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MERCHANTS ANNOUNCES FOURTH QUARTER CHARGES

 MERCHANTS ANNOUNCES FOURTH QUARTER CHARGES
 INDIANAPOLIS, Dec. 17 /PRNewswire/ -- Merchants National Corporation


(NASDAQ: MCHN) announced today that it plans to take approximately $43 million in charges during the fourth quarter. These charges include an additional $19.5 million provision for loan losses, a $10.5 million provision for real estate owned, and $13 million for other contractual obligations and restructuring charges.
 "These charges reflect the current evaluation of our overall portfolios given recent economic developments and our expectation that the economy will continue to be sluggish," stated Otto N. Frenzel III, chairman and chief executive officer. "Real estate markets have continued to soften during the fourth quarter. This fact, along with the absence of evidence of an economic upturn in the near future, makes appropriate the provisions announced today."
 The charges announced today will result in a loss for the fourth quarter, but Merchants anticipates that earnings will be restored in the first quarter of 1992. "Merchants' core operating earnings are healthy and continue to track on plan," stated Frenzel. "The corporation's capitalization remains solid and its stable core deposit base continues as a source of strength."
 Vincent A. DiGirolamo, senior vice president of National City Corporation and transition coordinator for the previously announced merger between Merchants and National City, stated that the charges had been discusses with National City. "We have reviewed the charges with Merchants and concur with them," said DiGirolamo. "Furthermore, these charges, which were fully anticipated, will have no effect on the proposed merger between Merchants and National City."
 Merchants National Corporation also announced today that it entered into an agreement with National City Corporation that gives Merchants the right to sell to National City, up to $35 million of Merchants permanent nonvoting preferred stock if the proposed merger agreement between the two is termianted. This preferred stock agreement will be terminated upon completion of the merger transaction. If the preferred stock is issued, it will constitute tier one capital for Merchants.
 Merchants National Corporation, an Indiana multibank holding company headquartered in Indianapolis, is the second largest publicly-held bank holding company based in the state. A network of 17 subsidiary banks with 138 banking locations serves the banking and financial needs of customers in Indiana and contiguous states. The corporation, through its subsidiaries, offers a broad range of commercial, retail, and mortgage banking services, as well as trust and investment services. Additionally, under a contract with the U.S. Department of Defense, the corporation's lead bank, Merchants National Bank & Trust Company of Indianapolis, provides retail banking services to military personnel through 179 military banking facilities in Germany, the Netherlands, Greece, the United Kingdom, Iceland, The Philippine Islands, Diego Garcia, Republic of Korea and Panama.
 -0- 12/17/91
 /CONTACT: Kenneth Carr (media), 317-267-6200, or David Lebedeff (investor), 317-267-3701, both of Merchants National/
 (MCHN) CO: Merchants National Corporation ST: Indiana IN: FIN SU:


KK -- CL005 -- 2979 12/17/91 13:16 EST
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Publication:PR Newswire
Date:Dec 17, 1991
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