the provision for credit losses, which
continues to be comprised of the sum of the provision for loan losses and the
provision for losses on lending-related commitments, nor on net income or
stockholders' equity.

A summary of changes in the allowance for loan losses follows:

The allowance for losses on lending-related commitments is computed using a
methodology similar to that used to determine the allowance for loan losses,
modified to take into account the probability of drawdown on the commitment.

FINANCIAL REVIEW continued
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2004 ANNUAL REPORT

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A summary of changes in the allowance for losses on lending-related commitments
follows:

(a) The provision for credit losses is the sum of the provision for loan losses
and the provision for losses on lending-related commitments.

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

Net charge-offs decreased during 2004 due primarily to lower losses and higher
recoveries on commercial loans and residential real estate loans. The credit
quality of the commercial portfolio improved in 2004 in comparison to the prior
two years due to general improvement in the financial condition of borrowers as
the economy strengthened. Losses declined for residential real estate loans in
2004 due to a $17 million writedown prior to the sale of the former Altegra
portfolio in 2003. Commercial construction charge-offs increased by a large
percentage in 2004 due to a few specific problem loans and the relatively small
size of this category. Credit card and other unsecured lines of credit
charge-offs also increased due to seasoning of this portfolio and higher levels
of consumer bankruptcies.

Net charge-offs increased during 2003 and 2002 due to losses on commercial loans
to highly leveraged borrowers, the effect of higher residential real estate
portfolio balances, and charge-offs recognized on sales of portfolio loans. The
increase in leveraged loan charge-offs was driven by nationally syndicated loans
in which National City participated but was not the agent bank. The increase in
commercial real estate loan net charge-offs was a function of overall portfolio
growth. The increase in residential real estate net charge-offs reflected the
growth and seasoning of the portfolio through the retention of First Franklin
loans, a $17 million write-down related to the sale of $950 million of the
former Altegra portfolio in 2003, and to a lesser extent, the reclassification
of certain home equity installment loans to the residential real estate
portfolio from the other consumer portfolio in December 2002. The year-over-year
increase in net charge-offs on credit card and other unsecured lines of credit
was primarily the result of higher losses associated with an increase in
consumer bankruptcies and growth in the portfolio, offset to some extent by
approximately $2 million associated with the aforementioned change in the
charge-off policy for delinquent credit card balances. The year-over-year
decrease in other consumer net charge-offs was due to the overall lower balance
of the portfolio affected by the aforementioned reclassification of certain home
equity installment loans to the residential real estate portfolio and the
continued runoff of the automobile lease portfolio.

The provision for credit losses decreased in 2004, reflecting improved credit
quality. The provision also decreased in 2003 versus 2002 as a result of
improvement in credit quality, although to a lesser extent than experienced in
2004. The provision for credit losses increased in 2002 consistent with higher
level of nonperforming assets and charge-offs and uncertainty surrounding the
magnitude and duration of the deterioration of economic conditions at the time.

An allocation of the ending allowance for loan losses and allowance for losses
on lending-related commitments by portfolio type is shown below. In 2004, the
Corporation refined its methodology for determining certain elements of the
allowance for loan losses. This refinement resulted in allocation of the entire
allowance to the specific loan portfolios. As a result, prior years are not
directly comparable to the current year presentation.

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2004 ANNUAL REPORT

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

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

The allowance for loan losses also includes an element for estimated probable
inherent but undetected losses and for imprecision in the credit risk models
utilized to calculate the allowance. In 2004, the methodology used to determine
this element of the allowance was refined so that this element was calculated
for each portfolio type. In prior years, this element of the allowance was
associated with the portfolio as a whole rather than with a specific portfolio
type and was categorized as unallocated. This change, coupled with the allowance
for loan losses associated with current year acquisitions, accounts for the
increase in the amount of the allowance allocated to each portfolio type in 2004
compared to prior years.

The increase in the unallocated allowance in 2003 relative to the allowance
allocated by portfolio type and to the 2002 unallocated allowance reflected
continued uncertainty surrounding near term economic conditions at the time and
the sustained effects of a weak economy over the prior two years. Although most
observable credit quality indicators had shown improvement, there were also
increased risks that additional undetected losses existed in light of the
severity of the past recession and ongoing uncertainty. Such uncertainty was
evidenced by mixed reports on economic growth and job creation, volatility of
interest rates and energy prices, the impacts of terrorism and war, budget
shortfalls at all levels of government, and continued slow demand for capital
investments, especially in the manufacturing sector within National City's
Midwestern footprint, all of which led to greater volatility in historical loss
rates used in National City's credit risk models.

MARKET RISK

Market risk is the risk of loss arising from adverse changes in the fair value
of financial instruments due to changes in interest rates, currency 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 and establishing policies to monitor and
limit exposure to interest rate risk. The guidelines established by ALCO are
reviewed by the Risk and Public Policy Committee of the Corporation's Board of
Directors. The Corporation is also exposed to equity price risk through its
internally managed portfolio of bank and thrift common stock investments. As of
December 31, 2004, this portfolio had a cost basis and fair value of $208
million and $236 million, respectively. Price risk in this portfolio is
mitigated by limiting the amount invested in any one company. The Corporation
does not have any material foreign currency exchange rate risk exposure.

ASSET/LIABILITY MANAGEMENT: The primary goal of asset/liability management is to
maximize net interest income and the net present value of future cash flows
within authorized risk limits.

Interest Rate Risk Measurement: Interest rate risk is monitored primarily
through the use of two complementary measures: earnings simulation modeling and
market value modeling. Both measures are highly assumption-dependent and change
regularly as the balance sheet and business mix evolve; however, taken together
they represent a reasonably comprehensive view of the magnitude of interest rate
risk, 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. The key assumptions employed by these measures are analyzed
regularly and reviewed by ALCO.

Earnings Simulation Modeling: 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 projects changes in net income caused by the
effect of changes in interest rates on net interest income. The model requires
management to make 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. Mortgage loan prepayment models are developed from industry median

FINANCIAL REVIEW continued
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2004 ANNUAL REPORT

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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.

Market implied forward rates over the next 12 months are used as the base rate
scenario in the earnings simulation model. A high rate scenario and a low rate
scenario are also modeled and consist of statistically determined two-standard
deviation (SD) moves above and below market implied forward rates over the next
12 months. These rate scenarios are non-parallel in nature and result in short
and long-term rates moving in different magnitudes. Resulting net incomes from
the base, high, and low scenarios are compared and the percentage change from
base net income is limited by ALCO policy to -4.0%.

The most recent earnings simulation model prepared projects net income would be
1.9% higher than base net income if rates were two standard deviations higher
than the implied forward curve over the next 12 months. The model also projects
a decrease in net income of 2.9% if rates were two standard deviations below the
implied forward curve over the same period. Both of the earning simulation
projections in net income were within the ALCO guideline of -4.0%.

The earnings simulation model excludes the potential effects on fee income and
noninterest expense associated with changes in interest rates. Mortgage banking
revenue in particular, which is generated from originating, selling, and
servicing residential mortgage loans, is highly sensitive to changes in interest
rates due to the direct effect changes in interest rates have on loan demand and
the value of mortgage servicing rights (MSRs). In general, low or declining
interest rates typically lead to increased origination and sales income but
potentially lower servicing-related income due to the impact of higher loan
prepayments on the value of MSRs. Conversely, high or rising interest rates
typically reduce mortgage loan demand and hence origination and sales income
while servicing-related income may rise due to lower prepayments. In addition,
net interest income earned on loans held for sale increases when the yield curve
steepens and decreases when the yield curve flattens. Risk related to mortgage
banking activities is also monitored by ALCO.

Market Value Modeling: Market Value of Equity (MVE) analysis is used to
estimate 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 MVE of the balance sheet is defined as the discounted
present value of asset cash flows, minus the discounted present value of
liability cash flows, plus or minus the discounted present value of any
off-balance sheet cash flows. Cash flows for the Corporation's MSRs and
associated hedges are not included in the MVE analysis. Market risk associated
with MSRs is hedged through the use of derivative instruments. Refer to Note 12
to the Consolidated Financial Statements for further details on managing market
risk for MSRs. Unlike the earnings simulation model, MVE analysis has no time
horizon limitations. In addition, MVE analysis is performed as of a single point
in time and does not include estimates of future business volumes. As with
earnings simulations, assumptions driving timing and magnitude of balance sheet
cash flows are critical inputs to the model. Particularly important are
assumptions driving loan and security prepayments and noncontractual deposit
balance and rate behavior.

The sensitivity of MVE to changes in interest rates is an indication of the
longer-term interest rate risk embedded in the balance sheet. This risk may not
be present in an earnings simulation due to the short time horizon or the effect
of estimated new business volumes in the earnings simulation model. A primary
measure of the sensitivity of MVE to movements in rates is defined as the
Duration of Equity (DOE). DOE represents the estimated percentage change in MVE
for a 1% instantaneous, parallel shift in the yield curve. Generally, the larger
the absolute value of DOE the more sensitive the value of the balance sheet is
to movements in rates. A positive DOE indicates the MVE should increase as rates
fall, or decrease as rates rise. A negative DOE indicates that MVE should
increase as rates rise, or decrease as rates fall. Due to the embedded options
in the balance sheet, DOE is not constant and can shift with movements in the
level or shape of the yield curve. ALCO has set limits on the maximum and
minimum acceptable DOE at +3.0 and -1.0, respectively, as measured between
+/-150 basis point instantaneous, parallel shifts in the yield curve.

The most recent market value model prepared estimated the current DOE at -0.4.
While the current DOE is below management's long-term target of +1.0, it is
consistent with management's current view of the interest rate outlook. DOE
would rise to +0.6 given a parallel shift of the yield curve up 150 basis points
and would be within the maximum constraint of +3.0. DOE would fall to -2.0 given
a parallel shift of the yield curve down 150 basis points. Although this result
would be below the minimum constraint of -1.0, management believes the
likelihood of a sustained 150 basis point fall in rates from current rate levels
to be unlikely.

Summary information about the interest-rate risk measures follows:

At the end of 2004, the interest rate risk position was slightly asset
sensitive, meaning net income should increase as rates rise and decrease as
rates fall, other things being equal. During 2004, the Corporation maintained an
asset sensitive interest rate risk position both from an earnings simulation and
DOE perspective due to management's expectation that rates would rise.

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

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2004 ANNUAL REPORT

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27

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. Further discussion of the use of and the accounting for derivative
instruments is included in Notes 1 and 25 to the consolidated financial
statements.

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 a
statistically-based value-at-risk methodology (VAR). 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 2004, the
average, high, and low VAR amounts were $1 million, $2 million, and $400
thousand, respectively, and within the limit established by ALCO of $4 million.
During 2003, the average, high, and low VAR amounts were $552 thousand, $858
thousand, and $293 thousand, respectively. Month-end VAR estimates are monitored
regularly. Income from these activities, including interest income, totaled $15
million in 2004, $11 million in 2003, and $16 million in 2002.

LIQUIDITY RISK

Liquidity risk arises from the possibility the Corporation may not be able to
satisfy current or future financial commitments, or may become unduly reliant on
alternative funding sources. The objective of liquidity risk management is to
ensure that the cash flow requirements of depositors and borrowers, as well as
the operating cash needs of the Corporation, are met, taking into account all
on- and off-balance sheet funding demands. Liquidity risk management also
includes ensuring cash flow needs are met at a reasonable cost. The Corporation
maintains a liquidity risk management policy which identifies the primary
sources of liquidity, establishes procedures for monitoring and measuring
liquidity, and establishes minimum liquidity requirements in compliance with
regulatory guidance. The policy also includes a contingency funding plan to
address liquidity needs in the event of an institution-specific or a systemic
financial crisis. The liquidity position is continually monitored and reviewed
by the Asset/Liability Management Committee.

Funds are available from a number of sources, including the securities
portfolio, the core deposit base, the capital markets, the Federal Home Loan
Bank, the U.S. Treasury, and through the sale or securitization of various types
of assets. Funding sources did not change significantly during 2004. Core
deposits, the most significant source of funding, comprised approximately 50% of
funding at December 31, 2004 and 54% of funding at December 31, 2003. The
year-over-year decline in the core deposit funding source was affected by the
mix of funding sources acquired through acquisition and through the use of
low-cost purchased funding to fund loan growth. Refer to the Financial Condition
section of this Financial Review for further discussion on changes in funding
sources. Asset securitization vehicles have also been used as a source of
funding over the past several years. During 2004, the Corporation securitized
$890 million of automobile loans. In 2002, the Corporation securitized $1.1
billion in automobile loans and $425 million of credit card receivables. Further
discussion of securitization activities is included in Note 5 to the
consolidated financial statements.

At the holding company level, the Corporation uses cash to pay dividends to
stockholders, repurchase common stock, make selected investments and
acquisitions, and service debt. The main sources of funding for the holding
company include dividends and returns of investment from its subsidiaries, a
line of credit with its bank subsidiaries, the commercial paper market, a
revolving credit agreement with a group of unaffiliated banks, and access to the
capital markets.

The primary source of funding for the holding company has been dividends and
returns of investment from its bank and nonbank subsidiaries. As discussed in
Note 18 to the consolidated financial statements, the Corporation's bank
subsidiaries are subject to regulation and, among other things, may be limited
in their ability to pay dividends or otherwise transfer funds to the holding
company. Accordingly, consolidated cash flows as presented in the consolidated
statements of cash flows on page 40 may not represent cash immediately available
to the holding company. During 2004, the Corporation's bank and nonbank
subsidiaries declared and paid dividends to the holding company of $2.2 billion.
During 2003, the bank and nonbank subsidiaries declared dividends of $1.3
billion, of which $918 million had been paid as of December 31, 2003. During
2002, the bank and nonbank subsidiaries declared and paid dividends to the
holding company of $1.1 billion. Additionally, during 2004, the holding company
received $1.2 billion in cash proceeds from the sale of National Processing.
During 2003, returns of capital paid to the holding company by the bank and
nonbank subsidiaries were $555 million, of which $306 million had been paid at
December 31, 2003. During 2002, returns of capital paid by the nonbank
subsidiaries were $345 thousand. There were no returns of capital provided by
the bank subsidiaries during 2004 and 2002.

Funds raised in the commercial paper market through the Corporation's
subsidiary, National City Credit Corporation, support the short-term cash needs
of the holding company and nonbank subsidiaries. At December 31, 2004 and 2003,
$415 million and $693 million, respectively, of commercial paper borrowings were
outstanding.

The holding company has a $500 million internal line of credit with its banking
subsidiaries to provide additional liquidity support. There were no borrowings
under this agreement at December 31, 2004 and 2003. The holding company also has
a $375 million revolving credit agreement with a group of unaffiliated financial
institutions, which serves as a back-up liquidity facility. No borrowings have
occurred under this facility. This facility expires in 2005 with a provision to
extend the expiration date under certain circumstances.

The Corporation also has in place a shelf registration with the SEC to allow for
the sale, over time, of up to

FINANCIAL REVIEW continued
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2004 ANNUAL REPORT

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$1.5 billion in senior subordinated debt securities, preferred stock, depositary
shares, and common stock issuable in connection with conversion of the
aforementioned securities. During 2004, the holding company issued $200 million
of senior notes under this shelf registration. In January 2005, the holding
company issued an additional $275 million of senior notes leaving $1.0 billion
available for future issuance under this shelf registration.

CONTRACTUAL OBLIGATIONS, COMMITMENTS, CONTINGENT LIABILITIES, AND OFF-BALANCE
SHEET ARRANGEMENTS

The Corporation has various financial obligations, including contractual
obligations and commitments, that may require future cash payments.

Contractual Obligations: The following table presents, as of December 31, 2004,
significant fixed and determinable contractual obligations by payment date. The
payment amounts represent those amounts contractually due to the recipient and
do not include unamortized premiums or discounts, hedge basis adjustments, fair
value adjustments, or other similar carrying value adjustments. Further
discussion of the nature of each obligation is included in the referenced note
to the consolidated financial statements.

(a) Excludes interest.
(b) Includes interest on both fixed- and variable-rate obligations. The interest
associated with variable-rate obligations is based upon interest rates in
effect at December 31, 2004. The contractual amounts to be paid on
variable-rate obligations are affected by changes in market interest rates.
Future changes in market interest rates could materially affect the
contractual amounts to be paid.
(c) Excludes unamortized premiums or discounts, hedge basis adjustments, fair
value adjustments, or other similar carrying value adjustments.

The Corporation's operating lease obligations represent short and long-term
lease and rental payments for facilities, certain software, and data processing
and other equipment. Purchase obligations represent obligations under agreements
to purchase goods or services that are enforceable and legally binding and that
specify all significant terms, including: fixed or minimum quantities to be
purchased; fixed, minimum or variable price provisions; and the approximate
timing of the transaction. The purchase obligation amounts presented above
primarily relate to certain contractual payments for services provided for
information technology, data processing, advertising, and the outsourcing of
certain operational activities.

The Corporation also has obligations under its postretirement plan as described
in Note 24 to the consolidated financial statements. The postretirement benefit
payments represent actuarially determined future benefit payments to eligible
plan participants. The Corporation reserves the right to terminate the
postretirement benefit plan at any time. The Corporation did not have any
commitments or obligations to the defined benefit pension plan at December 31,
2004, due to the funded status of the plan.

The Corporation also enters into derivative contracts under which it either
receives cash from or pays cash to counterparties depending on changes in
interest rates. Derivative contracts are carried at fair value on the
consolidated balance sheet with the fair value representing the net present
value of expected future cash receipts or payments based on market interest
rates as of the balance sheet date. The fair value of the contracts change daily
as market interest rates change. Certain contracts, such as interest rate
futures, are cash settled daily, while others, such as interest rate swaps,
involve monthly cash settlement. Because the derivative liabilities recorded on
the balance sheet at December 31, 2004 do not represent the amounts that may
ultimately be paid under these contracts, these liabilities are not included in
the table of contractual obligations presented above. Further discussion of
derivative instruments is included in Notes 1 and 25 to the consolidated
financial statements.

Commitments: The following table details the amounts and expected maturities of
significant commitments as of December 31, 2004. Further discussion of these
commitments is included in Note 22 to the consolidated financial statements.

Commitments to extend credit, including loan commitments, standby letters of
credit, and commercial letters of credit do not necessarily represent future
cash requirements, in that these commitments often expire without being drawn
upon.

The commitments to fund principal investments primarily relate to indirect
investments in various private equity funds managed by third-party general and
limited partners. These estimated commitments were based primarily on the
expiration of each fund's investment period at

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2004 ANNUAL REPORT

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29

December 31, 2004. The timing of these payments could change due to extensions
in the investment periods of the funds or by the rate the commitments are
invested, both of which are determined by either the general and/or limited
partners of the funds.

The commitments to fund civic and community investments pertain to the
construction and development of properties for low-income housing, small
business real estate, and historic tax credit projects. The timing and amounts
of these commitments are projected based upon the financing arrangements
provided in each project's partnership or operating agreement, and could change
due to variances in the construction schedule, project revisions, or the
cancellation of the project.

Contingent Liabilities: The Corporation may also incur liabilities under certain
contractual agreements contingent upon the occurrence of certain events. A
discussion of significant contractual arrangements under which National City may
be held contingently liable is included in Note 22 to the consolidated financial
statements.

Off-Balance Sheet Arrangements: The Corporation's significant off-balance sheet
arrangements include the use of special-purpose entities, generally
securitization trusts, to diversify its funding sources. During the past three
years, National City has sold credit card receivables and automobile loans to
securitization trusts which are considered qualifying special-purpose entities
and, accordingly, are not included in the consolidated balance sheet. In
addition, the Corporation acquired home equity securitizations as part of the
acquisition of Provident. The Corporation continues to service the loans sold to
the trusts, for which it receives a servicing fee, and also has certain retained
interests in the assets of the trusts. Further discussion on the accounting for
securitizations is included in Note 1 to the consolidated financial statements
and detail regarding securitization transactions and retained interests is
included in Note 5.

The Corporation also has obligations arising from contractual arrangements that
meet the characteristics of Financial Accounting Standards Board Interpretation
No. 45. These obligations are discussed in Note 22.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

National City's consolidated financial statements are prepared in accordance
with U.S. generally accepted accounting principles and follow general practices
within the industries in which it operates. Application of these principles
requires management to make estimates or judgments that affect the amounts
reported in the financial statements and accompanying notes. These estimates are
based on information available as of the date of the financial statements;
accordingly, as this information changes, the financial statements could reflect
different estimates or judgments. Certain policies inherently have a greater
reliance on the use of estimates, and as such have a greater possibility of
producing results that could be materially different than originally reported.
Estimates or judgments are necessary when assets and liabilities are required to
be recorded at fair value, when a decline in the value of an asset not carried
on the financial statements at fair value warrants an impairment write-down or
valuation reserve to be established, or when an asset or liability needs to be
recorded contingent upon a future event. Carrying assets and liabilities at fair
value inherently results in more financial statement volatility. The fair values
and the information used to record valuation adjustments for certain assets and
liabilities are based either on quoted market prices or are provided by other
third-party sources, when available. When third-party information is not
available, valuation adjustments are estimated in good faith by management
primarily through the use of internal cash flow modeling techniques.

The most significant accounting policies followed by the Corporation are
presented in Note 1 to the consolidated financial statements. These policies,
along with the disclosures presented in the other financial statement notes and
in this financial review, provide information on how significant assets and
liabilities are valued in the financial statements and how those values are
determined. Management views critical accounting policies to be those which are
highly dependent on subjective or complex judgments, estimates and assumptions,
and where changes in those estimates and assumptions could have a significant
impact on the financial statements. Management currently views the determination
of the allowance for loan losses and allowance for losses on lending-related
commitments, the valuation of mortgage servicing rights, and the valuation of
derivative instruments to be critical accounting policies.

Allowance for Loan Losses and Allowance for Losses on Lending-Related
Commitments: The Corporation maintains an allowance for losses inherent in the
loan and lease portfolio and an allowance for losses on lending-related
commitments for losses inherent in commitments to lend. The allowance for loan
losses is presented as a reserve against loans and leases while the allowance
for losses on lending-related commitments is presented in other liabilities on
the balance sheet. When a commitment is funded, any credit loss reserve
previously recognized within the allowance for losses on lending-related
commitments is reversed and established in the allowance for loan losses. Loan
losses are charged off against the allowance for loan losses, while recoveries
of amounts previously charged off are credited to the allowance for loan losses.
A provision for credit losses is charged to operations based on management's
periodic evaluation of adequacy of the allowance. The provision for credit
losses provides for probable losses on loans, leases and lending-related
commitments.

Estimating the amount of the allowance for loan losses and allowance for losses
on lending-related commitments requires significant judgment and the use of
estimates related to the amount 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 and
conditions, all of which may be susceptible to significant change. The loan and
lease portfolio represents the largest asset category on the consolidated
balance sheet.

Management's assessment of the adequacy of the allowance for loan losses
considers individual impaired loans, pools of homogeneous loans with similar
risk characteris-

FINANCIAL REVIEW continued
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2004 ANNUAL REPORT

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30

tics and other environmental risk factors. The allowance established for
individual impaired loans reflects expected losses resulting from analyses
developed through specific credit allocations for individual loans. The specific
credit allocations are based on regular analyses of all loans over a fixed
dollar amount where the internal credit rating is at or below a predetermined
classification. These analyses involve a high degree of judgment in estimating
the amount of loss associated with specific impaired loans, including estimating
the amount and timing of future cash flows, current market value of the loan,
and collateral values.

Pools of homogeneous loans with similar risk characteristics are also assessed
for probable losses. The loss migration analysis is performed quarterly and loss
factors are updated regularly based on actual experience. The analysis also
examines historical loss experience and the related internal gradings of loans
charged off. The loss migration analysis considers inherent but undetected
losses within the portfolio. These losses may arise 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. This component of the allowance also considers 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 loss estimates may not precisely correspond to the current
portfolio. Also, loss data representing a complete economic cycle is not
available for all sectors. Uncertainty surrounding the strength and timing of
economic cycles also affects estimates of loss. The historical loss experience
used in the migration analysis may not be representative of actual unrealized
losses inherent in the portfolio.

Management also evaluates the impact of environmental factors which pose
additional risks that may not adequately be addressed in the analyses described
above. Such environmental factors could include: levels of, and trends in,
delinquencies and impaired loans, charge-offs and recoveries; trends in volume
and terms of loans; effects of any changes in lending policies and procedures
including those for underwriting, collection, charge-off, and recovery;
experience, ability, and depth of lending management and staff; national and
local economic trends and conditions; industry and geographic conditions;
concentrations of credit such as, but not limited to, local industries, their
employees, suppliers; or any other common risk factor that might affect loss
experience across one or more components of the portfolio. The determination of
this component of the allowances requires considerable management judgment.

The allowance for losses on lending-related commitments relates primarily to
unfunded commercial lending related commitments and letters of credit. The
allowance is computed using a methodology similar to that used in determining
the allowance for loan losses, modified to take into account the probability of
funding these commitments.

There are many factors affecting the allowance for loan losses and allowance for
losses on lending-related commitments; some are quantitative while others
require qualitative judgment. Although management believes its process for
determining the allowance adequately considers all of the potential factors that
could potentially result in credit losses, the process includes subjective
elements and may be susceptible to significant change. To the extent actual
outcomes differ from management estimates, additional provision for credit
losses could be required that could adversely affect earnings or financial
position in future periods. The allowance for loan losses and allowance for
losses on lending-related commitments are assigned to the Corporation's business
lines based on the nature of the loan portfolio in each business line. The
Wholesale Banking, Consumer and Small Business Financial Services, and National
Consumer Finance business lines have been assigned the majority of the allowance
and accordingly would be the business lines most affected by actual outcomes
differing from management estimates.

The Credit Risk section of this financial review includes a discussion of the
factors driving changes in the allowance for loan losses during the current
period.

Mortgage Servicing Rights (MSRs): Servicing residential mortgage loans for
third-party investors represents a significant business activity of the National
City Mortgage line of business. As of December 31, 2004, MSRs totaled $1.5
billion. MSRs do not trade in an active open market with readily observable
market prices. Although sales of MSRs do occur, the exact terms and conditions
may not be readily available. As a result, MSRs are established and valued using
discounted cash flow modeling techniques which require management to make
estimates regarding future net servicing cash flows, taking into consideration
actual and expected mortgage loan prepayment rates, discount rates, servicing
costs, and numerous other factors. The expected and actual rates of mortgage
loan prepayments are the most significant factors driving the value of MSRs.
Increases in mortgage loan prepayments reduce estimated future net servicing
cash flows because the life of the underlying loan is reduced. In determining
the fair value of the MSRs, mortgage interest rates, which are used to determine
prepayment rates, and discount rates are held constant over the estimated life
of the portfolio. Expected mortgage loan prepayment rates are derived from a
third-party model and adjusted to reflect National City's actual prepayment
experience. MSRs are carried at the lower of the initial capitalized amount, net
of accumulated amortization and hedge accounting adjustments, or fair value.
Certain MSRs hedged with derivative instruments as part of SFAS 133 hedge
relationships may be adjusted above their initial carrying value. Management
compares its fair value estimates and assumptions to observable market data
where available and to recent market activity and believes that the fair values
and related assumptions are reasonable and comparable to those used by other
market participants.

Note 12 to the consolidated financial statements includes a sensitivity analysis
showing the effects immediate 10% and 20% adverse changes in the mortgage loan
prepayment and discount rate assumptions used to estimate the

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2004 ANNUAL REPORT

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31

fair value of MSRs would have on the fair value. Management mitigates risk
associated with declines in the estimated fair value of its MSRs due to
increases in mortgage loan prepayments through the use of derivative instruments
that are expected to increase in value when interest rates decline. The effects
of recognized changes in the values of the MSRs and the related derivative
instruments are included in mortgage banking revenue on the income statement.
Note 12 to the financial statements includes discussion of the impacts of
valuation changes on current period income.

Derivative Instruments: The Corporation regularly uses derivative instruments as
part of its risk management activities to protect the value of certain assets
and liabilities and future cash flows against adverse price or interest rate
movements. As of December 31, 2004, the recorded fair values of derivative
assets and liabilities were $886 million and $597 million, respectively. All
derivative instruments are carried at fair value on the balance sheet. The
valuation of derivative instruments is considered critical because most are
valued using discounted cash flow modeling techniques in the absence of market
value quotes. Therefore, management must make estimates regarding the amount and
timing of future cash flows, which are susceptible to significant change in
future periods based on changes in interest rates. The cash flow projection
models are acquired from third parties and the assumptions used by management
are based on yield curves, forward yield curves, and implied volatilities
observable in the cash and derivatives market. The pricing models are also
regularly validated by testing through comparison with other third parties.

Because the majority of the derivative instruments are used to protect the value
of other assets and liabilities on the balance sheet, changes in the value of
the derivatives instruments are typically offset by changes in the value of the
assets and liabilities being hedged, although income statement volatility can
still occur if the derivative instruments are not effective in hedging changes
in the value of those assets and liabilities. Changes in the fair values of
derivative instruments associated with mortgage banking activities are included
in mortgage banking revenue on the consolidated income statement and affect the
results of the National City Mortgage line of business. Changes in the fair
values of other derivatives are included in other income on the income statement
and are primarily generated from investment funding activities and are not
allocated to the business lines. Notes 1 and 25 to the consolidated financial
statements also provide further discussion on the accounting and use of
derivative instruments.

Any material effect on the financial statements related to these critical
accounting areas is also discussed in this financial review.

RECENT ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS

Note 2 to the consolidated financial statements discusses new accounting
policies adopted by the Corporation during 2004 and the expected impact of
accounting policies recently issued or proposed but not yet required to be
adopted. To the extent the adoption of new accounting standards materially
affects financial condition, results of operations, or liquidity, the impacts
are discussed in the applicable section(s) of this financial review and notes to
the consolidated financial statements.

FORWARD LOOKING STATEMENTS

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This Annual Report contains forward-looking statements. Forward-looking
statements provide current expectations or forecasts of future events and are
not guarantees of future performance, nor should they be relied upon as
representing management's views as of any subsequent date. The forward-looking
statements are based on management's expectations and are subject to a number of
risks and uncertainties. Although management believes that the expectations
reflected in such forward-looking statements are reasonable, actual results may
differ materially from those expressed or implied in such statements. Risks and
uncertainties that could cause actual results to differ materially include,
without limitation, the Corporation's ability to effectively execute its
business plans; changes in general economic and financial market conditions;
changes in interest rates; changes in the competitive environment; continuing
consolidation in the financial services industry; new litigation or changes in
existing litigation; losses, customer bankruptcy, claims and assessments;
changes in banking regulations or other regulatory or legislative requirements
affecting the Corporation's business; and changes in accounting policies or
procedures as may be required by the Financial Accounting Standards Board or
other regulatory agencies. Management may elect to update forward-looking
statements at some future point; however, it specifically disclaims any
obligation to do so.

2004 ANNUAL REPORT

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32

QUARTERLY SUMMARY

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FOURTH QUARTER REVIEW

Unaudited quarterly results are presented on page 33.

Net income for the fourth quarter of 2004 was $960 million, or $1.46 per diluted
share, compared to $591 million or $.86 per diluted share for the third quarter
of 2004, and $544 million, or $.88 per diluted for the fourth quarter of 2003.
Net income for the fourth quarter of 2004 includes the after-tax gain of $477
million recognized on the sale of National Processing, inclusive of associated
sale expenses, adding approximately $.74 to diluted earnings per share.

Net interest income for the fourth quarter of 2004 was $1.2 billion, up 4% from
the prior quarter and up 19% from the fourth quarter of 2003. Net interest
margin was 4.09% for the fourth quarter of 2004, up from 4.04% in the third
quarter of 2004, and 4.03% in the fourth quarter of 2003. The increase in net
interest income on a year-over-year basis was due to growth in earning assets,
primarily loans, from new business and acquisitions.

The provision for credit losses was $81 million for the fourth quarter of 2004,
compared to $98 million for the third quarter of 2004 and $148 million for the
fourth quarter of 2003. The lower provision in 2004 reflects improvement in
credit quality, particularly in commercial loans. See the Credit Risk section of
the Financial Review for further discussion of the provision for credit losses.

Fees and other income were $1.4 billion for the fourth quarter of 2004, compared
to $1.0 billion in the prior quarter and $981 million in the fourth quarter of
2003. Fees and other income during the fourth quarter of 2004 included the
pretax gain on the sale of National Processing of $714 million and a pretax gain
on the sale of seven branches located in the Upper Peninsula of Michigan of $14
million. Mortgage banking revenue declined on a year-over-year basis due to
lower volumes of mortgage loan originations and sales in 2004. Fourth quarter
2004 mortgage banking revenue also included $10 million of net hedging losses on
MSRs compared to hedging gains of $160 million and $4 million in the third
quarter of 2004 and the fourth quarter of 2003, respectively. Leasing revenue
increased on a year-over-year basis due to commercial equipment and automobile
leases obtained with the acquisition of Provident.

Noninterest expense was $1.3 billion for the fourth quarter of 2004, up 3% from
the immediately preceding quarter and 22% from the same quarter a year ago. The
fourth quarter of 2004 included $19 million of expenses associated with the sale
of National Processing and $39 million of other charges related to acquisitions
completed during 2004. On a year-over-year basis, noninterest expense also
increased due to higher personnel, leasing and equipment, and intangible
amortization costs related to acquisitions.

The income tax provision for the fourth quarter of 2004 included a $44 million
benefit resulting from the reduction of deferred tax liabilities arising from
the favorable conclusion of tax examinations and the regular re-assessment of
certain tax exposures, and also reflects a 32% effective tax rate on the
National Processing sale gain.

Average total assets for the fourth quarter of 2004 were $137.9 billion, up from
$133.6 billion in the third quarter of 2004. The growth in average total assets
primarily reflects increases in portfolio loans, mainly home equity and
nonconforming mortgage loans.

2004 ANNUAL REPORT

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QUARTERLY FINANCIAL INFORMATION

Unaudited quarterly results are presented below.

2004 ANNUAL REPORT

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34

STATISTICAL DATA

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CONSOLIDATED STATEMENTS OF INCOME AND SELECTED FINANCIAL DATA(a)

(a) Prior period data have been restated, where applicable, for stock splits and
pooling-of-interests business combinations.
(b) On a comparable basis, results for 2004 were affected by the acquisitions of
Allegiant Bancorp Inc., Provident Financial Group Inc., and Wayne Bancorp,
and the sale of National Processing, Inc. Refer to Note 3 of the
Consolidated Financial Statements for further details.
(c) The 2003-2000 periods have been restated to reflect the reclassification of
the allowance for losses on lending-related commitments from the allowance
for loan losses to other liabilities. Refer to the Credit Quality section of
the Financial Review and Note 8 of the Consolidated Financial Statements for
further details.

2004 ANNUAL REPORT

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35

REPORT ON MANAGEMENT'S ASSESSMENT OF

INTERNAL CONTROL OVER FINANCIAL REPORTING

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National City Corporation is responsible for the preparation, integrity, and
fair presentation of the consolidated financial statements included in this
annual report. The consolidated financial statements and notes included in this
annual report have been prepared in conformity with United States generally
accepted accounting principles and necessarily include some amounts that are
based on management's best estimates and judgments.

We, as management of National City Corporation, are responsible for establishing
and maintaining effective internal control over financial reporting that is
designed to produce reliable financial statements in conformity with United
States generally accepted accounting principles. The system of internal control
over financial reporting as it relates to the financial statements is evaluated
for effectiveness by management and tested for reliability through a program of
internal audits. Actions are taken to correct potential deficiencies as they are
identified. Any system of internal control, no matter how well designed, has
inherent limitations, including the possibility that a control can be
circumvented or overridden and misstatements due to error or fraud may occur and
not be detected. Also, because of changes in conditions, internal control
effectiveness may vary over time. Accordingly, even an effective system of
internal control will provide only reasonable assurance with respect to
financial statement preparation.

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

Management assessed the Corporation's system of internal control over financial
reporting as of December 31, 2004, in relation to criteria for effective
internal control over financial reporting as described in "Internal Control -
Integrated Framework," issued by the Committee of Sponsoring Organizations of
the Treadway Commission. Based on this assessment, management concludes that, as
of December 31, 2004, its system of internal control over financial reporting is
effective and meets the criteria of the "Internal Control - Integrated
Framework". Ernst & Young LLP, independent registered public accounting firm,
has issued an attestation report on management's assessment of the Corporation's
internal control over financial reporting.

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

Cleveland, Ohio

February 8, 2005

2004 ANNUAL REPORT

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36

REPORTS OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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REPORT ON EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING

Audit Committee of the Board of Directors and the Stockholders of National City
Corporation

We have audited management's assessment, included in the accompanying Report on
Management's Assessment of Internal Control Over Financial Reporting, that
National City Corporation maintained effective internal control over financial
reporting as of December 31, 2004, based on criteria established in "Internal
Control -- Integrated Framework" issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria). National City
Corporation's management is responsible for maintaining effective internal
control over financial reporting and for its assessment about the effectiveness
of internal control over financial reporting. Our responsibility is to express
an opinion on management's assessment and an opinion on the effectiveness of the
Corporation's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, evaluating management's assessment, testing and evaluating
the design and operating effectiveness of internal control, and performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion, management's assessment that National City Corporation
maintained effective internal control over financial reporting as of December
31, 2004, is fairly stated, in all material respects, based on the COSO
criteria. Also, in our opinion, National City Corporation maintained, in all
material respects, effective internal control over financial reporting as of
December 31, 2004, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheets as
of December 31, 2004 and 2003, 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, 2004 of National City Corporation and our
report dated February 8, 2005, expressed an unqualified opinion thereon.

Cleveland, Ohio /s/ Ernst & Young LLP

February 8, 2005

REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

Audit Committee of the Board of Directors and the Stockholders of National City
Corporation

We have audited the accompanying consolidated balance sheets of National City
Corporation and subsidiaries as of December 31, 2004 and 2003, 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, 2004. These
financial statements are the responsibility of National City Corporation's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit 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, 2004 and 2003, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2004, in conformity with U.S. generally accepted
accounting principles.

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of National City
Corporation's internal control over financial reporting as of December 31, 2004,
based on criteria established in "Internal Control -- Integrated Framework"
issued by the Committee of Sponsoring Organizations of the Treadway Commission
and our report dated February 8, 2005 expressed an unqualified opinion thereon.

Cleveland, Ohio /s/ Ernst & Young LLP

February 8, 2005

2004 ANNUAL REPORT

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37

CONSOLIDATED FINANCIAL STATEMENTS

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CONSOLIDATED BALANCE SHEETS

See Notes to Consolidated Financial Statements

2004 ANNUAL REPORT

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38

CONSOLIDATED FINANCIAL STATEMENTS continued
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CONSOLIDATED STATEMENTS OF INCOME

See Notes to Consolidated Financial Statements

2004 ANNUAL REPORT

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39

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(1) Includes adjustment for fair value of stock options exchanged and forward
purchase contracts assumed of $86 million and $59 million, respectively.

See Notes to Consolidated Financial Statements

2004 ANNUAL REPORT

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40

CONSOLIDATED FINANCIAL STATEMENTS continued
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CONSOLIDATED STATEMENTS OF CASH FLOWS

See Notes to Consolidated Financial Statements

2004 ANNUAL REPORT

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41

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 through
an extensive branch bank network in Ohio, Indiana, Illinois, Kentucky, Michigan,
Missouri, and Pennsylvania and also conducts selected consumer lending
businesses and other financial services on a nationwide basis. Primary
businesses include commercial and retail banking, mortgage financing and
servicing, consumer finance, and asset management.

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements include the accounts of the
Corporation and its consolidated subsidiaries. The Corporation completed
acquisitions of Allegiant Bancorp, Inc. (Allegiant), Provident Financial Group,
Inc. (Provident), and Wayne Bancorp (Wayne) on April 9, 2004, July 1, 2004, and
October 5, 2004, respectively. The consolidated financial statements include the
results of operations of these entities from their respective dates of
acquisition. All significant intercompany transactions and balances have been
eliminated. Certain prior period amounts have been reclassified to conform with
the current period presentation.

CONSOLIDATION: Accounting Research Bulletin 51 (ARB 51), Consolidated Financial
Statements, requires a company's consolidated financial statements include
subsidiaries in which the company has a controlling financial interest. This
requirement usually has been applied to subsidiaries in which a company has a
majority voting interest. Investments in companies in which the Corporation
controls operating and financing decisions (principally defined as owning a
voting or economic interest greater than 50%) are consolidated. Investments in
companies in which the Corporation has significant influence over operating and
financing decisions (principally defined as owning a voting or economic interest
of 20% to 50%) and limited partnership investments are generally accounted for
by the equity method of accounting. These investments are principally included
in other assets and National City's proportionate share of income or loss is
included in other noninterest income.

The voting interest approach defined in ARB 51 is not applicable in identifying
controlling financial interests in entities that are not controllable through
voting interests or in which the equity investors do not bear the residual
economic risks. In such instances, Financial Accounting Standards Board
Interpretation 46 (FIN 46), Consolidation of Variable Interest Entities (VIE),
provides guidance on when a company should include in its financial statements
the assets, liabilities and activities of another entity. In general, a VIE is a
corporation, partnership, trust, or any other legal structure used for business
purposes that either does not have equity investors with voting rights or has
equity investors that do not provide sufficient financial resources for the
entity to support its activities. FIN 46 requires a VIE to be consolidated by a
company if that company is subject to a majority of the risk of loss from the
VIE's activities or entitles it to receive a majority of the entity's residual
returns or both. A company that consolidates a VIE is called the primary
beneficiary of that entity. The Corporation's consolidated financial statements
include the assets, liabilities and activities of VIEs for which it is deemed to
be the primary beneficiary.

The Corporation uses special-purpose entities (SPEs), primarily securitization
trusts, to diversify its funding sources. SPEs are not operating entities,
generally have no employees, and usually have a limited life. The basic SPE
structure involves the Corporation transferring assets to the SPE. The SPE funds
the purchase of those assets by issuing asset-backed securities to investors.
The legal documents governing the SPE describe how the cash received on the
assets held in the SPE must be allocated to the investors and other parties that
have rights to these cash flows. National City structures these SPEs to be
bankruptcy remote, thereby insulating investors from the impact of the creditors
of other entities, including the transferor of the assets.

Where the Corporation is a transferor of assets to an SPE, the assets sold to
the SPE are no longer recorded on the balance sheet and the SPE is not
consolidated when the SPE is a qualifying special-purpose entity (QSPE).
Statement of Financial Accounting Standards (SFAS) 140, Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities, provides
specific criteria for determining when an SPE meets the definition of a QSPE. In
determining whether to consolidate non-qualifying SPEs where assets are legally
isolated from National City's creditors, the Corporation considers such factors
as the amount of third-party equity, the retention of risks and rewards, and the
extent of control available to third parties. The Corporation currently services
certain credit card receivables, automobile loans, and home equity loans and
lines that were sold to various securitization trusts. Further discussion
regarding these securitization trusts is included in Note 5.

USE OF ESTIMATES: The accounting and reporting policies of National City conform
with U.S. generally accepted accounting principles (GAAP). The preparation of
financial statements in conformity with GAAP requires management to make
estimates, assumptions, and judgments that affect the amounts reported in the
financial statements and accompanying notes. Actual realized amounts could
differ materially from those estimates.

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

BUSINESS COMBINATIONS: Business combinations are accounted for under the
purchase method of accounting. Under the purchase method, assets and liabilities
of the business acquired are recorded at their estimated fair values as of the
date of acquisition with any excess of the cost of the acquisition over the fair
value of the net tangible and intangible assets acquired recorded as goodwill.
Results of operations of the acquired business are included in the income
statement from the date of acquisition. Refer to Note 3 for further discussion.

2004 ANNUAL REPORT

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
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LOANS AND LEASES: Loans are generally reported at the principal amount
outstanding. Loans held for sale or securitization are valued on an aggregate
basis at the lower of carrying amount or fair value. Interest income is
recognized on an accrual basis. Loan origination fees, certain direct costs, and
unearned discounts are deferred and amortized into interest income 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.

Leases are classified as either direct financing leases or operating leases,
based on the terms of the lease arrangement. To be classified as a direct
financing lease, the lease must have at least one of the following four
characteristics: 1) the lease transfers ownership of the property to the lessee
by the end of the lease term; 2) the lease contains a bargain purchase option;
3) the lease term is equal to 75% or more of the estimated economic life of the
leased property; or 4) the present value of the lease payments and the
guaranteed residual value are at least 90% of the cost of the leased property.
Leases that do not meet any of these four criteria are classified as operating
leases and reported as equipment leased to others on the balance sheet.

Income on operating leases is recognized on a straight-line basis over the lease
term. 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 periodic 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 carrying 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
generally recognized in other noninterest expense in the income statement.

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. Interest income during the period the loan is on
nonperforming status is recorded on a cash basis after recovery of principal is
reasonably assured.

Nonperforming 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 $3 million are evaluated
for impairment in accordance with the provisions of 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
all amounts due will not be collected pursuant to the contractual terms of the
loan 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 subject to evaluation and considered impaired are included
in nonperforming assets.

Consumer loans are subject to mandatory charge-off at a specified delinquency
date and, except for residential real estate loans, 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.
Installment loans secured by home equity and classified as residential real
estate are also subject to this charge-off policy. 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.

The Corporation, through its subsidiary National City Mortgage, sells mortgage
loans to the Government National Mortgage Association (GNMA) in the normal
course of business and retains the servicing rights. The GNMA programs under
which the loans are sold allow the Corporation to repurchase individual
delinquent loans that meet certain criteria. At the Corporation's option, and
without GNMA's prior authorization, the Corporation may repurchase the
delinquent loan for an amount equal to 100% of the remaining principal balance
of the loan. Under SFAS 140, once the Corporation has the unconditional ability
to repurchase the delinquent loan, the Corporation is deemed to have regained
effective control over the loan and is required to recognize the loan on its
balance sheet and record an offsetting liability, regardless of the
Corporation's intent to repurchase the loan. At December 31, 2004 and December
31, 2003, residential real estate portfolio loans included $233 million and $240
million, respectively, of loans available for repurchase under the GNMA optional
repurchase programs with the offsetting liability recorded within other borrowed
funds.

ALLOWANCE FOR LOAN LOSSES AND ALLOWANCE FOR LOSSES ON LENDING-RELATED
COMMITMENTS: 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 and actual loss experience,

2004 ANNUAL REPORT

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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 environmental factors and 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 credit losses is charged to operations based
on management's periodic evaluation of the factors previously mentioned, as well
as other pertinent factors. Evaluations are conducted at least quarterly and
more often if deemed necessary. When loans are identified for sale or
securitization, the attributed loan loss allowance is reclassified as a
reduction to the carrying value of the loans.

The Corporation maintains an allowance for losses on unfunded commercial lending
commitments and letters of credit to provide for the risk of loss inherent in
these arrangements. The allowance is computed using a methodology similar to
that used to determine the allowance for loan losses, modified to take into
account the probability of a drawdown on the commitment. This allowance is
reported as a liability on the balance sheet within accrued expenses and other
liabilities, while the corresponding provision for these losses is recorded as a
component of the provision for credit losses.

OTHER REAL ESTATE OWNED: Other real estate owned (OREO) is comprised principally
of commercial and residential real estate properties obtained in partial or
total satisfaction of loan obligations. OREO also includes bank premises
qualifying as held for sale under SFAS 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. OREO obtained in satisfaction of a loan is
recorded at the estimated fair value less anticipated selling costs based upon
the property's appraised value at the date of transfer, with any difference
between the fair value of the property and the carrying value of the loan
charged to the allowance for loan losses. Bank premises are transferred at the
lower of carrying value or estimated fair value less anticipated selling costs.
Subsequent changes in value are reported as adjustments to the carrying amount,
not to exceed the initial carrying value of the assets at the time of transfer.
Changes in value subsequent to transfer are recorded in noninterest expense on
the income statement. Gains or losses not previously recognized resulting from
the sale of OREO are recognized in noninterest expense on the date of sale.

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
securities gains or losses on the statement of income. Interest on trading
account securities is recorded in interest income. As of December 31, 2004 and
December 31, 2003, trading account securities totaled $117 million and $22
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. National City held no
securities classified as held to maturity at December 31, 2004 or December 31,
2003.

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 unrealized losses not deemed other-than-temporary reported
in other comprehensive income, net of tax. Realized gains and losses on the sale
of and other-than-temporary impairment charges on available-for-sale securities
are recorded in securities gains or losses on the statement of income.

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. Realized gains and losses on the sale
of and other-than-temporary impairment charges on securities are determined
using the specific-identification method, except for the Corporation's
internally-managed equity portfolio comprised primarily of bank and thrift
common stock investments (bank stock fund). The Corporation utilizes the
average-cost method to determine realized gains and losses and other-than-
temporary impairment charges on bank stock fund investments, consistent with the
manner in which the investments in this fund are managed. Purchases and sales of
securities are recognized on a trade-date basis.

PRINCIPAL INVESTMENTS: Principal investments, which include direct investments
in private and public companies and indirect investments in private equity
funds, are carried at estimated fair value with changes in fair value recognized
in other noninterest income.

Direct investments include equity and mezzanine investments in the form of
common stock, preferred stock, limited liability company interests, warrants,
and subordinated debt. Direct mezzanine investments in the form of subordinated
debt and preferred stock, which earn interest or dividends, are included in
other investments on the balance sheet, while the remainder of the direct
investments are included in other assets. Indirect investments include ownership
interests in private equity funds managed by third party general partners and
are included in other assets on the balance sheet.

The fair values of publicly traded investments are determined using quoted
market prices, subject to various discount factors, sales restrictions, and
regulation, when appropriate. Investments that are not publicly traded are
initially valued at cost and subsequent adjustments to fair value are estimated
in good faith by management. Factors used in determining the fair value of
direct investments include consideration of the company's business model,
current and projected financial performance, liquidity, management team, and
overall economic and market conditions. Factors used in determining the fair
value of indirect investments include evaluation of the general partner's
valuation techniques and overall economic and market conditions. The fair value
estimates of the investments are based upon currently available information and
may not necessarily represent amounts

2004 ANNUAL REPORT

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
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that will ultimately be realized, which depend on future events and
circumstances.

Interest and dividends on principal investments are recorded in interest income
on the statement of income. Principal investment fee income, fair value
adjustments, realized gain and losses on the return of capital, and principal
investment write-offs are recognized in other noninterest income.

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 accounted for 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 is obtained or
requested to be returned as appropriate.

GOODWILL AND OTHER INTANGIBLE ASSETS: Goodwill represents the excess of the cost
of an acquisition over the fair value of the net assets acquired. Other
intangible assets represent purchased assets that also lack physical substance
but can be separately distinguished from goodwill because of contractual or
other legal rights or because the asset is capable of being sold or exchanged
either on its own or in combination with a related contract, asset, or
liability. Goodwill is tested at least annually for impairment.

Intangible assets with finite lives include core deposits, credit card,
operating lease, and other intangibles. Intangible assets are subject to
impairment testing whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. Core deposit intangibles are primarily
amortized over a period not to exceed 10 years using an accelerated amortization
method. Credit card intangibles are amortized over their estimated useful lives
on a straight-line basis, which range from one to 10 years. Operating lease
intangibles are amortized based upon an accelerated amortization method over the
remaining weighted average lease term. Other intangibles, which consist
primarily of customer contracts and noncompete agreements, are amortized over
the period benefited ranging from three to nine years. Amortization expense for
core deposits and other intangibles are recognized in noninterest expense.
Amortization expense for operating lease intangibles is recognized in
noninterest income. Note 11 includes a summary of goodwill and other intangible
assets.

DEPRECIABLE ASSETS: Properties and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization are calculated
using the straight-line method over the estimated useful lives of the assets.
Useful lives range from one to 10 years for furniture, fixtures, and equipment;
three to five years for software, hardware, and data handling equipment; and 10
to 40 years for buildings and building improvements. Land improvements are
amortized over a period of 15 years, and leasehold improvements are amortized
over the term of the respective lease plus the first optional renewal period, if
applicable. 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 of the asset.

Long-lived depreciable assets are evaluated periodically for impairment when
events or changes in circumstances indicate the carrying amount may not be
recoverable. Impairment exists when the expected undiscounted future cash flows
of a long-lived asset are less than its carrying value. In that event, the
Corporation recognizes a loss for the difference between the carrying amount and
the estimated fair value of the asset based on a quoted market price, if
applicable, or a discounted cash flow analysis. Impairment losses are recorded
in other noninterest expense on the income statement.

Equipment leased to others are stated at cost less accumulated depreciation.
Depreciation expense is recorded on a straight-line basis over the life of the
lease considering the estimated residual value. On a periodic basis, a review is
undertaken to determine if the leased equipment is impaired by comparing
expected undiscounted cash flows from rental income to the equipment carrying
value. An impairment loss is recognized if the carrying amount of the equipment
exceeds the expected cash flows.

ASSET SECURITIZATIONS: National City uses the securitization of financial assets
as a source of funding. Financial assets, including pools of credit card
receivables and automobile loans, were transferred into trusts or to SPEs in
transactions which are effective under applicable banking rules and regulations
to legally isolate the assets from National City Bank (the Bank), a subsidiary
of the Corporation. Where the transferor is a depository institution such as a
bank subsidiary of the Corporation, legal isolation is accomplished through
compliance with specific rules and regulations of the relevant regulatory
authorities. In addition, National City purchases the guaranteed portion of
Small Business Administration (SBA) loans from third-party lenders and then
securitizes these loans into SBA guaranteed pooled securities through the use of
a fiscal and transfer agent approved by the SBA. The certificates are then sold
directly to institutional investors, achieving legal isolation.

SFAS 140 requires a "true sale" analysis of the treatment of the transfer under
state law as if the Corporation was a debtor under the bankruptcy code. A "true
sale" legal analysis includes several legally relevant factors, such as the
nature and level of recourse to the transferor and the nature of retained
servicing rights. The analytical conclusion as to a true sale is never absolute
and unconditional, but contains qualifications based on the inherent equitable
powers of a bankruptcy court, as well as the unsettled state of the common law.
Once the legal isolation test has been met under SFAS 140, other factors
concerning the nature and extent of the transferor's control over the
transferred assets are taken into account in order to determine whether
derecognition of assets is warranted, including whether the SPE has complied
with rules concerning qualifying special-purpose entities.

2004 ANNUAL REPORT

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A legal opinion regarding legal isolation for each credit card securitization
has been obtained by the Bank. The opinion rendered in connection with the 2002
credit card securitization included in its conclusion that the Federal Deposit
Insurance Corporation (FDIC) regulation, Treatment by the Federal Deposit
Insurance Corporation as Conservator or Receiver of Financial Assets Transferred
by an Insured Depository Institution in Connection with a Securitization or
Participation (Securitization Rule) would be applicable to the transfer of such
receivables. The Securitization Rule provides reasonable assurance that neither
the FDIC acting as conservator or receiver for the transferring bank subsidiary,
nor any other creditor of the bank, may reclaim or recover the receivables from
the securitization trust or recharacterize the receivables as property of the
transferring bank subsidiary or of the conservatorship or receivership for the
bank. The opinion further reasoned, even if the Securitization Rule did not
apply, then pursuant to various FDIC pronouncements, the FDIC would uphold the
effectiveness of the security interest granted in the financial assets.

Legal opinions were also obtained for the automobile loan securitization
transactions in 2004 and 2002, which were structured as two-step
securitizations. While noting each of these transactions fall within the meaning
of a "securitization" under the Securitization Rule, in accordance with
accounting guidance, an analysis was also rendered under state law as if the
transferring Bank was a debtor under the bankruptcy code. The "true sale"
opinion obtained for each of these transactions provides reasonable assurance
the purchased assets would not be characterized as the property of the
transferring Bank's receivership or conservatorship estate in the event of
insolvency and also states the transferor would not be required to substantively
consolidate the assets and liabilities of the purchaser SPE with those of the
transferor upon such event.

The process of securitizing SBA loans into pools of SBA certificates is
prescribed by the SBA and must be followed to obtain the SBA guarantee. This
process meets the requirements for sale treatment under SFAS 140.

In a securitization, the trust issues beneficial interests in the form of senior
and subordinated asset-backed securities backed or collateralized by the assets
sold to the trust. The senior classes of the asset-backed securities typically
receive investment grade credit ratings at the time of issuance. These ratings
are generally achieved through the creation of lower-rated subordinated classes
of asset-backed securities, as well as subordinated interests retained by an
affiliate of the Corporation. In all cases, the Corporation or its affiliate
retains interests in the securitized assets, which may take the form of seller
certificates, subordinated tranches, cash reserve balances, servicing assets,
and interest-only strips representing the cash flows generated by the assets in
excess of the contractual cash flows required to be paid to the investors and
for other obligations such as servicing fees.

An SBA approved fiscal and transfer agent associated with the SBA
securitizations issues certificates once all the necessary documents to support
the transaction have been provided. The Corporation retains beneficial interests
in the securitized assets in the form of interest-only strips. The SBA
guarantees the credit risk with respect to the loans sold.

In accordance with SFAS 140, securitized loans are removed from the balance
sheet and a net gain or loss is recognized in income at the time of initial sale
and each subsequent sale when the combined net sales proceeds and, if
applicable, retained interests differ from the loans' allocated carrying amount.
Net gains or losses resulting from securitizations are recorded in noninterest
income.

Retained interests in the subordinated tranches and interest-only strips are
recorded at their fair value and included in the available-for-sale or trading
securities portfolio. Retained interests from the credit card, automobile loan,
and home equity securitizations are classified as available-for-sale securities.
Retained interests from the SBA securitizations are classified as trading
securities and are included in other investments on the consolidated balance
sheet. Subsequent adjustments to the fair value of retained interests classified
as available-for-sale are recorded through other comprehensive income within
stockholders' equity or in other noninterest expense in the income statement if
the fair value has declined below the carrying amount and such decline has been
determined to be other-than-temporary. Fair value adjustments and
other-than-temporary adjustments to retained interests classified as trading
securities are recorded in other noninterest income on the income statement. The
Corporation uses 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,
credit loss experience, loan repayment rates, the cost of funds, and discount
rates commensurate with the risks involved.

On a quarterly basis, management reviews the historical performance of each
retained interest and the assumptions used to project future cash flows. If past
performance and future expectations dictate, assumptions are revised and the
present value of future cash flows is recalculated. Refer to Note 5 for further
analysis of the assumptions used in the determination of fair value.

When the Corporation retains the right to service the loans and receives related
fees that exceed the current market rate to service the receivables, a servicing
asset is recorded and included in other assets on the balance sheet. A servicing
asset is not recognized if the Corporation receives adequate compensation
relative to current market servicing prices to service the receivables sold.
Servicing assets created in a securitization are initially measured at their
allocated carrying amount based upon relative fair values at the date of
securitization and are subsequently carried at the lower of this initial
carrying value, adjusted for amortization, or fair value. Impairment, if any, is
recognized when and in the amount the carrying value exceeds its fair value as
determined by calculating the present value of the expected future net servicing
cash flows using the assumptions described previously. The amortization of
servicing assets occurs in

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
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proportion to, and over the period of, the estimated net servicing income and is
recorded in noninterest income on the income statement.

For securitizations involving credit card receivables, the Corporation's
continuing involvement in the securitized assets includes maintaining an
undivided, pro rata interest in all credit card loan receivables that are in the
trust, referred to as seller's interest. The seller's interest ranks pari-passu
with the investors' interests in the trust. As the amount of the loans in the
securitized pool fluctuates due to customer payments, purchases, cash advances,
and credit losses, the carrying amount of the seller's interest will vary.
However, the Corporation is required to maintain its seller's interest at a
minimum level of 4% of the initial invested amount in each series to ensure
receivables are available for allocation to the investors' interests.

Also with regard to credit card securitizations, the trust is not required to
make principal payments to the investors during the revolving period, which
generally approximates 48 months. Instead, the trust uses principal payments
received on the accounts to purchase new loan receivables. Therefore, the
principal dollar amount of the investor's interest in the loans within the trust
remains unchanged. Once the revolving period ends, the trust will distribute
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 loans securitized (generally
equal to the sum of 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.

The retained interests represent National City's maximum loss exposure with
respect to securitization vehicles. The investors in the asset-backed securities
issued by the SPEs have no further recourse against the Corporation if cash
flows generated by the securitized assets are inadequate to service the
obligations of the SPEs.

Transaction costs associated with revolving loan securitizations are deferred at
the time of sale and amortized over the revolving term of the securitization,
while transaction costs associated with fixed-term loan securitizations are
recognized as a component of the gain or loss at the time of sale.

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. In addition, certain contracts and commitments are defined as derivatives
under GAAP.

Under the guidelines of SFAS 133, Accounting for Derivative Instruments and
Hedging Activities, as amended, all derivative instruments are required 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 the 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 payments and related amounts accrued during the period on
derivatives included in a fair value hedge relationship are recorded as
adjustments to the 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 that the
hedged forecasted transaction affects earnings.

Under both the fair value and cash flow hedge methods, derivative gains and
losses not 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. SFAS 133 basis adjustments recorded on hedged assets
and liabilities are amortized over the remaining life of the hedged item
beginning no later than when hedge accounting ceases.

MORTGAGE SERVICING RIGHTS (MSRS): The Corporation sells mortgage loans in the
secondary market and typically retains the right to service the loans sold. Upon
sale, an MSR is established, which represents the then current fair value of
future net cash flows expected to be realized for performing the servicing
activities. In addition, the Corporation may purchase the right to service
mortgage loans originated by others. MSRs, when purchased, are initially
recorded at cost. MSRs are carried at the lower of the initial capitalized
amount, net of accumulated

2004 ANNUAL REPORT

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amortization and hedge accounting adjustments, or fair value. Certain MSRs
hedged with derivative instruments as part of SFAS 133 hedge relationships may
be adjusted above their initial carrying value. Changes in fair value resulting
from the application of hedge accounting become part of the carrying values of
MSRs.

The fair value of MSRs is estimated by calculating the present value of
estimated future net servicing cash flows, taking into consideration actual and
expected mortgage loan prepayment rates, discount rates, servicing costs, and
other economic factors, which are determined based on current market conditions.
The expected and actual rates of mortgage loan prepayments are the most
significant factors driving the value of MSRs, particularly for residential
mortgage loans. Increases in mortgage loan prepayments reduce estimated future
net servicing cash flows because the life of the underlying loan is reduced. In
determining the fair value of the MSRs, mortgage interest rates, which are used
to determine prepayment rates, and discount rates are held constant over the
estimated life of the portfolio. Expected mortgage loan prepayment rates are
derived from a third party model and adjusted to reflect National City's actual
prepayment experience. Prepayment rates have a lesser impact on the value of
servicing assets associated with commercial real estate loans as these loans
have lockout and prepayment penalties generally ranging from five to nine years.
Servicing fees, net of amortization, impairment, and related derivative gains
and losses, are recorded in mortgage banking revenue on the income statement.

The carrying values of MSRs (initial capitalized amount, net of accumulated
amortization and hedge accounting adjustments) are amortized in proportion to,
and over the period of, estimated net servicing income.

MSRs are evaluated for impairment in accordance with SFAS 140. For purposes of
determining impairment, the MSRs are stratified by certain risk characteristics,
primarily loan type and note rate. If temporary impairment exists within a risk
stratification tranche, a valuation allowance is established through a charge to
income equal to the amount by which the carrying value, including hedge
accounting adjustments, exceeds the fair value. If it is later determined all or
a portion of the temporary impairment no longer exists for a particular tranche,
the valuation allowance is reduced through a recovery of income.

MSRs are also reviewed for other-than-temporary impairment. Other-than-temporary
impairment exists when the recoverability of a recorded valuation allowance is
determined to be remote, taking into consideration historical and projected
interest rates and loan pay-off activity. When this situation occurs, the
unrecoverable portion of the valuation allowance is applied as a direct
write-down to the carrying value of the MSRs. Unlike a valuation allowance, a
direct write-down permanently reduces the carrying value of the MSRs and the
valuation allowance, precluding subsequent recoveries.

STOCK-BASED COMPENSATION: Effective January 1, 2003, the Corporation adopted the
fair value method of recording stock awards under SFAS 123, Accounting for
Stock-Based Compensation. Under the guidance of SFAS 148, Accounting for
Stock-Based Compensation - Transition and Disclosure, the Corporation applied
the recognition provisions of SFAS 123 to all awards granted to employees after
January 1, 2003. Compensation expense for option awards granted subsequent to
January 1, 2003 was determined based on the estimated fair value of the award at
the date of grant and recognized ratably in the income statement over the
option's vesting period. Stock options granted prior to January 1, 2003, were
accounted for under the recognition and measurement provisions of Accounting
Principles Board Opinion 25 (APB 25), Accounting for Stock Issued to Employees.
Under APB 25, compensation expense for employee stock options was generally not
recognized if the exercise price of the option equaled or exceeded the market
price of the stock on the date of grant. Therefore, the cost related to
stock-based employee compensation included in the determination of net income
for 2004 and 2003 is less than that which would have been recognized if the fair
value method had been applied to all unvested stock awards.

Compensation expense for restricted share awards is recognized ratably over the
period of service, usually the restricted period, based upon the fair value of
the stock on the date of grant. The adoption of the recognition provisions of
SFAS 123 did not have a significant impact on the determination of compensation
expense for restricted share awards.

The following table illustrates the effect on net income and earnings per share
if the Corporation had applied the fair value recognition provisions of SFAS 123
to all stock option awards. Also included in the pro forma net income and
earnings per share is the after-tax expense, net of minority interest benefit,
related to option awards granted by the Corporation's former 83%-owned payment
processing subsidiary, National Processing, Inc., on its common stock. Included
in reported net income for 2004 is stock-based compensation expense of $4
million related to the acceleration of option vesting as required by the change
in control provisions of National Processing, Inc.'s plan. Refer to Note 3 for
discussion on the sale of this business in October 2004.

2004 ANNUAL REPORT

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
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The fair values of stock options granted were estimated at the date of grant
using the 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 assumptions, which can
materially affect the fair value estimate. The following weighted-average
assumptions were used to determine the fair value of options granted on National
City common stock:

The weighted-average assumptions used to value the National Processing option
grants were disclosed in National Processing, Inc.'s June 30, 2004 Quarterly
Report on Form 10-Q and December 31, 2003 Annual Report on Form 10-K, as filed
with the United States Securities and Exchange Commission (SEC) and accessible
at www.sec.gov.

ADVERTISING COSTS: Advertising costs are generally expensed as incurred.

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.

STOCK REPURCHASES: Acquisitions of the Corporation's common stock are recorded
using the par value method, which requires the cash paid to be allocated to
common stock, capital surplus, and retained earnings.

2. RECENT ACCOUNTING PRONOUNCEMENTS

EXCHANGES OF NONMONETARY ASSETS: In December 2004, the FASB issued SFAS 153,
Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting
for Nonmonetary Transactions. This statement amends the principle that exchanges
of nonmonetary assets should be measured based on the fair value of the assets
exchanged and more broadly provides for exceptions regarding exchanges of
nonmonetary assets that do not have commercial substance. This Statement is
effective for nonmonetary asset exchanges occurring in fiscal periods beginning
after June 15, 2005. The adoption of this standard is not expected to have a
material impact on financial condition, results of operations, or liquidity.

SHARE-BASED PAYMENT: In December 2004, the FASB revised SFAS 123, Accounting for
Stock-Based Compensation. SFAS 123R establishes accounting requirements for
share-based compensation to employees and carries forward prior guidance on
accounting for awards to non-employees. The provisions of this statement will
become effective July 1, 2005 for all equity awards granted after the effective
date. On January 1, 2003, the Corporation adopted the provisions of SFAS 123 and
began recognizing compensation expense ratably in the income statement, based on
the estimated fair value of all awards granted to employees after January 1,
2003. SFAS 123R requires an entity to recognize compensation expense based on an
estimate of the number of awards expected to actually vest, exclusive of awards
expected to be forfeited. Currently, the Corporation recognizes forfeitures as
they occur. The adoption of this standard is not expected to have a material
effect on financial condition, the results of operations, or liquidity.

MEANING OF OTHER THAN TEMPORARY IMPAIRMENT: In March 2004, the Financial
Accounting Standards Board (FASB) Emerging Issues Task Force (EITF) released
Issue 03-01, Meaning of Other Than Temporary Impairment, which addressed
other-than-temporary impairment for certain debt and equity investments. The
recognition and measurement requirements of Issue 03-01, and other disclosure
requirements not already implemented, were effective for periods beginning after
June 15, 2004. In September 2004, the FASB staff issued FASB Staff Position
(FSP) EITF 03-1-1, which delayed the effective date for certain measurement and
recognition guidance contained in Issue 03-1. The FSP requires the application
of pre-existing other-than-temporary guidance during the period of delay until a
final consensus is reached. Management does not anticipate the issuance of the
final consensus will have a material impact on financial condition, the results
of operations, or liquidity.

LOAN COMMITMENTS: On March 9, 2004, the SEC issued Staff Accounting Bulletin 105
(SAB 105), Application of Accounting Principles to Loan Commitment stating that
the fair value of loan commitments is to be accounted for as a derivative
instrument under SFAS 133, but the valuation of such commitment should not
consider expected future cash flows related to servicing of the future loan. The
Corporation had historically valued its loan commitments including the change in
value of expected future cash flows related to servicing.

The Corporation adopted the provisions of SAB 105 as of January 1, 2004. The
impact of adopting SAB 105 resulted in a decrease in mortgage banking revenue of
$36 million for 2004. This change in accounting may result in increased
volatility in earnings in the future as changes in the value of derivative
instruments utilized to hedge the loan commitments will continue to be reported
currently in earnings, while offsetting changes in certain components of the
fair value of the loan commitment will not be recognized until the loan is
closed or is sold.

2004 ANNUAL REPORT

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ACCOUNTING FOR CERTAIN LOANS OR DEBT SECURITIES ACQUIRED IN A TRANSFER: In
December 2003, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 03-3, Accounting for Certain Loans or Debt
Securities Acquired in a Transfer. SOP 03-3 requires acquired loans, including
debt securities, to be recorded at the amount of the purchaser's initial
investment and prohibits carrying over valuation allowances from the seller for
those individually-evaluated loans that have evidence of deterioration in credit
quality since origination, and it is probable all contractual cash flows on the
loan will be unable to be collected. SOP 03-3 also requires the excess of all
undiscounted cash flows expected to be collected at acquisition over the
purchaser's initial investment to be recognized as interest income on a
level-yield basis over the life of the loan. Subsequent increases in cash flows
expected to be collected are recognized prospectively through an adjustment of
the loan's yield over its remaining life, while subsequent decreases are
recognized as impairment. Loans carried at fair value, mortgage loans held for
sale, and loans to borrowers in good standing under revolving credit agreements
are excluded from the scope of SOP 03-3. The guidance is effective for loans
acquired in fiscal years beginning after December 15, 2004 and is not expected
to have a material impact on financial condition, results of operations, or
liquidity.

ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH
LIABILITIES AND EQUITY: In May 2003, the FASB issued SFAS 150, Accounting for
Certain Financial Instruments with Characteristics of Both Liabilities and
Equity. This statement establishes standards for classifying and measuring
certain financial instruments that embody obligations of the issuer and have
characteristics of both liabilities and equity. The provisions of SFAS 150
became effective June 1, 2003, for all financial instruments created or modified
after May 31, 2003, and otherwise became effective as of July 1, 2003. The
adoption of this standard did not have a material impact on financial condition,
the results of operations, or liquidity.

In December 2003, the FASB deferred for an indefinite period the application of
the guidance in SFAS 150 to noncontrolling interests that are classified as
equity in the financial statements of a subsidiary but would be classified as a
liability in the parent's financial statements under SFAS 150. The deferral is
limited to mandatorily redeemable noncontrolling interests associated with
finite-lived subsidiaries. Management does not believe any such applicable
entities exist as of December 31, 2004, but will continue to evaluate the
applicability of this deferral to entities which may be consolidated as a result
of FASB Interpretation No. 46 (FIN 46), Consolidation of Variable Interest
Entities.

CONSOLIDATION OF VARIABLE INTEREST ENTITIES: In January 2003, the FASB issued
FIN 46, which provides guidance on how to identify a variable interest entity
(VIE) and determine when the assets, liabilities, noncontrolling interests, and
results of operations of a VIE are to be included in an entity's consolidated
financial statements. A VIE exists when either the total equity investment at
risk is not sufficient to permit the entity to finance its activities by itself,
or the equity investors lack one of three characteristics associated with owning
a controlling financial interest. Those characteristics include the direct or
indirect ability to make decisions about an entity's activities through voting
rights or similar rights, the obligation to absorb the expected losses of an
entity if they occur, or the right to receive the expected residual returns of
the entity if they occur.

During 2003, the Corporation applied the provisions of FIN 46 to two wholly
owned subsidiary trusts that issued capital securities to third party investors
and to certain direct and indirect interests in investment partnerships. The
application of FIN 46 resulted in the deconsolidation of the two wholly owned
subsidiary trusts. The assets and liabilities of the subsidiary trusts that were
deconsolidated totaled $189 million and $183 million, respectively. See Note 17
for further discussion of these trusts and the Corporation's related
obligations. The application of FIN 46 to certain direct and indirect interests
in investment partnerships resulted in the consolidation of assets and
liabilities each totaling $73 million. Of the total $73 million of liabilities
consolidated, $72 million represented amounts owed to minority ownership
interests.

In December 2003, the FASB reissued FIN 46 with certain modifications and
clarifications. Application of this guidance was effective for interests in
certain VIEs commonly referred to as special-purpose entities (SPEs) as of
December 31, 2003. Application for all other types of entities was required as
of March 31, 2004, unless previously applied.

Management evaluated the applicability of the revised FIN 46 to various other
investments and interests as of March 31, 2004, including low-income housing
partnership interests, historic tax credit partnerships, investments in certain
real estate projects, leveraged leasing structures, and certain trust accounts
to determine whether these entities are VIEs and whether the Corporation is
either a primary beneficiary or a significant interest holder in the VIE. The
impact of adopting the revised FIN 46 is described below.

National City invests in low-income housing and historic tax credit projects
primarily through its subsidiary, National City Community Development
Corporation for the purpose of providing a source of private sector financing
for projects to promote economic development, create employment opportunities
and contribute to the enhancement of the community. Investments principally
consist of real estate projects and venture/working capital. The Corporation
accounts for these partnership investments under the equity method of
accounting, with a carrying value of $342 million at December 31, 2004. As a
limited partner in these projects, National City is allocated tax credits and
deductions associated with the underlying projects. The adoption of FIN 46 as of
March 31, 2004, resulted in the consolidation of one low-income housing project
with assets and liabilities each totaling $7 million. The Corporation also holds
significant interests in other low-income housing and historic tax credit
projects in which the maximum exposure to loss would be limited to the initial
capital investment contributed.

2004 ANNUAL REPORT

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
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The Investment Real Estate (IRE) group, a business unit within the Wholesale
Banking line of business, delivers financial services to real estate investors
and developers. National City receives origination fees and fees for credit
administration services. IRE primarily originates collateralized and guaranteed
loan facilities for the acquisition and development of land, construction, and
semi-permanent financing. Property types include multi-family and single family
residential, retail, office, commercial and industrial property. In many cases,
these loans represent variable interests in a VIE of which National City is not
the primary beneficiary. The Corporation's maximum exposure to loss is mitigated
by the underlying collateral and guarantees.

3. ACQUISITIONS AND DIVESTITURES

ACQUISITIONS: On April 9, 2004, National City Corporation completed its
acquisition of Allegiant Bancorp, Inc. (Allegiant), a bank holding company
operating 36 retail bank branch offices in the St. Louis, Missouri metropolitan
area. The acquisition of Allegiant allowed the Corporation to expand its product
offerings and delivery channels into the St. Louis market. Under the terms of
the merger, each share of Allegiant common stock was exchanged for .833 shares
of National City common stock, $27.25 in cash, or a combination of cash and
stock. In connection with the transaction, substantially all of Allegiant's
common stock was exchanged, resulting in the issuance of approximately 14
million shares of National City common stock and a cash payment of $23 million.
The total cost of the transaction was $493 million. The common shares issued
were valued at $32.42 per share, representing an average of closing market
prices for two days before and after the date the merger terms were agreed to
and announced.

On July 1, 2004, the Corporation completed its acquisition of Provident
Financial Group, Inc. (Provident), a bank holding company operating 65 branch
banking offices in the Cincinnati and Dayton, Ohio metropolitan areas. The
acquisition of Provident expanded National City's product offerings and delivery
channels into the southwestern Ohio market. Under the terms of the transaction,
each share of Provident common stock was exchanged for 1.135 shares of National
City common stock and each share of Provident preferred stock was exchanged for
one share of National City Series D convertible preferred stock. This
transaction resulted in the issuance of approximately 57 million shares of
National City common stock, 70 thousand convertible preferred shares and a small
cash payment for fractional shares. The total cost of the transaction was $2.2
billion. The common shares issued were valued at $34.99 per share, representing
an average of closing market prices for two days before and after the date the
merger terms were agreed to and announced. The convertible preferred shares were
issued at their common stock equivalent value as of the merger announcement
date. The cost of this acquisition also included the fair value of stock options
exchanged and forward purchase contracts assumed of $86 million and $59 million,
respectively.

On October 5, 2004, the Corporation completed its acquisition of Wayne Bancorp,
Inc. (Wayne), an $825 million asset banking company operating 23 branches in
several northeastern Ohio counties, for a cash price of $182 million.

The assets and liabilities of these acquired entities were recorded on the
balance sheet at their estimated fair values as of their respective acquisition
dates, and their results of operations have been included in the consolidated
statement of income from those dates. Refer to Note 4 for discussion on
severance and other restructuring costs incurred in connection with these
acquisitions and to Note 11 for further discussion on goodwill and intangible
assets.

The following table shows the excess purchase price over carrying value of net
assets acquired, purchase price adjustments, and resulting goodwill for the
Corporation's acquisitions:

2004 ANNUAL REPORT

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The following table summarizes the estimated fair value of the net assets
acquired related to these acquisitions:

The estimated fair values of the acquired assets and liabilities, including
identifiable intangible assets, are preliminary and subject to refinement as
exit plans are finalized and additional information becomes available. Any
subsequent adjustments to the fair values of assets and liabilities acquired,
identifiable intangible assets, or other purchase accounting adjustments will
result in adjustments to goodwill within the first 12 months following the date
of acquisition.

The following unaudited pro forma consolidated financial information presents
the combined results of operations of National City, Allegiant, Provident, and
Wayne as if the acquisitions had occurred as of the beginning of 2004 and 2003,
respectively.

The pro forma results include amortization of fair value adjustments on loans,
deposits, and debt, amortization of newly created intangibles, and post-merger
acquisition related charges. The pro forma number of average common shares
outstanding includes adjustments for shares issued for the acquisitions and the
impact of additional dilutive securities but does not assume any incremental
share repurchases. The pro forma results presented do not reflect cost savings
or revenue enhancements anticipated from the acquisitions and are not
necessarily indicative of what actually would have occurred if the acquisitions
had been completed as of the beginning of each period presented, nor are they
necessarily indicative of future results.

On January 15, 2005, the Corporation completed the acquisition of Charter One
Vendor Finance for a cash payment of $310 million. Charter One Vendor Finance
serves major vendors, such as manufacturers, value-added resellers, and select
specialized lessors, in middle- and large-ticket equipment and software markets,
and finances equipment and real estate for franchises of selected, leading
franchisors. A post-closing purchase price adjustment will be made based upon
the value of assets acquired on the closing date.

DIVESTITURES: On October 1, 2004, the Corporation completed the sale of seven
branches located in the Upper Peninsula of Michigan, resulting in a pretax gain
of $14 million.

On October 15, 2004, the Corporation sold its 83%-owned payment processing
subsidiary, National Processing, Inc. (NPI) for $1.2 billion in cash. The buyer
purchased all of NPI's outstanding common stock for $26.60 per share. The
Corporation recognized a pretax gain on the sale of its share of the subsidiary
of $714 million. In conjunction with the sale, the Corporation, through its bank
subsidiary National City Bank of Kentucky, entered into a Service and
Sponsorship Agreement with NPI. This agreement relates to the United Airlines
card processing agreement, whereby the buyer, through NPI, made a one-time
payment of $36 million to the Corporation in exchange for the Corporation's
agreement to release NPI from its obligation to indemnify the Corporation
against any losses or claims arising from the United Airlines card processing
agreement. As a result, the Corporation has retained the contractual obligation
to process card transactions for United Airlines. Refer to Note 22 for the
related discussion on the Corporation's chargeback exposure.

On December 1, 2004, the Corporation completed the sale of Provident's subprime
servicing business (Provident PCFS). The Provident PCFS business was part of the
acquisition of Provident on July 1, 2004. This transaction provided evidence of
the fair values assigned to the assets and liabilities of this business. A net
reduction in PCFS' net assets recorded in connection with the Provident
acquisition and an increase in goodwill of $23 million was recognized as a
result of this sale. A potential post-closing purchase price reduction may occur
if PCFS is replaced as servicer under any of the servicing agreements
transferred to the buyer prior to December 1, 2009.

2004 ANNUAL REPORT

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
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On June 30, 2004, the Corporation sold its Corporate Trust Bond Administration
business for $65 million in cash, resulting in a pre-tax gain of $62 million,
recorded in other noninterest income. Assets under administration transferred in
this transaction were approximately $10.8 billion.

4. RESTRUCTURING CHARGES

The Corporation has implemented restructuring plans related to the integration
of Allegiant, Provident and Wayne. These plans were formulated prior to the
acquisition of these entities and are anticipated to be substantially complete
by December 31, 2005. Costs incurred for employee terminations consist of
severance, relocation, retention, and outplacement benefits. Certain costs
associated with severance, relocation, and outplacement benefits were recognized
in the allocation of the purchase price to acquired assets and liabilities.
Retention benefits are expensed over the required service period. Exit and
termination costs relating to the exit of Provident PCFS, facility leases, and
other contract termination costs, were also recognized in the allocation of the
purchase price to acquired assets and liabilities.

In connection with these acquisitions, a severance liability of $65 million and
an exit costs liability of $230 million were recognized in the allocation of the
purchase price to acquired assets and liabilities. As these activities are
completed, the associated liabilities will be adjusted to reflect the actual
costs incurred resulting in an increase or decrease to goodwill. During the year
ended December 31, 2004, the Corporation recorded $39 million of severance and
other employee-related expense, of which approximately half was related to
retention benefits.

During 2003, the Corporation implemented various cost-reduction initiatives and
recognized severance and related charges of $82 million. Of the total charge
recognized, $77 million was recorded to salaries, benefits, and other personnel
expense and was associated with a voluntary retirement program and position
eliminations across all lines of business. The remaining $5 million was recorded
to third-party services expense for outplacement services.

A rollforward of the severance and restructuring liability for the years ended
December 31, 2004 and 2003 is presented in the table that follows. The table
also includes severance expenses incurred in the normal course of business.
Except for severance charges incurred by the National Processing line of
business, all severance and related termination expenses were recorded as
unallocated corporate charges within the Parent and Other category.

Effective October 15, 2004, the Corporation sold its former subsidiary, National
Processing, resulting in the transfer of all severance liabilities to the buyer.
Accordingly, as of December 31, 2004, all severance and restructuring
liabilities related to one segment - Parent and Other.

Effective December 1, 2004, the Corporation sold Provident's PCFS subprime
servicing business which resulted in the payment of many of the exit costs
accrued. The terms of the PCFS sale provide that the Corporation will be
reimbursed for severance costs incurred for PCFS employees who are not offered
comparable positions with the buyer.

Substantially all acquisition-related severance and related employee benefits
will be paid out by December 2005. The remaining balance of exit and other
termination costs consists primarily of lease and other contract terminations
which are expected to be paid by December 31, 2005.

2004 ANNUAL REPORT

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5. SECURITIZATION ACTIVITY

The Corporation periodically sells pools of credit card receivables and
automobile loans through securitization transactions. Small Business
Administration (SBA) loans are also purchased and then sold by the Corporation.
Provident, acquired in 2004, had also securitized home equity loans and lines of
credit, and automobile leases. The home equity securitizations were structured
to achieve sale treatment in accordance with SFAS 140, and as a result, the
loans and lines of credit were removed from the balance sheet, a net gain on
sale for each transaction was recognized, and retained interests in the form of
interest-only strips were recorded. The fair value of interest only strips and
the aggregate principal balances of the home equity loans and lines associated
with the securitizations acquired were $3 million and $84 million, respectively,
as of the acquisition date.

On February 25, 2004, the Corporation established the National City Auto
Receivables Trust 2004-A into which it sold, through securitization, $890
million of fixed-rate, closed-end automobile loans. A pretax gain of $9 million
on this term securitization was recorded in other noninterest income. Retained
interests in the form of interest-only strips, subordinated tranches, and dealer
rebate receivables were also recognized with initial carrying values of $32
million, $46 million, and $1 million, respectively. In addition, a servicing
asset was established in the amount of $10 million. See Note 1 for further
details regarding the accounting for servicing assets.

During 2004 and 2003, the Corporation securitized pools of SBA loans totaling $9
million and $52 million, respectively. Retained interests in the form of
interest-only strips were recognized with an initial carrying value of
approximately $660 thousand and $4 million in connection with the 2004 and 2003
securitizations, respectively. The SBA loans securitized were sold servicing
released and transaction costs were expensed in conjunction with the sale.
During 2004, the Corporation sold the interest-only strips associated with the
SBA loan pools securitized in 2003.

On January 31, 2002, National City sold $425 million of credit card receivables
to the National City Credit Card Master Trust and recognized a pretax gain of
$25 million, which was recorded in other noninterest income. Retained interests
in the form of interest-only strips and subordinated tranches were also
recognized with initial carrying values of $5 million and $27 million,
respectively. Transaction costs of $2 million incurred in connection with the
securitization were deferred and are being amortized over the revolving term of
the securitization. The transaction costs deferred in connection with the credit
card securitizations consisted primarily of securities underwriting, filing, and
professional services fees.

On March 27, 2002, the Corporation established the National City Auto
Receivables Trust 2002-A into which it sold, through securitization, $1.1
billion of fixed-rate, closed-end automobile loans. A pretax gain of $25 million
was recorded as a result of the securitization and was recorded in other
noninterest income. Retained interests in the form of interest-only strips,
subordinated tranches, and dealer rebate receivables were also recognized with
initial carrying values of $41 million, $62 million, and $2 million,
respectively. In addition, a servicing asset was created in the amount of $17
million. See Note 1 for further details regarding the accounting for servicing
assets.

A summary of the assumptions used to value the credit card retained interests
and automobile retained interests and servicing asset at the time of the
securitizations were as follows:

2004 ANNUAL REPORT

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
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A summary of the assumptions used to value the home equity retained interests at
the time of the Provident acquisition were as follows:

(a) Monthly principal repayment rate assumption relates to home equity lines of
credit and cumulative prepayment rate (CPR) relates to home equity loans.

(b) The home equity securitizations are credit enhanced with cash collateral
accounts that are maintained within the securitization vehicle. The cash
collateral accounts absorb all credit losses with respect to the securitized
loans.

(c) Yield represents the weighted-average of fixed-rate loan and variable-rate
lines of credit.

A summary of the components of managed loans, representing both owned and
securitized loans, along with quantitative information about delinquencies and
net credit losses is presented in the following tables. The automobile loans
presented represent the managed portfolio of indirect prime automobile loans.
The SBA loans represent securitized loans originally purchased and then sold by
the Corporation.

The Corporation's credit card receivables recognized on the consolidated balance
sheet are expected to increase following the revolving period of the credit card
securitization.

2004 ANNUAL REPORT

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Certain cash flows received from the securitization trusts follow:

A summary of the fair values of the interest-only strips and servicing assets
retained, key economic assumptions used to arrive at the fair values, and the
sensitivity of the December 31, 2004, fair values to immediate 10% and 20%
adverse changes in those assumptions follows. The sensitivities are
hypothetical. 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.

During 2004, actual credit losses for the auto securitizations exceeded their
initial projections developed at the time of the securitizations. As a result,
the cumulative loss curve was increased to 2.25% and this change is reflected in
the expected static pool loss assumption disclosed in the sensitivity analysis.

(a) Represents interest-only strips recognized in connection with the credit
card securitization series 2000-1, 2001-1 and 2002-1.

(b) Represents weighted-average assumptions and aggregate declines in fair value
for all credit card securitization series.

2004 ANNUAL REPORT

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
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(a) Represents interest-only strips and servicing assets associated with the
automobile securitization series 2004-A and 2002-A.

(b) Represents weighted-average assumptions and aggregate declines in fair value
for all automobile securitization series.

(c) Absolute prepayment speed.

(d) Carrying value of servicing assets at December 31, 2004 was $7.4 million.

(a) Represents interest-only strips recognized in connection with the home
equity securitization series 1998-A,1999-A and 2000-A.

(b) Represents weighted-average assumptions and aggregate declines in fair value
for all home equity securitization series.

(c) Monthly principal repayment rate assumption relates to home equity lines of
credit and cumulative prepayment rate (CPR) relates to home equity loans.

(d) Yield represents a weighted-average of fixed-rate loans and variable-rate
lines of credit.

2004 ANNUAL REPORT

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6. ASSET-BACKED COMMERCIAL PAPER CONDUIT

Prior to September 29, 2002, the Corporation served as the administrative agent
and investment advisor to a commercial paper conduit (North Coast Funding, LLC)
that purchased high-grade assets from the Corporation and certain corporate
customers and then issued high-grade commercial paper to third-party investors
collateralized by such assets. The conduit was established in 2000, and at that
time was considered an unconsolidated qualified special-purpose entity under the
guidelines of SFAS 140.
Effective September 29, 2002, the asset sale agreement between North Coast
Funding, LLC and National City SPC, Inc. was amended to grant the conduit the
right to sell assets at its sole discretion. All parties to the conduit and the
rating agencies were informed of the intent to amend the agreement and the
independent third-party owner of the conduit approved the amendment. The nature
of the amendment caused the conduit to lose its status as a qualifying
special-purpose entity. As a result, under applicable accounting guidance, the
assets and liabilities and results of operations of the conduit were
consolidated in the financial statements of the Corporation. During the fourth
quarter of 2002, the remaining commercial paper borrowings held by third-party
investors matured and the conduit was legally dissolved.

7. LEASES

National City leases commercial equipment and automobiles to customers. The
leases are classified as either lease financings or operating leases based on
the terms of the lease arrangement. When a lease is classified as a lease
financing, the future lease payments, net of unearned income and the estimated
residual value of the leased property at the end of the lease term, are recorded
as an asset within the loan portfolio. The amortization of the unearned income
is recorded as interest income. When a lease is classified as an operating
lease, the cost of the leased property, net of depreciation, is recorded as
equipment leased to others on the balance sheet. Rental income is recorded in
noninterest income while the depreciation on the leased property is recorded in
noninterest expense. At the expiration of a lease, the leased property is either
sold or another lease agreement is initiated.

LEASE FINANCINGS: Lease financings, included in portfolio loans on the
consolidated balance sheet, consist of direct financing and leveraged leases of
commercial and other equipment, primarily computers and office equipment,
manufacturing and mining equipment, commercial trucks and trailers, railroad
equipment, and airplanes, along with retail automobile lease financings.
Commercial equipment lease financings are included in commercial loans, while
automobile lease financings are included in other consumer loans. The
Corporation ceased originating retail automobile leases in December 2000,
however, additional automobile leases financings were acquired as part of the
acquisition of Provident. No new leases have been originated since the
acquisition date, and this portfolio will run off over time as the leases expire
and the automobiles are sold.

A summary of lease financings by type at December 31 follows:

The components of the net investment in lease financings at December 31 follow:

A rollforward of the residual value component of lease financings follows:

The commercial lease residual value write-downs recorded during 2004 and 2003
were primarily associated with various commercial aircraft leases. The
write-downs consisted of $1 million and $16 million in 2004 and 2003,
respectively, attributable to decreases in residual values which were charged to
other noninterest expense, $8 million and $6 million in 2004 and 2003,
respectively, attributable to credit losses which were charged to the allowance
for loan losses, and $3 million and $16 million

2004 ANNUAL REPORT

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
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in 2004 and 2003, respectively, attributable to the write-off of unearned income
and other related accounts. All recoveries and write-downs of consumer lease
residual values were charged to noninterest expense.

At December 31, 2004, the minimum future lease payments to be received from
lease financings were as follows:

EQUIPMENT LEASED TO OTHERS: Equipment leased to others represents equipment
owned by National City that is leased to customers under operating leases.
Commercial equipment includes aircraft and other transportation, manufacturing,
data processing, medical, and office equipment leased to commercial customers
while consumer equipment consists of automobiles leased to retail customers. The
majority of the balance of consumer leased equipment at December 31, 2004, was
acquired through the acquisition of Provident. As discussed above with regard to
lease financings, National City ceased originating retail automobile leases in
2000 and plans to let the acquired automobile portfolio run off over time. The
totals below also include the carrying value of any equipment previously leased
to customers under either operating or financing leases that are in the process
of being either re-leased or sold.

A summary of the net carrying value of equipment leased to others by type at
December 31 follows:

Depreciation expense on equipment leased to others totaled $124 million in 2004,
$17 million in 2003, and $24 million in 2002.

At December 31, 2004, aggregate minimum future rental payments to be received
from equipment leased to others were as follows:

8. LOANS, ALLOWANCE FOR LOAN LOSSES AND ALLOWANCE FOR LOSSES ON LENDING-RELATED
COMMITMENTS

Total portfolio loans outstanding were recorded net of unearned income,
unamortized premiums and discounts, deferred loan fees and costs, and fair value
adjustments associated with acquired loans of $328 million and $209 million at
December 31, 2004 and 2003, respectively.

To provide for the risk of loss inherent in the process of extending credit,
National City maintains an allowance for loan losses and an allowance for losses
on lending-related commitments. In the fourth quarter of 2004, the allowance for
losses on lending-related commitments was reclassified from the allowance for
loan losses to other liabilities. Previously reported periods were restated to
conform to the current period presentation. The reclassifications had no effect
on the provision for credit losses, which continues to be comprised of the sum
of the provision for loan losses and the provision for credit losses on lending
related commitments, nor on net income or stockholder's equity.

Activity in the allowance for loan losses follows:

In 2004, the allowance related to loans acquired, sold or securitized represents
the allowance associated with the acquisitions of Allegiant, Provident, and
Wayne. In 2003 and 2002, allowance acquired, sold or securitized represents the
allowance for loan losses transferred to the bases of credit card and automobile
loans either sold through securitization during the year or held for
securitization as of the end of the year.

The reduction in net charge-offs in 2004 was primarily the result of improved
credit quality in the commercial portfolios, partially offset by net charge-offs
associated with portfolios acquired through acquisitions. Net charge-offs in
2003 were affected by higher levels of delinquencies and losses across all
portfolios and a $17 million charge recognized in connection with the transfer
of $967 million of residential real estate loans from the former Altegra
portfolio to loans held for sale. This charge was recognized to record the loans
at estimated fair value prior to sale.

2004 ANNUAL REPORT

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A summary of changes in the allowance for losses on lending-related commitments
follows:

The allowance related to lending-related commitments acquired is associated with
the acquisitions of Allegiant, Provident, and Wayne.

Nonperforming loans totaled $469 million and $550 million at December 31, 2004
and 2003, respectively. For loans classified as nonperforming at December 31,
2004, the contractual interest due and actual interest recognized on those loans
during 2004 was $43 million and $9 million, respectively. Included in
nonperforming loans were impaired loans, as defined under SFAS 114, aggregating
$133 million and $263 million at December 31, 2004 and 2003, respectively.
Average impaired loans for 2004, 2003, and 2002 totaled $212 million, $358
million, and $354 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 2004
and 2003 was $16 million and $22 million, respectively. At December 31, 2004,
impaired loans with an associated allowance totaled $63 million, while $70
million of impaired loans had no related allowance. At December 31, 2003, $75
million of impaired loans had an associated allowance, while $188 million of
impaired loans had no related allowance. During 2004, 2003, and 2002, interest
recognized on impaired loans while they were considered impaired was not
material.

9. SECURITIES

Securities available for sale follow:

The other category includes Federal Reserve and Federal Home Loan Bank stock,
certain retained interests in securitizations, and the Corporation's internally
managed equity portfolio of bank and thrift common stock investments, which had
an amortized cost and fair value of $208 million and $236 million, respectively,
at December 31, 2004, and $7 million and $8 million, respectively, at December
31, 2003.

The following table presents the age of gross unrealized losses and associated
fair value by investment category.

Management does not believe any individual unrealized loss as of December 31,
2004 represents an other-than-temporary impairment. The unrealized losses
reported for mortgage-backed securities relate primarily to securities issued by
FNMA, FHLMC and private institutions. These unrealized losses are primarily
attributable to changes in interest rates and individually were 4% or less of
their respective amortized cost basis. The Corporation has both the intent and
ability to hold the securities contained in the previous table for a time
necessary to recover the amortized cost.

2004 ANNUAL REPORT

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
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The following table presents the amortized cost, fair value, and
weighted-average yield of securities at December 31, 2004 by maturity:

(a) Yield on debt securities only; equity securities and retained interests in
securitizations are 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 and retained interests in
securitizations 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, 2004, the fair value of securities pledged to secure public and
trust deposits, U.S. Treasury notes, security repurchase agreements, and
derivative instruments totaled $7.9 billion.

At December 31, 2004, 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 2004, 2003, and 2002, gross securities gains of $25 million, $52 million, and
$109 million and gross securities losses of $6 million, $5 million, and $28
million were recognized, respectively.
10. PRINCIPAL INVESTMENTS

The principal investment portfolio is managed within the Wholesale Banking line
of business. The direct portfolio primarily consists of investments in the
consumer, retail, manufacturing, automotive, commercial services, and building
products industries with the largest industry constituting approximately 32% of
the total portfolio. The indirect portfolio consists of investments in private
equity funds managed by third parties. Each fund is diversified according to the
terms of the fund's agreement and the general partner's direction. A rollforward
of principal investments follows:

(a) Represents principal investments acquired with Provident

(b) Consists primarily of interest, dividends, and fee income

(c) Consists of fair value adjustments, realized gains and losses on the return
of capital, and principal investment write-offs

Accounting policies for principal investments are included in Note 1.
Commitments to fund principal investments are discussed in Note 22.

2004 ANNUAL REPORT

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11. GOODWILL AND OTHER INTANGIBLE ASSETS

A rollforward of goodwill by line of business for 2004 and 2003 follows:

The goodwill acquired for each line of business above relates to the
acquisitions of Allegiant Bancorp, Inc., Provident Financial Group, Inc., Wayne
Bancorp, Inc., and other small acquisitions. For each acquisition, goodwill was
allocated to the business segments above based upon the relative fair value of
the assets and liabilities assigned to each business segment. Goodwill sold in
2004 relates to the sale of National Processing. Refer to Note 3 for further
discussion of these activities.

The Corporation has finite-lived intangible assets capitalized on its balance
sheet pertaining to core deposit, credit card, merchant portfolios, operating
lease, and other intangibles. Merchant portfolio intangibles were associated
with the former National Processing subsidiary. A summary of core deposit,
credit card, and merchant portfolios, and other intangible assets at December 31
follows:

Core deposit intangibles and other intangibles in the form of noncompete
agreements of $32 million and $3 million, respectively, were recognized as part
of the acquisition of Allegiant. Core deposit intangibles, operating lease
intangibles, and other intangibles consisting primarily of customer contracts
and noncompete agreements, in the amounts of $133 million, $47 million, and $17
million, respectively, were recognized as part of the acquisition of Provident.
Core deposit intangibles and other intangibles in the form of noncompete
agreements in the amounts of $21 million and $2 million, respectively, were
recognized as part of the acquisition of Wayne Bancorp, Inc.

Amortization expense on finite-lived intangible assets totaled $67 million, $23
million, and $21 million for 2004, 2003, and 2002, respectively. Amortization
expense on finite-lived intangible assets is expected to total $68 million, $35
million, $28 million, $23 million, and $19 million for the calendar years 2005
through 2009, respectively. These amounts exclude amortization associated with
intangibles associated with National Processing and are exclusive of any changes
in amortization associated with pending acquisitions or other dispositions.

2004 ANNUAL REPORT

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
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12. SERVICING ASSETS

MORTGAGE SERVICING RIGHTS (MSRS): MSRs recognized on conforming residential real
estate loans sold servicing retained are capitalized by the Corporation's
National City Mortgage subsidiary. MSRs associated with nonconforming
residential real estate loans are capitalized by the Corporation's First
Franklin subsidiary and are then transferred to the National City Home Loan
Services (NCHLS) subsidiary. First Franklin began capitalizing nonconforming
MSRs in November 2004. Additionally, during 2004, nonconforming MSRs were
acquired as part of the acquisition of Provident, and were sold during the
fourth quarter of 2004 as part of the sale of Provident PCFS. Refer to Note 3
for further discussion. Changes in the carrying value of MSRs and the associated
valuation allowance follow:

MSRs are evaluated for impairment and a valuation allowance is established
through a charge to income when the carrying value of the MSR, including hedge
accounting adjustments, exceeds the fair value and is determined to be
temporary. Other-than-temporary impairment is recognized when the recoverability
of a recorded valuation allowance is determined to be remote, taking into
consideration historical and projected interest rates and loan pay-off activity.
When this situation occurs, the unrecoverable portion of the valuation allowance
is applied as a direct write-down to the carrying value of the MSRs. Unlike a
valuation allowance, a direct write-down permanently reduces the carrying value
of the MSRs and the valuation allowance, precluding subsequent recoveries. There
were no other-than-temporary write-downs recognized during 2004. During the
second quarter of 2003, management determined that $138 million of previously
established valuation allowance was not recoverable and reduced both the asset
and the valuation allowance. At January 1, 2002, the valuation allowance
recognized against the carrying value of MSRs totaled $88 million. Activity in
the valuation allowance during 2002 totalled $246 million and was entirely
related to impairment charges.

The fair value of MSRs was estimated by calculating the present value of
estimated future net servicing cash flows, taking into consideration actual and
expected mortgage loan prepayment rates, discount rates, servicing costs, and
other economic factors, which are determined based on current market conditions.
The expected and actual rates of mortgage loan prepayments are the most
significant factors driving the valuation. Increases in mortgage loan
prepayments reduce estimated future net servicing cash flows because the life of
the underlying loan is reduced. In determining the fair value of the MSRs,
mortgage interest rates, which are used to determine prepayment rates, and
discount rates are held constant over the estimated life of the portfolio.
Expected mortgage loan prepayment rates are derived from a third-party model and
adjusted to reflect National City's actual prepayment experience. At December
31, 2004, the fair value of MSRs exceeded the carrying value reported in the
consolidated balance sheet by $12 million. This difference represents increases
in the fair value of certain MSRs accounted for under SFAS 140 that were not
permitted to be recorded above their cost basis, net of accumulated amortization
and SFAS 133 adjustments.

2004 ANNUAL REPORT

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The key economic assumptions used to estimate the value of the MSRs at December
31, 2004 and 2003 are presented in the table that follows. A sensitivity
analysis of the current fair value to immediate 10% and 20% adverse changes in
those assumptions as of December 31, 2004 is also presented. These sensitivities
are hypothetical. 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 MSRs is calculated
independently without changing any other assumption. In reality, changes in one
factor may result in changes in another (for example, changes in mortgage
interest rates, which drive changes in prepayment rate estimates, could result
in changes in the discount rates), which might magnify or counteract the
sensitivities.

The key economic assumptions used in determining the fair value of MSRs
capitalized in 2004 and 2003 were as follows:

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Risk associated with declines in the estimated fair value due to increases in
mortgage loan prepayments is managed using derivative instruments that are
expected to increase in value when interest rates decline. The Corporation
typically strives to include the derivative instruments it uses to protect the
value of the conforming MSRs in SFAS 133 hedge relationships in order to record
gains and losses on both the assets and the associated derivative instruments
simultaneously in the income statement. MSRs not included in the SFAS 133
relationships may not be written up above their initial carrying value, adjusted
for amortization, limiting the amount of gains that might otherwise be
recognized to offset losses on the derivative instruments, which are always
carried at fair value. Notes 1 and 25 provide further discussion on how
derivative instruments are accounted for, the nature of the derivative
instruments used by the Corporation, the risks associated with the use of
derivative instruments, and ineffective hedge and other gains and losses
generated by derivative instruments during the current and prior year.

OTHER SERVICING RIGHTS: The Corporation also recognizes servicing assets on
commercial real estate loans sold servicing retained through its subsidiaries
Red Mortgage Capital and Capstone Realty. These subsidiaries and their
commercial real estate servicing right assets were acquired as part of the
Provident acquisition. Commercial real estate servicing assets are recorded in
other assets on the consolidated balance sheet. Changes in the carrying value of
the commercial real estate servicing assets and the associated valuation
allowance follow:

2004 ANNUAL REPORT

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
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13. PROPERTIES AND EQUIPMENT

The composition of properties and equipment follow:

Depreciation and amortization of properties and equipment totaled $219 million
in 2004, $178 million in 2003, and $159 million in 2002.

14. FEDERAL FUNDS BORROWED AND SECURITY REPURCHASE AGREEMENTS

Detail of Federal funds borrowed and security repurchase agreements follows:

Federal funds borrowed and security repurchase agreements have maturities of six
months or less.

15. BORROWED FUNDS

Detail of borrowed funds follows:

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

Commercial paper is issued by the Corporation's subsidiary, National City Credit
Corporation, and is due in four months or less.

Senior bank notes are issued by National City's bank subsidiaries and have
maturities of six months or less at December 31, 2004.

The other category includes the Corporation's liability related to mortgage
loans available for repurchase under GNMA optional repurchase programs. See
further discussion in Note 1. This liability totalled $233 million and $240
million at December 31, 2004 and 2003, respectively.

16. LONG-TERM DEBT

The composition of long-term debt follows. This note excludes the amounts
associated with the junior subordinated notes owed to the unconsolidated
subsidiary trusts. See Note 17 for further discussion on these obligations.

2004 ANNUAL REPORT

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The amounts above represent the par value of the debt adjusted for any
unamortized discount, other basis adjustments related to hedging the debt with
derivative instruments, or fair value adjustments recognized in connection with
debt acquired through acquisitions. The Corporation uses derivative instruments,
primarily interest rate swaps and caps, to manage interest rate risk on its
long-term debt. Interest rate swaps are used to hedge the fair value of certain
fixed-rate debt by converting the debt to variable rate and are also used to
hedge the cash flow variability associated with certain variable-rate debt by
converting the debt to fixed rate. Interest rate caps are used to hedge cash
flow variability by capping the interest payments associated with variable-rate
debt issuances. Interest rate swaps and caps used to convert the Corporation's
debt are based on the one- or three-month London Interbank Offering Rate (LIBOR)
rate, the Federal Funds rate, or the Prime rate. Further discussion on
derivative instruments is included in Notes 1 and 25.

The subordinated notes of the holding company and bank subsidiaries qualify for
Tier 2 capital under the regulatory capital requirements of the federal banking
agencies. Further discussion on regulatory capital requirements is included in
Note 18.

A summary of par values and weighted-average rates of long-term debt as of
December 31, 2004 follows. The weighted-average effective rate includes the
effects of derivative instruments used to manage interest rate risk and
amortization of fair value adjustments associated with debt acquired through
acquisitions.

Senior bank notes are issued by National City's bank subsidiaries. During 2004,
senior bank notes with a par value of $13.3 billion were issued by the bank
subsidiaries. At December 31, 2004, $2.5 billion were contractually based on a
fixed rate of interest and $16.0 billion were contractually based on a variable
rate of interest. Senior bank notes have maturities ranging from 2005 to 2078.

All subordinated notes of the bank subsidiaries were issued at fixed rates, pay
interest semi-annually and may not be redeemed prior to maturity. The 8.375%
senior note of the holding company was acquired as part of the Provident
acquisition, is fixed-rate, pays interest quarterly, and is callable on July 15,
2007. All remaining senior notes and subordinated notes of the holding company
were issued at fixed rates, pay interest semi-annually and may not be redeemed
prior to maturity. During 2004, the holding company issued senior notes with a
par value of $200 million. In January 2005, the holding company issued $275
million of 4.90% fixed-rate senior notes due January 15, 2015.

At December 31, 2004, Federal Home Loan Bank (FHLB) advances consisted of $860
million of fixed-rate obligations and $4.0 billion of variable-rate obligations.
The Corporation's maximum borrowing limit with the FHLB totaled $5.3 billion at
December 31, 2004. The Corporation pledged $17.9 billion in residential real
estate loans, $6.0 billion in home equity lines of credit, and $12 million in
mortgage-backed securities as collateral against FHLB borrowings at December 31,
2004. FHLB advances have maturities ranging from 2005 to 2030.

At December 31, 2004, long-term debt maturities for the next five years and
thereafter were as follows: $9.2 billion in 2005, $7.7 billion in 2006, $2.9
billion in 2007, $1.3 billion in 2008, $3.3 billion in 2009, and $3.4 billion
thereafter. These maturities are based upon the par values of long-term debt.

Secured debt financings were obtained from acquisitions, primarily Provident.
Secured debt financings outstanding at December 31, 2004 relate to fixed-rate
obligations of $342 million and $2 million collateralized by auto and equipment
leases, respectively, and variable-rate obligations of $302 million
collateralized by auto leases. The auto lease secured debt financings pay
interest monthly, can be redeemed prior to maturity, and were collateralized by
$942 million in auto leases and $172 million in cash at year end. The equipment
lease secured debt financings outstanding at December 31, 2004 pay interest
quarterly, cannot be redeemed prior to maturity, and were collateralized by $2
million in equipment leases. Secured debt financings have contractual maturities
ranging from 2005 to 2009. During the fourth quarter of 2004, the Corporation
exercised early call options on obligations secured by auto and equipment leases
totaling $52 million and $19 million, respectively. In January 2005, the
Corporation exercised an early call option on obligations secured by auto leases
totaling $10 million.

A credit agreement dated April 12, 2001, as amended, with a group of
unaffiliated banks allows the Corporation to borrow up to $375 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 its
long-term debt rating. The fee is currently 10 basis points on the amount of the
credit facility. There have been no borrowings outstanding under this agreement.

2004 ANNUAL REPORT

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
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17. JUNIOR SUBORDINATED DEBENTURES OWED TO UNCONSOLIDATED SUBSIDIARY TRUSTS AND
CORPORATION-OBLIGATED MANDATORILY REDEEMABLE CAPITAL SECURITIES OF
SUBSIDIARY TRUSTS HOLDING SOLELY DEBENTURES OF THE CORPORATION

As of December 31, 2004, National City sponsored seven trusts, First of America
Capital Trust I, Fort Wayne Capital Trust I, Allegiant Capital Trust II,
Provident Capital Trust I, Provident Capital Trust III, Provident Capital Trust
IV, and Banc Services Corp. Statutory Trust I, of which 100% of the common
equity is owned by the Corporation. The Allegiant capital trust, Provident
capital trusts, and the Banc Services Corp. Statutory trust were acquired as
part of the acquisitions of Allegiant Bancorp, Inc., Provident Financial Group,
Inc., and Wayne Bancorp, respectively. The trusts were formed for the purpose of
issuing corporation-obligated mandatorily redeemable capital securities (the
capital securities) to third-party investors and investing the proceeds from the
sale of such capital securities solely in junior subordinated debt securities of
the Corporation (the debentures). The debentures held by each trust are the sole
assets of that trust.

Distributions on the capital securities issued by First of America Capital Trust
I, Fort Wayne Capital Trust I, and Provident Capital Trust I are payable
semi-annually at a rate per annum equal to the interest rate being earned by the
trust on the debentures held by these trusts. Distributions on the capital
securities issued by Allegiant Capital Trust II, Provident Capital Trust III,
and Provident Capital Trust IV are payable quarterly at a rate per annum equal
to the interest rate being earned by the trust on the debentures held by these
trusts. Distributions on the capital securities issued by Banc Services Corp.
Statutory Trust I are payable quarterly at a variable rate equal to the
three-month LIBOR rate plus 3.45 basis points, with a maximum interest rate of
11.95%. The interest rate associated with the Banc Services Corp. Statutory
Trust capital securities was 6.00% at December 31, 2004.

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 the trusts are first redeemable, in whole or in part, by the Corporation as
follows:

On September 21, 2004 and September 30, 2004, respectively, the Corporation
redeemed the capital securities of two other trusts, Allegiant Capital Trust I
and Provident Capital Trust II, which had also been acquired as part of the
Allegiant and Provident acquisitions.

The capital securities held by the trusts qualify as Tier 1 capital for the
Corporation under Federal Reserve Board guidelines. On May 6, 2004, the Federal
Reserve issued proposed rules that retain Tier 1 capital treatment for trust
preferred securities but with stricter limits. Under the proposal, after a
three-year transition period, the aggregate amount of trust preferred securities
and certain other capital elements will retain its current limit of 25% of Tier
1 capital elements, net of goodwill. The amount of trust preferred securities
and certain other elements in excess of the limit could be included in Tier 2
capital, subject to restrictions. This proposal would have no impact on the
Corporation's Tier 1 capital.

Consolidated debt obligations related to subsidiary trusts holding solely
debentures of the Corporation follows. These amounts represent the par value of
the obligations owed to the subsidiary trusts, including the Corporation's
ownership interest in the trusts, plus basis adjustments related to hedging the
obligations with derivative instruments and fair value adjustments recognized at
the acquisition date for the Allegiant, Provident, and Wayne obligations.

18. REGULATORY RESTRICTIONS AND CAPITAL RATIOS

The Corporation and its banking subsidiaries are subject to various regulatory
capital requirements of 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

2004 ANNUAL REPORT

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by regulators that could have a material effect on financial position and
operations.

Regulatory and other capital measures at December 31 follow:

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

Tier 1 capital consists of total equity plus qualifying capital securities and
minority interests, less unrealized gains and losses accumulated in other
comprehensive income, certain intangible assets, and adjustments related to the
valuation of servicing assets and certain equity investments in nonfinancial
companies (principal investments).

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 exclude certain intangible
and servicing assets.

National City's Tier 1, total risk-based capital, and leverage ratios for the
current period 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 the most recent notification from the Federal Deposit
Insurance Corporation, which was December 15, 2004, each of the Corporation's
subsidiary banks was considered well-capitalized under the regulatory framework
for prompt corrective action. There have been no conditions or events since
these filings were made that management believes have changed any subsidiary
bank's capital category. As of December 31, 2004, each of the subsidiary banks
was also categorized as well-capitalized.

As discussed in Note 17, the capital securities held by the First of America,
Fort Wayne, Allegiant, Provident, and Banc Services Corp. subsidiary trusts
qualify as Tier 1 capital for the Corporation under Federal Reserve Board
guidelines. On May 6, 2004, the Federal Reserve issued proposed rules that
retain Tier 1 capital treatment for trust preferred securities but with stricter
limits. Under the proposal, after a three-year transition period, the aggregate
amount of trust preferred securities and certain other capital elements will
retain its current limit of 25% of Tier 1 capital elements, net of goodwill. The
amount of trust preferred securities and certain other elements in excess of the
limit could be included in Tier 2 capital, subject to restrictions. This
proposal would have no impact on the Corporation's Tier 1 capital.

The Corporation's subsidiary banks are required to maintain noninterest bearing
reserve balances with the Federal Reserve Bank. The required reserve balance was
$132 million at December 31, 2004.

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 paid by subsidiary banks to the parent company are also subject to
certain legal and regulatory limitations. The subsidiary banks may pay dividends
in 2005 of $1.2 billion, plus an additional amount equal to their net profits
for 2005, as defined by statute, up to the date of any such dividend
declaration, without prior regulatory approval.

The Corporation's mortgage banking and broker/dealer subsidiaries are also
required to maintain minimum net worth capital requirements with various
governmental agencies. The mortgage banking subsidiaries' net worth requirements
are governed by the Department of Housing and Urban Development and the
broker/dealer's net worth requirements are governed by the United States
Securities and Exchange Commission. As of December 31, 2004, these subsidiaries
met their respective minimum net worth capital requirements.

19. STOCKHOLDERS' EQUITY

STOCK REPURCHASES: In December 2004, the Corporation's Board of Directors
authorized the repurchase of 25 million shares of National City common stock,
subject to an aggregate purchase limit of $1.1 billion. This new authorization
is incremental to the 50 million share repurchase authorization, which was
authorized by the Corporation's Board of Directors in February 2004. The
February authorization is subject to a purchase limit of $2.0 billion and
replaced all prior share repurchase authorizations. Shares repurchased under
these programs are held for reissue in connection with stock compensation plans
and for general corporate purposes. During 2004, 2003, and 2002, the Corporation
repurchased 40.1 million, 11.5 million, and 1.3 million shares, respectively of
its common stock. As of December 31, 2004, 37.1 million shares remain authorized
for repurchase.

PREFERRED STOCK: In connection with the acquisition of Provident on July 1,
2004, 70,272 shares of National City Series D convertible non-voting preferred
stock were issued. Each share of Series D preferred stock is convertible at any
time by the holder into 15.96 shares of National City common stock. The
conversion rate is

2004 ANNUAL REPORT

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
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subject to adjustment in the event the Corporation takes certain actions such as
paying a dividend in stock, splitting its common stock, or combining its common
stock into a smaller number of shares. Common shares deliverable upon conversion
of the preferred stock have been reserved for future issuance. The Corporation
has no right to redeem the preferred stock. Dividends are paid on the preferred
stock when dividends are paid on common stock at the dividend rate per common
share multiplied by the preferred stock conversion ratio. The Series D preferred
stock shall be preferred over the Corporation's common stock in the event of
involuntary liquidation or dissolution of the Corporation. In such event, the
preferred holders will be entitled to receive $100 per share, or $7 million,
plus accrued and unpaid dividends.

On August 30, 2002, the Corporation redeemed all 13,969 shares of its then
outstanding preferred stock, stated value of $50 per share, at a redemption
price of $50.50137 per share, representing a total cost of $37 thousand.

PREFERRED SECURITIES OF SUBSIDIARIES: As part of the acquisition of Provident,
PFGI Capital Corporation (PFGI Capital) became a consolidated subsidiary of the
Corporation. PFGI Capital had issued 6.6 million equity units (PRIDES) to
outside investors for $165 million. This ownership by outside investors is
accounted for as a minority interest in the consolidated financial statements.
The principal objective of PFGI Capital is to hold and manage commercial
mortgage loan assets and other authorized investments acquired from the
Corporation to generate net income for distribution to its stockholders. PFGI
Capital has elected to be treated as a real estate investment trust (REIT) for
federal income tax purposes.

Holders of PRIDES are entitled to receive non-cumulative cash distributions at a
dividend rate of 7.75%. Under the forward purchase contract described below, the
Corporation will also make quarterly contract payments to holders at the rate of
1.25% of the stated amount per year. The PRIDES have a liquidation preference of
$25 per share. Under certain regulatory circumstances, the PRIDES will be
automatically exchanged into National City preferred stock.

PRIDES contain a forward purchase contract. Each forward purchase contract
obligates the holder to buy, on or before August 17, 2005, for $25.00, a number
of newly issued shares of National City common stock equal to the settlement
rate, determined as follows:

- - if the applicable market value of National City common stock is equal to or
greater than $25.6033, the settlement rate will be 0.9764;

- - if the applicable market value of National City common stock is between
$25.6033 and $21.5154, the settlement rate will be equal to the $25.00 stated
amount divided by the applicable market value; and

- - if the applicable market value is less than or equal to $21.5154, the
settlement rate will be 1.1620.
Applicable market value is defined as the average of the closing price per share
of National City common stock on each of the 20 consecutive trading days ending
on the fifth trading day immediately preceding August 17, 2005.

In January 2005, holders of 1.8 million PRIDES exercised their forward purchase
contracts. The Corporation issued 1.7 million shares of National City common
stock for proceeds of $44.5 million.

OTHER COMPREHENSIVE INCOME: A summary of activity in accumulated other
comprehensive income follows:

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20. 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 of outstanding convertible preferred stock, commitments to issue
additional shares pursuant to forward contracts, and certain unvested restricted
stock and unexercised stock option awards. During 2004, the Corporation issued
convertible preferred stock and assumed an obligation to issue additional shares
under a forward contract in connection with the acquisition of Provident (see
discussion of forward contracts in Note 19). For the years ended December 31,
2004, 2003, and 2002, options to purchase 2,294,126, 18,136,018, and 22,866,306
shares of common stock, respectively, were outstanding but not included in the
computation of diluted net income per share because the option exercise price
exceeded the fair value of the stock such that their inclusion would have had an
anti-dilutive effect. Diluted net income is not adjusted for preferred dividend
requirements since preferred shares are assumed to be converted from the
beginning of the period.

21. INCOME TAXES

The composition of income tax expense follows:

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 in the following table:

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

A net operating loss carryforward of $81 million is remaining at December 31,
2004 which was acquired in

2004 ANNUAL REPORT

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
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connection with Provident. This carryforward expires in 2021. Management
believes that future taxable income will be sufficient to fully realize the
deferred tax asset associated with this carryforward.

For the years ended 2004, 2003, and 2002, income tax benefits of $45 million,
$27 million, and $20 million, respectively, were credited to stockholders'
equity related to the exercise of nonqualified employee stock options.

22. COMMITMENTS, CONTINGENT LIABILITIES, GUARANTEES, AND RELATED PARTY
TRANSACTIONS

COMMITMENTS: A summary of the contractual amount of significant commitments
follows:

Commitments to extend credit are agreements to lend. 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.
Certain lending commitments for residential mortgage loans to be sold into the
secondary market are considered derivative instruments in accordance with SFAS
133. The changes in the fair value of these commitments due to changes in
mortgage interest rates are recorded on the balance sheet as either derivative
assets or liabilities and are included in residential real estate loans in the
above table. Further discussion on derivative instruments is included in Notes 1
and 25.

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 under-lying 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 enters into forward contracts for the future delivery or
purchase of fixed-rate residential mortgage loans and mortgage-backed
securities, commercial real estate loans to reduce the interest rate risk
associated with loans held for sale, commitments to fund loans, and mortgage
servicing rights. These contracts are also considered derivative instruments
under SFAS 133 and the fair value of these contracts are recorded on the balance
sheet as either derivative assets or derivative liabilities. Further discussion
on derivative instruments is included in Notes 1 and 25.

The Corporation has principal investment commitments to provide equity and
mezzanine capital financing to private and public companies through either
direct investments in specific companies or through investment funds and
partnerships. The timing of future cash requirements to fund such commitments is
generally dependent on the investment cycle. This cycle, the period over which
privately held companies are funded by private equity investors and ultimately
sold, merged, or taken public through an initial offering, can vary based on
overall market conditions as well as the nature and type of industry in which
the companies operate.

The Corporation invests in low-income housing, small-business commercial real
estate, and historic tax credit projects to promote the revitalization of
low-to-moderate-income neighborhoods throughout the local communities of its
banking subsidiaries. As a limited partner in these unconsolidated projects, the
Corporation is allocated tax credits and deductions associated with the
underlying projects. The commitments to fund civic and community investments
represent funds committed for existing and future projects.

The Corporation and certain of its subsidiaries occupy certain 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 $139 million in 2005, $125 million in
2006, $102 million in 2007, $89 million in 2008, $76 million in 2009, and $331
million thereafter. The Corporation also subleases and receives rental income on
certain leased properties. As of December 31, 2004, aggregate future minimum
rentals to be received under noncancelable subleases totaled $42 million. Total
operating lease expense, net of sublease income, recorded under all operating
leases was $137 million, $131 million, and $132 million in 2004, 2003, and 2002,
respectively.

CONTINGENT LIABILITIES AND GUARANTEES: The Corporation enters into residential
mortgage loan sale agreements with investors in the normal course of business.
These agreements usually require certain representations concerning credit
information, loan documentation, collateral, and insurability. On occasion,
investors have requested the Corporation to indemnify them against losses on
certain loans or to repurchase loans which the investors believe do not comply
with applicable representations. Upon completion of its own investigation, the
Corporation generally repurchases or provides indemnifi-

2004 ANNUAL REPORT

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cation on certain loans. Indemnification requests are generally received within
two years subsequent to sale.

Management maintains a liability for estimated losses on loans expected to be
repurchased or on which indemnification is expected to be provided and regularly
evaluates the adequacy of this recourse liability based on trends in repurchase
and indemnification requests, actual loss experience, known and inherent risks
in the loans, and current economic conditions. Total loans sold, including loans
sold with servicing released, were $79.8 billion, $117.5 billion, and $72.1
billion in 2004, 2003, and 2002, respectively. Total loans repurchased or
indemnified during 2004, 2003, and 2002 were $508 million, $265 million, and
$206 million, respectively. Loans indemnified that remain outstanding as of
December 31, 2004 totaled $228 million. In addition, total loans sold of $292
million remained uninsured as of December 31, 2004. The volume and balance of
uninsured government loans may be affected by processing or notification delays.
Management believes the majority of the uninsured loans at December 31, 2004
will become insured during the normal course of business. To the extent
insurance is not obtained, the loans may be subject to repurchase. Uninsured
government loans which were ultimately repurchased have been included in the
repurchase totals above. Losses charged against the liability for estimated
losses, including uninsured government loans, were $127 million, $65 million,
and $42 million for 2004, 2003, and 2002, respectively. At December 31, 2004 and
2003, the liability for estimated losses on repurchase and indemnification was
$209 million and $167 million, respectively, and was included in other
liabilities on the balance sheet.

In connection with the acquisition of Provident, the Corporation assumed a
guarantee made to Fannie Mae on behalf of its subsidiary Red Mortgage Capital,
an approved Fannie Mae Delegated Underwriting and Servicing (DUS) mortgage
lender. Under the Fannie Mae DUS program, Red Mortgage Capital underwrites,
funds, and sells mortgage loans on multifamily rental projects. Red Mortgage
Capital then services these mortgage loans on Fannie Mae's behalf. Participation
in the Fannie Mae DUS program requires Red Mortgage Capital to share the risk of
loan losses with Fannie Mae. Under the loss sharing arrangement, Red Mortgage
Capital and Fannie Mae split losses with one-third assumed by Red Mortgage
Capital and two-thirds assumed by Fannie Mae. The Corporation provides a
guarantee to Fannie Mae that it would fulfill all payments required of Red
Mortgage Capital under the loss sharing arrangement if Red Mortgage Capital
fails to meet its obligations. At December 31, 2004, Red Mortgage Capital
serviced loans with outstanding principal balances aggregating $4.1 billion
under the DUS program. The guarantee will continue until such time as the loss
sharing agreement is amended or Red Mortgage Capital no longer shares the risk
of losses with Fannie Mae. The fair value of the guarantee, in the form of
reserves for losses under the Fannie Mae DUS program, is recorded in accrued
expenses and other liabilities on the balance sheet and totaled $10 million at
December 31, 2004.

The guarantee liability for standby letters of credit was $49 million and $51
million at December 31, 2004 and 2003, respectively. This liability is recorded
in accrued expenses and other liabilities on the balance sheet. See above for
further discussion on standby letters of credit and their associated outstanding
commitments.

The Corporation, through various subsidiaries, has historically provided
merchant card processing or sponsorship services. Under the rules of VISA(R) and
MasterCard(R), when a merchant processor acquires card transactions, it has
certain contingent liabilities for the transactions processed. This contingent
liability arises in the event of a billing dispute between the merchant and a
cardholder that is ultimately resolved in the cardholder's favor. In such a
case, the transaction is "charged back" to the merchant and the disputed amount
is credited or otherwise refunded to the cardholder. If the Corporation is
unable to collect this amount from the merchant's account, and if the merchant
refuses or is unable to reimburse the Corporation for the chargeback due to
liquidation or other reasons, the Corporation will bear the loss for the amount
of the refund paid to the cardholder.

Effective October 15, 2004, National Processing, Inc. was sold as described in
Note 3. As a result of this sale, the Corporation has exited the merchant card
processing business and has no continuing or future exposure to potential
chargeback liabilities, except for an immaterial exposure acquired with
Provident and the exposure to United Airlines as described in the following
paragraphs.

Under the terms of the National Processing sale agreement, the Corporation
retained the contractual obligation to process card transactions for United
Airlines, which is currently operating under Chapter 11 protection. The
Corporation was paid $36 million to retain this obligation. Pursuant to FASB
Interpretation 45, regarding accounting for guarantees, this amount is deemed to
be the fair value of this obligation and has been recorded in accrued expenses
and other liabilities at December 31, 2004.

The Corporation will honor its existing contractual obligations to United
Airlines but does not intend to renew the contract when its current term expires
in November 2005. In the event of liquidation of United Airlines, the
Corporation could become financially responsible for refunding tickets purchased
through VISA(R) and MasterCard(R) under the chargeback rules of those
associations. At December 31, 2004, the estimated dollar value of tickets
purchased, but as yet unflown, under the United Airlines merchant processing
contract was approximately $547 million. Based upon available information, this
amount represents management's best estimate of its maximum potential chargeback
exposure related to United Airlines, Inc. The Corporation holds no significant
collateral under this contract.

In November 2004, Congress passed the Intelligence Reform and Terrorism
Prevention Act of 2004. This legislation included an extension of the airline
ticket re-accommodation provision, which requires airlines to honor tickets
through November 2005 for other airlines that may suspend, interrupt or
discontinue services due to insolvency or liquidation.

2004 ANNUAL REPORT

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
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Based on information currently available to the Corporation, management believes
the risk of a material loss under the chargeback rules is unlikely.

National City and its subsidiaries are involved in a number of legal proceedings
arising from the conduct of their business activities. These actions include
claims brought against the Corporation and its subsidiaries where the
Corporation acted as depository bank, lender, underwriter, fiduciary, financial
advisor, broker or other business activities. Although the ultimate outcome
cannot be predicted with certainty, the Corporation believes that it has valid
defenses for all asserted claims. Reserves are established for legal claims when
losses associated with the claims are judged to be probable and the loss can be
reasonably estimated.

A claim has been asserted against a subsidiary of the Corporation concerning
management of investments held in a trust. The complaint alleges failure to
adequately and timely diversify investments held in this trust, which resulted
in investment losses. The plaintiffs are seeking damages of as much as $100
million. The court has denied the Corporation's request to dismiss this claim. A
trial date has been set for September 2005. Discovery and development of expert
testimony is currently underway and the Corporation will conduct a vigorous
defense. Management believes that this claim does not have merit and that the
risk of material loss is unlikely.

Based on information currently available, advice of counsel, available insurance
coverage and established reserves, the Corporation believes that the eventual
outcome of all claims against the Corporation and its subsidiaries, will not,
individually or in the aggregate, have a material adverse effect on the
Corporation's consolidated financial position or results of operations. However,
in the event of unexpected future developments, it is possible that the ultimate
resolution of these matters, if unfavorable, may be material to the Company's
results of operations for a particular period.

RELATED PARTY TRANSACTIONS: The Corporation has no material related party
transactions which would require disclosure. In compliance with applicable
banking regulations, the Corporation may extend credit to certain officers and
directors of the Corporation and its banking subsidiaries in the ordinary course
of business under substantially the same terms as comparable third-party lending
arrangements.

23. STOCK OPTIONS AND AWARDS

National City maintains various incentive and nonqualified stock option plans
and also maintains various restricted stock plans. These plans provide for the
granting of stock options and restricted shares to eligible employees and
directors.

On April 27, 2004, stockholders approved the National City Corporation Long-Term
Cash and Equity Incentive Plan (the Long-Term Incentive Plan), which
consolidates and replaces all long-term incentive programs under one plan and
formalizes the use of performance measures in connection with all long-term
awards. Under the Long-Term Incentive Plan, up to 45 million shares of National
City common stock may be made the subject of option rights, stock appreciation
rights, restricted awards, common stock awards, or restricted stock units, in
the aggregate. In addition to the aggregate limit on awards of National City
common stock, the Long-Term Incentive Plan includes the following limitations:
no more than 18 million shares may be awarded in the form of restricted stock,
restricted stock units, or common stock awards; and no more than 40 million
shares may be awarded in the form of incentive stock options.

STOCK OPTIONS: Stock options may currently be granted to officers and key
employees to purchase shares of common stock at the market price of the common
stock on the date of grant. These options generally become exercisable to the
extent of 25% to 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 market price 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.

On January 1, 2003, the Corporation prospectively adopted the fair value method
of accounting for stock options under SFAS 123. Further discussion of the impact
of this change is included in Note 1. Compensation expense recognized related to
National City Corporation's stock option plans totaled $25 million and $12
million, in 2004 and 2003, respectively. Compensation expense of $4 million was
recorded in 2002 related to the fair value of stock options for former employees
in situations where vesting continued upon a change in employee status.

RESTRICTED SHARES: Restricted common shares may currently be awarded 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 recognizes compensation expense over the restricted period. The
weighted-average grant-date fair value of restricted share awards granted during
2004, 2003, and 2002 was $35.39, $32.28, and $29.69, respectively. Compensation
expense recognized in 2004, 2003, and 2002 totaled $30 million, $18 million, and
$12 million, respectively, related to restricted share plans.

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

Upon consummation of the Allegiant and Provident acquisitions, all outstanding
options issued by Allegiant and Provident were converted into equivalent
National City options. Cancelled activity includes both forfeited and expired
awards and options.

Information about stock options outstanding at December 31, 2004 follows:

At December 31, 2004, 2003, and 2002, options for 44,503,822, 40,448,964, and
38,664,840 shares of common stock, respectively, were exercisable. As of
December 31, 2004, stock option and restricted stock awards available for grant
under the Long-Term Incentive Plan totaled 27 million and 11 million shares,
respectively.

Additional stock option and restricted award information as of December 31, 2004
follows, which includes plans assumed through various acquisitions. As of
December 31, 2004, outstanding options related to these acquired plans totaled
7,639,678 shares with a weighted-average exercise price per share of $26.52.

(a) In 1995, in commemoration of its 150th anniversary, National City granted to
virtually all employees a total of 5.6 million options to purchase common
stock at the then market price. The options became exercisable to the extent
of 33% per year beginning two years from the grant date. The 308,500
remaining outstanding options at December 31, 2004 are all exercisable.

(b) Provident's 2000 Employee Stock Option Plan provided for the grant of stock
options to employees, other than executive officers. Options were granted at
an exercise price of not less than 95% of market price at the time of the
grant, for a term of up to 10 years. Options vested as determined by
Provident's Compensation Committee. The 131,235 remaining outstanding
options at December 31, 2004 are all exercisable.

Provident's 2002 Outside Directors Stock Option Plan provided for the grant
of 2,000 options to each non-employee director upon election to its Board
and upon each subsequent annual election. The options were granted at an
exercise price equal to their market price, for a term of 10 years. Options
vested as determined by Provident's Compensation Committee. The 72,642
remaining outstanding options at December 31, 2004 are all exercisable.

24. PENSION AND OTHER
POSTRETIREMENT BENEFIT PLANS

National City has a noncontributory, defined benefit pension plan covering
substantially all employees. Employees retained from the Allegiant, Provident
and Wayne acquisitions will be eligible to participate in the Corporation's
defined benefit pension plan effective January 1, 2005. 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 postretirement 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.

2004 ANNUAL REPORT

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
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Using an actuarial measurement date of October 31, plan assets for each of the
plans follows:

The asset allocation for the defined benefit pension plan as of the measurement
date, by asset category, is as follows:

The investment objective for the defined benefit pension plan is to maximize
total return with tolerance for slightly above average risk. Asset allocation
strongly favors equities, with a target allocation of approximately 80% equity
securities, 15% fixed income securities, and 5% cash. Due to volatility in the
market, the target allocation is not always desirable and asset allocations will
fluctuate. A core equity position of large cap stocks will be maintained.
However, more aggressive or volatile sectors will be meaningfully represented in
the asset mix in pursuit of higher returns. Higher volatility investment
strategies such as credit risk, structured finance, and international bonds will
be appropriate strategies in conjunction with the core position.

It is management's intent to give the investment managers flexibility within the
overall guidelines with respect to investment decisions and their timing.
However, certain investments require specific review and approval by management.
Management is also informed of anticipated changes in nonproprietary investment
managers, significant modifications of any previously approved investment, or
anticipated use of derivatives to execute investment strategies.

Equity securities include $197 million and $164 million of National City common
stock at October 31, 2004 and 2003, respectively. The $197 million of National
City Common stock included in plan assets at October 31, 2004 represented
5,048,833 shares of stock at a closing price of $38.97 as of that date. During
2004, dividends of $7 million were paid on the shares included in plan assets.

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

The weighted-average assumptions used to determine benefit obligations at the
measurement date were as follows:

At December 31, 2004, the projected benefit payments for the defined benefit
pension plan and the postretirement benefit plan, net of the Medicare subsidy,
totaled $66 million and $11 million in 2005, $67 million and $10 million in
2006, $69 million and $10 million in 2007, $72 million and $10 million in 2008,
$72 million and $10 million 2009, and $456 million and $52 million in years 2010
through 2014, respectively. The projected payments were calculated using the
same assumptions as those used to calculate the benefit obligations listed
above.

2004 ANNUAL REPORT

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

The weighted-average assumptions used to determine net periodic benefit and net
periodic cost for the years ended December 31 were as follows:

The expected long-term rate of return was estimated using market benchmarks for
equities and bonds applied to the plan's target asset allocation. The expected
return on equities was computed utilizing a valuation framework, which projected
future returns based on current equity valuations rather than historical
returns. Due to active management of the plan's assets, the return on the plan's
equity investments historically has exceeded market averages. Management
estimated the rate by which the plan assets would outperform the market in the
future based on historical experience adjusted for changes in asset allocation
and expectations for overall lower future returns on equities compared to past
periods.

National City does not anticipate making a contribution to its defined benefit
pension plan in 2005 as the plan is currently overfunded. The 2005 pension plan
assumptions used to determine net periodic cost will be a discount rate of 6.00%
and an expected long-term return on plan assets of 8.50%.

The assumed health care cost trend rate at the measurement date follows:

The health care trend rate assumption affects only those participants retired
under the plan prior to April 1, 1989.

Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plan. A one-percentage-point change in the assumed
health care cost trend rate would have the following effect:

In December 2003, a bill was signed into law that expands Medicare benefits,
primarily adding a prescription drug benefit for Medicare-eligible retirees
beginning in 2006. The law also provides a federal subsidy to companies that
sponsor postretirement benefit plans that provide prescription drug coverage. In
May 2004, FASB Staff Position 106-2, Accounting and Disclosure Requirements
Related to the Medicare Prescription Drug, Improvement and Modernization Act of
2003, was issued which provides guidance on accounting for the federal subsidy.
The provisions of FASB Staff Position 106-2 became effective for the Corporation
as of July 1, 2004 and have been applied prospectively. As a result of the
provisions of the Medicare Prescription Drug, Improvement and Modernization Act
of 2003, the postretirement benefit obligation decreased by $8 million and the
net periodic benefit cost decreased by $1 million for 2004. The Corporation
anticipates its benefit costs will continue to be somewhat lower as a result of
the new Medicare provisions.

The Corporation also maintains nonqualified supplemental retirement plans for
certain key employees. All benefits provided under these plans are unfunded, and
payments to plan participants are made by the Corporation. At December 31, 2004
and 2003, obligations of $90 million and $83 million, respectively, were
included in accrued expenses and other liabilities for these plans. For the
years ended December 31, 2004, 2003, and 2002, expense related to these plans
was $13 million, $21 million, and $15 million, respectively.

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. The Corporation provides up to a 6.9% matching
contribution. For the years ended 2004, 2003, and 2002, the expense related to
the plan was $72 million, $64 million, and $58 million, respectively. Included
in the 2004 expense is $4 million which relates to contributions for employees
of acquired entities. Also included is $9 million of contributions related to
National Processing which was sold effective October 15, 2004.

2004 ANNUAL REPORT

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76

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
- --------------------------------------------------------------------------------

25. 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 little or 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 an 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, such as mortgage-banking loan commitments,
which by definition qualify as derivative instruments under SFAS 133.

Market risk is the risk of loss arising from an adverse change in interest
rates, exchange rates, or equity prices. 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 include interest rate
swaps, interest rate futures, interest rate options, 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 environments.

SFAS 133 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. 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 an 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 an 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,
primarily market and credit risk. Market risk associated with changes in
interest rates is managed by establishing and monitoring limits as to the degree
of risk that may be undertaken as part of the Corporation's overall market risk
monitoring process carried out by the Asset/Liability Management Committee. See
further discussion of this process in the Market Risk section of the Financial
Review.

Credit risk occurs when 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 amount of net unrealized gains in
agreements outstanding, monitoring the size and the maturity structure of the
derivative portfolio, applying uniform credit standards to 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. At December 31, 2004, these collateral agreements
covered 99.7% of the notional amount of the total derivative portfolio,
excluding futures, forward commitments to sell or purchase mortgage loans or
mortgage-backed securities, and customer derivative contracts. At December 31,
2004, the Corporation held cash, U.S. government, and U.S. government-sponsored
agency securities with a fair value of $291 million to collateralize net gains
with counterparties and had pledged or delivered to counterparties U.S.
government and U.S. government-sponsored agency securities with a fair value of
$35 million to collateralize net losses with counterparties. The Corporation
typically does not have collateral agreements covering open forward commitments
to sell or purchase mortgage loans or mortgage-backed securities due to the fact
these contracts usually mature within 90 days. Open futures contracts are also
not covered by collateral agreements because 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.

Derivative contracts are valued using observable market prices, if available, or
cash flow projection models acquired from third parties. Pricing models used for
valuing derivative instruments are regularly validated by testing through
comparison with other third parties. The estimated fair value of a
mortgage-banking loan commitment is based on the change in estimated fair value
of the underlying mortgage loan and the probability that the mortgage loan will
fund within the terms of the loan commitment. The change in fair value of the
underlying mortgage loan is based on quoted mortgage-backed securities prices.
The probability that the loan will be funded is derived from the Corporation's
own historical empirical data. The change in the value of the underlying
mortgage loan is measured from the commitment date. At the time of issuance, the
estimated fair value of the commitment is zero. The valuations 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, 2004 and 2003.

2004 ANNUAL REPORT

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77

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FAIR VALUE HEDGES: The Corporation primarily uses interest rate swaps, interest
rate futures, interest rate caps and floors, interest rate options, and forward
purchase and sales commitments to hedge the fair values of mortgage loans held
for sale, mortgage servicing rights, certain fixed-rate commercial loans, and
available for sale securities for changes in interest rates.

The Corporation also uses 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 include purchased certificates of deposit, long-term
FHLB advances, corporate and subordinated long-term debt, and senior bank notes.

During 2004, 2003, and 2002, total net ineffective fair value hedge (losses)
gains of $(145) million, $70 million and $278 million, respectively, were
recognized. Detail of ineffective hedge gains and losses by hedge strategy are
presented in the table on page 78. Ineffective hedge gains and losses for
mortgage servicing rights and mortgage loans held for sale are included in
mortgage banking revenue on the income statement. Net ineffective hedge gains
and losses related to hedging commercial loans, available for sale securities,
and fixed-rate funding products are included in other noninterest income on the
income statement. There were no components of derivative instruments excluded
from the assessment of hedge effectiveness during 2004, 2003, and 2002.

CASH FLOW HEDGES: The Corporation hedges cash flow variability related to
variable-rate funding products, specifically FHLB advances, senior bank notes
and secured debt financings, through the use of pay-fixed interest rate swaps
and interest rate caps. The Corporation also uses forward starting pay-fixed
interest rate swaps and caps to hedge forecasted cash flows associated with debt
instruments expected to be issued subsequent to 2004.

During 2004, 2003, and 2002, the Corporation recognized net ineffective cash
flow hedge gains (losses) of $300 thousand, $100 thousand, and $(100) thousand,
respectively. These gains and losses are included in other noninterest income on
the income statement. There were no components of derivative instruments
excluded from the assessment of hedge effectiveness during 2004, 2003, and 2002.

Derivative gains and losses 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, 2004 and 2003, accumulated other
comprehensive income included a deferred after tax net loss of $7 million and
$68 million, respectively, related to derivatives used to hedge funding cash
flows. See Note 19 for further detail of the amounts included in accumulated
other comprehensive income. The net after tax derivative loss included in
accumulated other comprehensive income as of December 31, 2004 is projected to
be reclassified into interest expense in conjunction with the recognition of
interest payments on funding products through November 2014, with $20 million of
net loss expected to be reclassified within the next year. During 2004, 2003,
and 2002, pretax losses of $128 million, $189 million, and $160 million,
respectively, were reclassified into interest expense as adjustments to interest
payments on variable-rate funding products. Additionally, in 2002, pretax gains
of $2 million were reclassified into other noninterest income as part of the
gain on the automobile loan securitization. In 2004, a pretax loss of $4 million
was reclassified from accumulated other comprehensive income into other
noninterest income for cash flow hedges that were discontinued because
forecasted debt issuances originally contemplated were not probable of
occurring. There were no gains or losses reclassified into earnings during 2003
and 2002 arising from the determination that the original forecasted transaction
would not occur.

2004 ANNUAL REPORT

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78

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
- --------------------------------------------------------------------------------

Summary information regarding the interest rate derivatives portfolio used for
interest rate risk management purposes and designated as accounting hedges under
SFAS 133 at December 2004 and 2003 follows:

(a) Represents net ineffective hedge gain (loss) on hedging strategy for the
year.

(b) Mortgage loans held for sale were not designated in a SFAS 133 hedge
relationship in 2003 or 2002.

2004 ANNUAL REPORT

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79

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OTHER DERIVATIVE ACTIVITIES: The derivative portfolio also includes derivative
financial instruments not included in SFAS 133 hedge relationships. Those
derivatives include interest rate swaps, futures, options, and forwards used for
interest rate and other risk management purposes, as well as mortgage banking
loan commitments defined as derivatives under SFAS 133, and derivatives executed
with commercial banking customers, primarily interest rate swaps and options, to
facilitate their interest rate risk management strategies. Price risk associated
with mortgage banking loan commitments is managed primarily through the use of
other derivative instruments, such as forward sales of mortgage loans and
mortgage-backed securities. Because mortgage-banking loan commitments are
defined as derivative instruments under SFAS 133, the associated derivative
instruments used for risk management activities do not qualify for hedge
accounting under SFAS 133. The Corporation generally does not enter into
derivative transactions for purely speculative purposes. Gains and losses on
mortgage-banking related derivative financial instruments are included in
mortgage banking revenue on the income statement, while gains and losses on
other derivative financial instruments are included in other noninterest income.
A summary of derivative financial instruments not in SFAS 133 hedge
relationships by type of activity follows:

26. 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 an option-adjusted discounted cash flow model or other
valuation techniques. These techniques are significantly affected by the
assumptions used, including discount rates, market volatility, 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, 2004 and 2003. Excluded are certain items not
defined as financial instruments, including nonfinancial assets and intangibles,
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 fair value of the Corporation.

2004 ANNUAL REPORT

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80

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
- --------------------------------------------------------------------------------

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: The fair values of portfolio
loans and commercial and commercial real estate loans held for sale or
securitization are estimated using an option-adjusted discounted cash flow model
that discounts future cash flows using recent market interest rates, market
volatility, and credit spread assumptions. The fair values of mortgage loans
held for sale is based either upon observable market prices or prices obtained
from third parties.

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 an option-adjusted discounted cash flow model.

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 are estimated using an
option-adjusted discounted cash flow model that incorporates the Corporation's
current incremental borrowing rates for similar types of borrowing arrangements.

OTHER FINANCIAL INSTRUMENTS: The amounts shown under carrying value represent
the Corporation's estimated obligations under these off-balance sheet financial
instruments. These estimated obligations consist of deferred fees and expected
loss contingencies associated with the financial instruments. The carrying value
of these instruments approximates their fair values.

27. LINE OF BUSINESS RESULTS

At December 31, 2004, National City operated five major lines of business:
Consumer and Small Business Financial Services, Wholesale Banking, National City
Mortgage, National Consumer Finance, and Asset Management. Effective January 1,
2004, National City Mortgage, formerly a business unit within National Consumer
Finance, was designated as a separate line of business. Prior periods have been
restated to conform to the current line of business reporting structure. No new
business segments were created in connection with the acquisitions of Allegiant,
Provident or Wayne. Effective October 2004, National Processing was sold.

Consumer and Small Business Financial Services (CSB) provides banking services
to consumers and small businesses within National City's seven-state footprint.
In addition to deposit gathering and direct lending services provided through
the retail bank branch network, call centers, and the Internet, CSB's activities
also include small business banking services, dealer finance, education finance,
retail brokerage, and lending-related insurance services. Consumer lending
products include home equity, automobile, marine, and recreational vehicle
installment loans, government or privately guaranteed student loans, and credit
cards and other unsecured personal and business lines of credit. Major revenue
sources include net interest income on loan and deposit accounts, deposit
account service fees, debit and credit card interchange and service fees, and
ATM surcharge and net interchange fees. CSB's expenses are mainly personnel and
branch network support costs.

Wholesale Banking provides credit-related and treasury management services, as
well as capital markets and international services, to large- and medium-sized
corporations. Major products and services include: lines of credit, term loans,
leases, investment real estate lending, asset-based lending, structured finance,
syndicated lending, equity and mezzanine capital, treasury management, principal
investing, and international payment and clearing services. The majority of
revenue is driven by loans to middle-market companies with annual revenue in the
$5 million to $500 million range across a diverse group of industries, generally
within National City's seven-state footprint. Expenses include personnel and
support costs, in addition to credit costs.

2004 ANNUAL REPORT

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81

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

National City Mortgage primarily originates conventional residential mortgage
and home equity loans both within National City's banking footprint and
nationally. National City Mortgage's activities also include servicing mortgage
loans for third-party investors. Mortgage loans originated by National City
Mortgage generally represent loans collateralized by one-to-four family
residential real estate and are made to borrowers in good credit standing. These
loans are typically sold to primary mortgage market aggregators (Fannie Mae,
Freddie Mac, Ginnie Mae, or the Federal Home Loan Banks) and jumbo loan
investors. During 2004, approximately half of National City Mortgage mortgage
loans were originated through wholesale and correspondent channels, with the
remaining half being originated through retail mortgage branches operated by
National City Mortgage nationally, or through CSB bank branches within National
City's banking footprint. Significant revenue streams for National City Mortgage
include net interest income on loans held for sale and fee income related to the
origination, sale and servicing of loans. Expenses include personnel costs,
branch office costs, third-party outsourcing and loan collection expenses.

National Consumer Finance (NCF) is comprised of four business units and
originates home equity loans and nonconforming residential mortgage loans
nationally through correspondent relationships and a network of brokers.
Nonconforming mortgage loans are originated by First Franklin Financial
Corporation (First Franklin), a business unit within NCF, principally through
wholesale channels, including a national network of brokers and mortgage
bankers. During 2004, 33% of First Franklin originated loans were retained in
portfolio at NCF's National City Home Loan Services business unit. The remaining
loans sold during 2004 were primarily sold servicing released. First Franklin
began selling certain loans with servicing retained in November 2004. The
percentage of loans sold versus retained in any given period will vary depending
on product mix and market conditions. Nonconforming mortgages are generally not
readily saleable to primary mortgage market aggregators due to the credit
characteristics of the borrower, the underlying documentation, the loan-to-value
ratio, or the size of the loan, among other factors. The National Home Equity
business unit within NCF originates prime-quality home equity loans outside
National City's banking footprint. The National City Warehouse Resources
business unit provides emerging mortgage bankers across the country with lines
of credit for loan funding purposes. Significant revenue streams for NCF include
net interest income on loans and fee income related to the origination and sale
of loans. Expenses include personnel costs, branch office costs, and loan
collection expenses.

The Asset Management business includes both institutional asset and personal
wealth management. The institutional asset management business provides
investment management, custody, retirement planning services, and other
corporate trust services to institutional clients, and acts as the investment
advisor for the Armada(R) mutual funds. The clients served include publicly
traded corporations, charitable endowments and foundations, as well as unions,
residing primarily in National City's banking footprint and generally
complementing its corporate banking relationships. Personal wealth management
products and services include private banking services and tailored credit
solutions, customized investment management services, brokerage, estate and tax
planning, as well as trust management and administration for affluent
individuals and families. Personal wealth management also includes services
offered through its Sterling business unit which offers financial management
services and alternative investments for high net worth clients.

National Processing consists of National Processing, Inc., National City's
former 83%-owned payment processing subsidiary. In October 2004, this business
was sold. Refer to Note 3 for further discussion. National Processing's business
consisted of the authorization, processing, financial settlement, and reporting
of debit and credit card transactions, and financial settlement and reporting
solutions for large and mid-size corporate customers in the travel and health
care industries.

The business units are identified by the product or services offered and the
channel through which the product or service is delivered. The reported results
attempt to 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 as part of investment funding
activities. Asset securitizations related to credit card, automobile, and home
equity loans are also considered funding activities and the effects of such
securitizations are included within the Parent and Other category. Loans sold
through securitizations continue to be reflected as owned by the business unit
that manages those assets. 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 and expense eliminations, and unallocated corporate income
and expense. The intersegment revenue and expense amounts presented in the
tables relate to either services provided or asset sales between the operating
segments. The amounts do not include reimbursements related to expense
allocations and the effects of centrally managing interest rate risk. The
accounting policies of the individual business units are the same as those of
the Corporation. Prior period amounts have been restated to conform with the
current period's presentation.

Operating results of the business units are discussed in the Line of Business
Results section of the Financial Review. Selected financial information by line
of business is included in the following table.

2004 ANNUAL REPORT

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82

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
- --------------------------------------------------------------------------------

(a) Includes tax-equivalent adjustment for tax-exempt interest income.

(b) Includes gain on sale of National Processing of $486,822 after-tax in 2004.

2004 ANNUAL REPORT

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83

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28. FINANCIAL HOLDING COMPANY

Condensed financial statements of the holding company, which include
transactions with subsidiaries, follow:

BALANCE SHEETS

Securities and other investments totaling $115 million at December 31, 2004,
were restricted for use in certain of the Corporation's nonqualified benefit
plans. The borrowed funds from subsidiaries balance includes the junior
subordinated debt securities payable to the seven wholly owned subsidiary trusts
(the trusts). The holding company continues to guarantee the capital securities
issued by the trusts, which totaled $565 million at December 31, 2004. The
holding company also guarantees commercial paper issued by its subsidiary
National City Credit Corporation, which borrowings totaled $415 million at
December 31, 2004. Additionally, the holding company guarantees National City
Bank of Kentucky's financial obligation under this subsidiary's membership with
VISA(R) up to $600 million and MasterCard(R) up to $400 million. Refer to Note
22 for further discussion of contingent liabilities and guarantees related to
the Corporation's former merchant card processing business.

STATEMENTS OF INCOME

2004 ANNUAL REPORT

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84

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
- --------------------------------------------------------------------------------

STATEMENTS OF CASH FLOWS

At December 31, 2004 and 2003, retained earnings of the holding company included
$7.0 billion and $6.9 billion, respectively, of equity in undistributed net
income of subsidiaries.

2004 ANNUAL REPORT

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85

FORM 10-K

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

The Annual Report includes the materials required in Form 10-K filed with the
United States Securities and Exchange Commission. The integration of the two
documents gives stockholders and other interested parties timely, efficient, and
comprehensive information on 2004 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 United States 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, 2004

[ ] 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. [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). YES X NO ___

The aggregate market value of the registrant's outstanding voting common stock
held by nonaffiliates on June 30, 2004, determined using a per share closing
price on that date of $35.01, as quoted on the New York Stock Exchange, was
$21,286,882,569.

The number of shares outstanding of each of the registrant's classes of common
stock, as of December 31, 2004:

Common Stock, $4.00 Per Share - 646,749,650

Documents Incorporated By Reference:

Portions of the registrant's Proxy Statement (to be dated approximately March 9,
2005) 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 Related Stockholder
Matters; Item 13. Certain Relationships and Related Transactions; and Item 14.
Principal Accounting Fees and Services, of Part III.

2004 ANNUAL REPORT

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86

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

FORM 10-K CROSS REFERENCE INDEX

Reports on Form 8-K filed or furnished during the fourth quarter of 2004 and
through the date of this Form 10-K filing:

October 5, 2004 - National City issued a news release announcing the completion
of its acquisition of Wayne Bancorp, Inc.

October 8, 2004 - National City announced that the shareholders of National
Processing, Inc. (NPI) approved the sale of NPI to Bank of America pursuant to
the Agreement and Plan of Merger.

October 14, 2004 - National City issued a news release announcing its financial
results for the quarterly and year-to-date periods ended September 30, 2004, and
the availability of the September 30, 2004, Financial Supplement on its Web
site.

October 14, 2004 - National City filed a Form 8-K/A to the October 14, 2004,
Form 8-K, furnishing an updated news release announcing its financial results
for the quarterly and year-to-date periods ended September 30, 2004.

October 18, 2004 - National City announced the completion of the sale of
National Processing, Inc. to Bank of America.

December 13, 2004 - National City announced the posting of its November 30, 2004
Mid-Quarter Update to Financial Supplement to its Web site.

December 21, 2004 - National City announced that its Board of Directors
authorized the repurchase of an additional 25 million shares of outstanding
common stock.

December 22, 2004 - National City announced the January 1, 2005 adoption of the
National City Executive Long-Term Disability Plan.

January 12, 2005 - National City filed the following exhibits related to the
issuance of $275 million, 4.90% Senior Notes due January 15, 2015, under
National City Corporation's Form S-3 shelf registration dated May 5, 2003: Term
Agreement, dated January 5, 2005, between National City Corporation and Credit
Suisse First Boston LLC, and Form of 4.90% Senior Notes due January 15, 2015.

January 18, 2005 - National City issued a news release announcing its financial
results for the fourth quarter and fiscal year ended December 31, 2004, and the
availability of the December 31, 2004, Financial Supplement on its Web site.

The index of exhibits and any exhibits filed as part of the 2004 Form 10-K are
accessible at no cost on the Corporation's Web site at NationalCity.com or
through the United States Securities and Exchange Commission's Web site at
www.sec.gov. Copies of exhibits may also be requested at a cost of 30 cents per
page from National City's investor relations department.

Financial Statement Schedules - Omitted due to inapplicability or because
required information is shown in the consolidated financial statements or the
notes thereto.
- ----------------------------------------------------------

Note (1) - Incorporated by reference from the Corporation's Proxy Statement to
be dated approximately March 9, 2005.
- ----------------------------------------------------------

2004 ANNUAL REPORT

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87

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BUSINESS

National City Corporation (National City or the Corporation), founded in 1845,
is a $139.3 billion financial holding company headquartered in Cleveland, Ohio.
National City operates through an extensive distribution network in Ohio,
Indiana, Illinois, Kentucky, Michigan, Missouri, and Pennsylvania and also
conducts selected consumer lending businesses and other financial services on a
nationwide basis. Its primary businesses include commercial and retail banking,
consumer finance, asset management, and mortgage financing and servicing.
Operations are primarily conducted through more than 1,200 branch banking
offices located within National City's seven-state footprint and over 490 retail
and wholesale mortgage offices located throughout the United States. National
City and its subsidiaries had 35,230 full-time-equivalent employees at December
31, 2004.

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 financial holding companies. National City's banking
subsidiaries are subject to limitations with respect to transactions with
affiliates.

On July 30, 2002, the Senate and the House of Representatives of the United
States (Congress) enacted the Sarbanes-Oxley Act of 2002, a law that addresses,
among other issues, corporate governance, auditing and accounting, executive
compensation, and enhanced and timely disclosure of corporate information. The
New York Stock Exchange also issued new corporate governance rules, that were
approved by the Securities and Exchange Commission, intended to allow
stockholders to more easily and efficiently monitor the performance of companies
and directors.

As directed by Section 302(a) of Sarbanes-Oxley, National City's chief executive
officer and chief financial officer are each required to certify that National
City's Quarterly and Annual Reports do not contain any untrue statement of a
material fact. The rules have several requirements, including having these
officers certify that: they are responsible for establishing, maintaining and
regularly evaluating the effectiveness of National City's internal controls;
they have made certain disclosures to National City's auditors and the audit
committee of the Board of Directors about National City's internal controls; and
they have included information in National City's Quarterly and Annual Reports
about their evaluation and whether there have been significant changes in
National City's internal controls or in other factors that could significantly
affect internal controls subsequent to the evaluation.

The Board of Directors of National City approved a series of actions to
strengthen and improve its already strong corporate governance practices.
Included in those actions was the adoption of a new Code of Ethics, a Code of
Ethics for Senior Financial Officers, Corporate Governance Guidelines and new
charters for the Audit, Compensation, and Nominating and Board of Directors'
Governance Committees. More information on National City Corporation's corporate
governance practices is available on the National City Web site at
NationalCity.com.

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
removed 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 is derived from dividends paid
by its subsidiary banks. These dividends are subject to various legal and
regulatory restrictions as summarized in Note 18 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,
the Federal Deposit Insurance Corporation (FDIC), and the respective state
banking departments.

2004 ANNUAL REPORT

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FORM 10-K continued
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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, Illinois, Indiana, Kentucky, Michigan, Missouri, and Pennsylvania
have all adopted nationwide reciprocal interstate banking.

The Financial Reform, Recovery and Enforcement Act of 1989 (FIRREA) provided
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 owns its corporate headquarters building, National City Center,
located in Cleveland, Ohio. The Corporation also owns freestanding operation
centers in Columbus, Cincinnati, and Cleveland, Ohio, and Kalamazoo and Royal
Oak, Michigan. Certain of National City's significant subsidiaries occupy their
headquarters offices under long-term leases. The Corporation also leases
operations centers in Cleveland and Miamisburg, Ohio, Pittsburgh, Pennsylvania,
and Chicago, Illinois. Branch office locations are variously owned or leased.

LEGAL PROCEEDINGS

The information contained in Note 22 to the consolidated financial statements of
this Annual Report is incorporated herein by reference.

EXECUTIVE OFFICERS

The Executive Officers of National City (as of February 14, 2005) are as
follows:

The term of office for executive officers is one year.

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

2004 ANNUAL REPORT

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89

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

Mr. Daberko has been chairman and chief executive officer since 1995.

Mr. Kelly was appointed vice chairman in December 2004 and chief financial
officer in 2000. He was an executive vice president from 1994 to December 2004.

Mr. MacDonald III was appointed vice chairman in 2001. Prior to that time, he
was a senior executive vice president from 1999 to 2001 and an executive vice
president from 1993 to 1999.

Mr. Raskind was appointed vice chairman in December 2004. He was an executive
vice president from 2000 to December 2004. Prior to that time, he was vice
chairman of U.S. Bancorp.

Mr. Bell has been an executive vice president since 1996. He has been Chief Risk
Officer since April of 2004. From 2000 to 2004, he was head of the Capital
Markets Group.

Mr. Clark was appointed an executive vice president in 1998. Prior to that time
he was chief executive officer of National City Bank of Michigan/Illinois from
1998 to 2000.

Mr. Gellhausen was appointed an executive vice president in 2002. Prior to that
time, he was president and chief operating officer of National City Mortgage Co.
from 2000 to 2002 and senior vice president and comptroller of National City
Corporation from 1998 to 2000.

Mr. Geraghty was appointed an executive vice president in April 2004. He had
been a senior vice president since October 2002. He has been an executive vice
president of National City Bank since August 1999.

Mr. Golonski was appointed chairman and chief executive officer of National City
Bank of Pennsylvania in 1999. Prior to that time, he was president and chief
executive officer of National City Bank of Pennsylvania. He has been an
executive vice president since 1996.

Mr. Gorney has been an executive vice president since 1993.

Mr. Lathe has been an executive vice president since 2000. He was appointed
chairman and chief executive officer of NatCity Investments, Inc. in August 2004
and chairman and chief executive officer of National City Bank of the Midwest in
2000. Prior to that time, he was executive vice president of National City Bank
for the Syndications Division from 1998 to 2000.

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

Mr. 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 National City Bank.

Mr. Payne was appointed an executive vice president in April of 2004 and has
been with National City since July of 2001. Prior to that, Mr. Payne was with
First Union Corporation (now Wachovia Corporation) from July 1999 to June 2001.

Mr. Ramirez was appointed an executive vice president in 2000. Prior to that
time, he was senior vice president since 1994.

Mr. Rice was appointed an executive vice president and president and chief
executive officer of National City Bank in 2000. Prior to that time, he was
executive vice president of the Northcoast Region of National City Bank.

Ms. Seifert was appointed an executive vice president 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 of National City Bank of Indiana.

Mr. Zoeller was appointed an executive vice president in 2000. Since 1992, he
has been general counsel and secretary.

Mr. Gulick has been senior vice president and general auditor since 1995.

Mr. Crowl was appointed a senior vice president in October 2004 and has been
comptroller since April 2004. He was the Asset/Liability and Securitization
manager from November 1998 to April 2004.

Mr. Richlovsky has been senior vice president and treasurer since 1989.

2004 ANNUAL REPORT

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

CONTROLS AND PROCEDURES

National City's management is responsible for establishing and maintaining
effective disclosure controls and procedures, as defined under Rules 13a-15(e)
and 15d-15(e) of the Securities Exchange Act of 1934. As of December 31, 2004,
an evaluation was performed under the supervision and with the participation of
management, including the Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of the Corporation's disclosure
controls and procedures. Based on that evaluation, management concluded that
disclosure controls and procedures as of December 31, 2004 were effective in
ensuring material information required to be disclosed in this Annual Report on
Form 10-K was recorded, processed, summarized, and reported on a timely basis.
Additionally, there were no changes in the Corporation's internal control over
financial reporting that occurred during the quarter ended December 31, 2004
that have materially affected, or are reasonably likely to materially affect,
the Corporation's internal control over financial reporting.

Management's responsibilities related to establishing and maintaining effective
disclosure controls and procedures include maintaining effective internal
controls over financial reporting that are designed to produce reliable
financial statements in accordance with accounting principles generally accepted
in the United States. As disclosed in the Report on Management's Assessment of
Internal Control Over Financial Reporting on page 35 of this Annual Report,
management assessed the Corporation's system of internal control over financial
reporting as of December 31, 2004, in relation to criteria for effective
internal control over financial reporting as 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, 2004, its system of internal control over
financial reporting met those criteria and is effective.

There have been no significant changes in the Corporation's internal controls or
in other factors that could significantly affect internal controls subsequent to
December 31, 2004.

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 February 14, 2005.

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 February 14, 2005.

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

David A. Daberko

Chairman and Chief Executive Officer

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

Jeffrey D. Kelly

Vice Chairman and Chief Financial Officer

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

William E. MacDonald III

Vice Chairman

/s/ Peter E. Raskind
- ---------------------------------------

Peter E. Raskind

Vice Chairman

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

Thomas A. Richlovsky

Senior Vice President and Treasurer

The Directors of National City Corporation 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

2004 ANNUAL REPORT

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91

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CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER SARBANES-OXLEY ACT SECTION 302

I, David A. Daberko, certify that:

1. I have reviewed this annual report on Form 10-K of National City Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors:

a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.

Date: February 14, 2005

By: /s/ David A. Daberko
------------------------------
David A. Daberko
Chairman and Chief Executive Officer

SARBANES-OXLEY ACT SECTION 906

Pursuant to 18 U.S.C. section 1350, the undersigned officer of National City
Corporation (the "Company"), hereby certifies, to such officer's knowledge, that
the Company's Annual Report on Form 10-K for the year ended December 31, 2004
(the "Report") fully complies with the requirements of Section 13(a) or 15(d),
as applicable, of the Securities Exchange Act of 1934 and that the information
contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.

Date: February 14, 2005

By: /s/ David A Daberko
------------------------------
David A. Daberko
Chairman and Chief Executive Officer

The signed original of this written statement required by Section 906, or other
document authenticating, acknowledging, or otherwise adopting the signature that
appears in typed form within the electronic version of this written statement
required by Section 906, has been provided to the Company and will be retained
by the Company and furnished to the Securities and Exchange Commission or its
staff upon request.

NEW YORK STOCK EXCHANGE

The undersigned Chief Executive Officer of National City Corporation certifies
to the New York Stock Exchange that, as of the date of this certification, he is
unaware of any violation by National City Corporation of the New York Stock
Exchange's corporate governance listing standards in effect as of the date of
this certification.

Date: February 14, 2005

By: /s/ David A Daberko
------------------------------
David A. Daberko
Chairman and Chief Executive Officer

2004 ANNUAL REPORT

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FORM 10-K continued
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CERTIFICATIONS OF CHIEF FINANCIAL OFFICER

SARBANES-OXLEY ACT SECTION 302

I, Jeffrey D. Kelly, certify that:

1. I have reviewed this annual report on Form 10-K of National City Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors:

a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.

Date: February 14, 2005

By: /s/ Jeffrey D. Kelly
------------------------------

Jeffrey D. Kelly
Vice Chairman and Chief Financial Officer

SARBANES-OXLEY ACT SECTION 906

Pursuant to 18 U.S.C. section 1350, the undersigned officer of National City
Corporation (the "Company"), hereby certifies, to such officer's knowledge, that
the Company's Annual Report on Form 10-K for the year ended December 31, 2004
(the "Report") fully complies with the requirements of Section 13(a) or 15(d),
as applicable, of the Securities Exchange Act of 1934 and that the information
contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.

Date: February 14, 2005

By: /s/ Jeffrey D. Kelly
------------------------------

Jeffrey D. Kelly
Vice Chairman and Chief Financial Officer

The signed original of this written statement required by Section 906, or other
document authenticating, acknowledging, or otherwise adopting the signature that
appears in typed form within the electronic version of this written statement
required by Section 906, has been provided to the Company and will be retained
by the Company and furnished to the Securities and Exchange Commission or its
staff upon request.

CORPORATE INFORMATION
- --------------------------------------------------------------------------------

CORPORATE HEADQUARTERS

National City Center
1900 East Ninth Street
Cleveland, Ohio 44114-3484
216-222-2000
NationalCity.com

TRANSFER AGENT AND REGISTRAR

National City Bank
Corporate Trust Operations
Department 5352
P.O. Box 92301
Cleveland, Ohio 44193-0900
Web site: NationalCityStockTransfer.com
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 StockAccess at
www.ncstockaccess.com. Stockholders can also download frequently used forms
from this Web site. For log-in assistance or other inquiries, call 800-622-6757.

INVESTOR INFORMATION

Jennifer Hammarlund
Investor Relations
Department 2101
P.O. Box 5756
Cleveland, Ohio 44101-0756
800-622-4204
E-mail: Investor.Relations@NationalCity.com

WEB SITE ACCESS TO UNITED STATES SECURITIES AND EXCHANGE COMMISSION FILINGS

All reports filed electronically by National City Corporation with the United
States Securities and Exchange Commission (SEC), including the Annual Report on
Form 10-K, quarterly reports on Form 10-Q, and current event reports on Form
8-K, as well as any amendments to those reports, are accessible at no cost on
the Corporation's Web site as NationalCity.com. These filings are also
accessible on the SEC's Web site at www.sec.gov.

CORPORATE GOVERNANCE

The National City corporate governance practices are described in the following
documents, which are available free of charge on the Corporation's Web site at
NationalCity.com or in print form through the investor relations department:
Corporate Governance Guidelines, Code of Ethics, Code of Ethics for Senior
Financial Officers, Audit Committee Charter, Nominating and Board of Directors
Governance Committee Charter, Compensation Committee Charter, and Risk and
Public Policy Committee Charter.

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.

ANNUAL MEETING

The Annual Meeting of Stockholders will be on
Tuesday, April 26, 2005 at
10 a.m. Eastern time

National City Corporation
National City Center
1900 East Ninth Street
Cleveland, Ohio 44114-3484

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 800-622-6757. The Plan
prospectus is also available on the Corporation's Web site.

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 800-622-6757.

NAIC

National City is 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.

NATIONAL CITY(R) -------------
Corporation PRSRT STD
U S POSTAGE
1900 East Ninth Street PAID
Cleveland, OH 44114 National City
Corporation
-------------

74-0549-00 (Rev. 02/05)

EXHIBIT INDEX