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MERCHANTS NATIONAL CORPORATION REPORTS ANNUAL EARNINGS

 MERCHANTS NATIONAL CORPORATION REPORTS ANNUAL EARNINGS
 INDIANAPOLIS, Jan. 21 /PRNewswire/ -- Merchants National Corporation


(NASDAQ: MCHN) today announced annual earnings for 1991.
 The corporation recorded earnings for 1991 of $5.8 million, or $.40 per share, versus $15.7 million, or $1.07 per share, in 1990. A net loss of $22.8 million, or a loss of $1.55 per share, was recorded for the fourth quarter of 1991 compared to net income of $10.6 million, or $.73 per share, in last year's fourth quarter.
 As previously announced, the corporation took $43.0 million in charges during the fourth quarter of 1991. These charges included $13.0 million for contractual obligations and restructuring charges, an additional $19.5 million provision for loan losses and a $10.5 million provision for real estate owned.
 "We look for earnings to be restored in the first quarter," stated Otto N. Frenzel III, chairman and chief executive officer. "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."
 Nonperforming assets continued to decline from the peak level of $152.8 million at March 31, 1991 to $131.1 million at Dec. 31, 1991. Nonperforming assets were $136.4 million at Sept. 30, 1991 and $146.6 million at June 30, 1991. Real estate related assets accounted for $93.1 million of nonperforming assets at year-end 1991. The allowance for losses of $84.7 million represented 114.6 percent of nonperforming loans at Dec. 31, 1991.
 Total assets at Dec. 31, 1991 were $5.8 billion, unchanged from last year end. Loans at Dec. 31, 1991 were $3.7 billion, compared to $3.6 billion a year ago. Deposits at year end were $4.4 billion, up 1 percent from the same time last year.
 On Oct. 30, 1991, Merchants and National City Corporation (NYSE: NCC) jointly announced the signing of a definitive merger agreement. The merger agreement calls for an exchange of 1.12 shares of National City common stock for each share of Merchants National. The merger is expected to be completed in the second quarter of 1992.
 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 166 military banking facilities in Germany, the Netherlands, Greece, the United Kingdom, Iceland, The Philippine Islands, Diego Garcia, the Republic of Korea and the Republic of Panama.
 Merchants National Corporation and Subsidiaries
 Financial Highlights
 (Dollars in Thousands and unaudited)
 1991 1990
 Fourth Quarter
 Net Interest Income 49,151 48,430
 Net Income (22,784) 10,594
 Dividends 4,415 4,409
 Per Share
 Net Income (1.55) .73
 Dividends .30 .30
 Market Stock Price
 High 39.75 18.00
 Low 24.50 14.00
 Year-to-Date
 Net Interest Income 194,534 190,968
 Net Income 5,838 15,659
 Dividends 17,649 17,638
 Per Share
 Net Income .40 1.07
 Dividends 1.20 1.20
 Market Stock Price
 High 39.75 29.88
 Low 12.75 14.00
 At December 31
 Total Assets 5,806,262 5,817,767
 Loans 3,662,060 3,641,549
 Deposits 4,404,862 4,361,111
 Shareholders' Equity 328,580 337,021
 Per Share
 Shareholders' Equity 22.18 22.93
 Market Stock Price 38.75 14.75
 Shares Outstanding 14,816,148 14,697,854
 Year-to-Date Daily Averages
 Total Assets 5,650,544 5,561,952
 Loans 3,635,453 3,565,271
 Deposits 4,279,011 4,123,504
 Shareholders' Equity 348,042 359,811
 Shares Outstanding 14,711,929 14,697,854
 Consolidated Balance Sheets
 Merchants National Corporation and Subsidiaries
 (Dollars in Thousands and unaudited)
 December 31
 Assets 1991 1990
 Cash and Due from Banks $538,285 $403,785
 Money Market Instruments:
 Funds sold and resell agreements 62,951 193,056
 Trading account securities 9,033 4,688
 Interest-bearing deposits with banks 190,200 91,048
 Other investments 1,297 598
 Total money market instruments 263,481 289,390
 Investment securities 721,683 834,771
 Loans 3,662,060 3,641,549
 Allowance for credit losses (84,700) (78,805)
 Premises and equipment 74,230 74,537
 Accrued interest 42,761 50,236
 Military banking assets 386,850 427,617
 Other Assets 201,612 174,687
 Total Assets $5,806,262 $5,817,767
 Liabilities and Shareholders' Equity
 Deposits:
 Noninterest-bearing $ 929,300 $880,559
 Interest-bearing 3,161,724 3,085,953
 Interest-bearing over $100 313,838 394,399
 Total Deposits 4,404,862 4,361,111
 Borrowed Funds 510,566 559,889
 Accrued Interest 18,189 21,803
 Military Banking Liabilities 386,850 427,617
 Other Liabilities 62,351 39,735
 Long-term Debt 94,864 70,591
 Total Liabilities 5,477,682 5,480,746
 Shareholders' Equity
 Preferred Stock --- ---
 Common Stock 24,743 24,545
 Capital Surplus 102,618 99,915
 Retained Earnings 231,240 243,051
 Shares Acquired by ESOP Trust (30,021) (30,490)
 Total Shareholders' Equity 328,580 337,021
 Total Liabilities and
 Shareholders' Equity 5,806,262 5,817,767
 Merchants National Corporation and Subsidiaries
 Consolidated Statements of Income
 (Dollars in Thousands and Unaudited)
 Quarters Ended Years Ended
 Dec. 31, Dec. 31,
 1991 1990 1991 1990
 Interest Income:
 Money Market Instruments 4,168 3,974 13,841 13,280
 Investment Securities:
 Taxable 10,879 13,661 47,588 57,905
 Nontaxable 3,109 3,731 13,312 15,707
 Loans:
 Taxable 87,200 98,883 360,077 388,437
 Nontaxable 1,421 1,616 6,095 6,451
 Total Interest Income 106,777 121,865 440,913 481,780
 Interest Expense:
 Deposits 50,118 61,356 213,696 240,060
 Borrowed Funds 5,247 10,318 24,807 43,665
 Long-term Debt 2,261 1,761 7,876 7,087
 Total Interest Expense 57,626 73,435 246,379 290,812
 Net Interest Income 49,151 48,430 194,534 190,968
 Provision for Credit Losses 30,560 6,463 60,166 63,399
 Net Interest Income After
 Provision 18,591 41,967 134,368 127,569
 Other Operating Income
 Trust and Investment Advisory Fees 4,176 3,851 16,675 15,369
 Service Charges on Deposits 6,584 6,811 26,532 24,119
 Other Customer Fees 7,005 6,742 26,310 24,828
 Securities Gains (Losses) (1,663) (119) 244 (478)
 Trading Gains 243 235 806 792
 Other Income 7,052 6,237 25,373 21,878
 Total Other Operating Income 23,397 23,757 95,940 86,508
 Other Operating Expense
 Salaries and Employee Benefits 32,471 23,398 108,377 94,996
 Net Occupancy Expense 4,877 4,002 16,661 15,310
 Equipment Expense 4,647 4,320 17,845 17,112
 FDIC Assessment Premiums 2,452 1,219 9,017 4,824
 Net Cost of Other Real Estate 11,063 1,866 21,130 5,511
 Other Expense 18,907 15,810 54,408 56,221
 Total Other Operating Expense 74,417 50,615 227,438 193,974
 Income Before Income
 Taxes (Benefit) (32,429) 15,109 2,870 20,103
 Income Taxes (Benefit) (9,645) 4,515 (2,968) 4,444
 Net Income (22,784) 10,594 5,838 15,659
 Earnings Per Share ($1.55) .73 .40 1.07
 Dividends Per Share .30 .30 1.20 1.20
 Selected Financial Data
 Merchants National Corporation and Subsidiaries
 (Dollars in Thousands and Unaudited)
 1991 1990 1989 1988 1987
 Income Statement Summary:
 Net Interest
 Income (FTE) $203,698 $201,016 $194,631 $172,044 $156,410
 FTE Adjustment (9,164) (10,048) (11,669) (11,133) (15,822)
 Net Interest
 Income 194,534 190,968 182,962 160,911 140,588
 Provision for Credit
 Losses (60,166) (63,399) (32,690) (23,927) (39,460)
 Other Operating
 Income 95,940 86,508 72,767 66,819 55,397
 Other Operating
 Expense (227,438) (193,974) (166,014) (145,909) (140,171)
 Income Before Income
 Taxes (Benefit) 2,870 20,103 57,025 57,894 16,354
 Income Taxes
 (Benefit) (2,968) 4,444 15,624 13,843 1,783
 Net Income 5,838 15,659 41,401 44,051 14,571
 Dividends (17,649) (17,638) (15,422) (12,334) (10,301)
 Net Income
 Retained (11,811) (1,979) 25,979 31,717 4,270
 Per Share Information:
 Net Income $.40 $1.07 $2.82 $3.05 $1.00
 Dividends 1.20 1.20 1.05 .85 .71
 Book Value,
 Year End 22.18 22.93 25.14 23.36 21.17
 Market Price,
 Year End 38.75 14.75 28.75 26.25 18.75
 Dividend Payout
 Ratio (percent) 300.00 112.15 37.23 27.87 71.00
 Dividend Yield 3.10 8.14 3.65 3.24 3.79
 Performance Ratios:
 Net Interest
 Spread (percent) 3.62 3.42 3.37 3.39 3.33
 Net Interest Margin 4.39 4.35 4.45 4.36 4.31
 Return on Average
 Assets .10 .28 .80 .96 .36
 Return on Average
 Equity 1.68 4.35 11.49 13.69 4.78
 Capital Formation
 Rate --- --- 7.58 10.36 1.40
 Market Price to Book
 Value 174.71 64.33 114.36 112.37 88.57
 Market Price to Net
 Income 96.88x 13.79x 10.20x 8.61x 18.75x
 Capital Ratios at Year End:
 Primary
 Capital (pct) 6.68 6.71 7.03 7.36 8.38
 Total Capital 7.82 7.85 8.32 7.46 8.56
 Leverage Ratio 5.32 5.43 6.27 6.31 7.19
 Tier 1 Risk Based
 Capital 6.94 6.78 7.88 N/A N/A
 Total Risk Based
 Capital 9.67 9.44 10.53 N/A N/A
 Equity to Assets 5.66 5.79 6.63 6.52 7.29
 Equity to Loans 8.97 9.25 10.55 11.43 12.71
 Long-term Debt to
 Equity 28.87 20.95 19.49 1.90 3.18
 Averages
 Assets $5,650,544 $5,561,952 $5,157,837 $4,565,089 $4,012,056
 Loans 3,635,453 3,565,271 3,195,367 2,655,476 2,315,725
 Deposits 4,279,011 4,123,504 3,688,848 3,265,917 2,989,132
 Shareholders'
 Equity 348,042 359,811 360,285 321,730 304,875
 Shares
 Outstanding 14,711,929 14,697,854 14,687,390 14,442,699 14,629,123
 At Year End:
 Assets 5,806,262 5,817,767 5,576,601 5,255,673 4,196,956
 Loans 3,662,060 3,641,549 3,502,653 2,999,021 2,407,877
 Deposits 4,404,862 4,361,111 4,096,717 3,738,636 3,184,875
 Long-term Debt 94,864 70,591 72,027 6,499 9,720
 Shareholders'
 Equity 328,580 337,021 369,490 342,916 306,054
 Shares
 Outstanding 14,816,148 14,697,854 14,697,854 14,676,983 14,458,880
 Annual Shares
 Traded 10,372,065 9,046,929 4,456,432 4,556,915 6,074,176
 N/A - Not Available
 Quarterly Financial Information
 Merchants National Corporation and Subsidiaries
 (Dollars in Thousands and Unaudited)
 1991: Dec. 31 Sept. 30 June 30 March 31
 Interest Income $106,777 $109,035 $111,676 $113,425
 Interest Expense 57,626 60,180 62,071 66,502
 Net Interest Income 49,151 48,855 49,605 46,923
 Provision for Credit
 Losses 30,560 10,785 8,571 10,250
 Net Interest Income
 After Provision 18,591 38,070 41,034 36,673
 Net Other Income
 (Expense) (51,020) (27,119) (28,935) (24,424)
 Income (Loss) Before
 Income Tax (Benefit) (32,429) 10,951 12,099 12,249
 Income Tax (Benefit) (9,645) 1,234 2,593 2,850
 Net Income (Loss) (22,784) 9,717 9,506 9,399
 Per Share ($1.55) $.66 $.65 $.64
 Dividends $4,415 $4,415 $4,410 $4,409
 Per Share $.30 $.30 $.30 $.30
 1990: Dec. 31 Sept. 30 June 30 March 31
 Interest Income $121,865 $120,124 $120,965 $118,826
 Interest Expense 73,435 72,813 72,374 72,190
 Net Interest Income 48,430 47,311 48,591 46,636
 Provision for Credit
 Losses 6,463 33,070 10,906 12,960
 Net Interest Income
 After Provision 41,967 14,241 37,685 33,676
 Net Other Income
 (Expense) (26,858) (27,800) (23,615) (29,193)
 Income (Loss) Before
 Income Tax (Benefit) 15,109 (13,559) 14,070 4,483
 Income Tax (Benefit) 4,515 (4,413) 4,462 (120)
 Net Income (Loss) 10,594 (9,146) 9,608 4,603
 Per Share $.73 ($.63) $.66 $.31
 Dividends $4,409 $4,410 $4,410 $4,409
 Per Share $.30 $.30 $.30 $.30
 Stock Price Range:
 1991 $24.50-39.75 $20.00-27.00 $17.75-22.50 $12.75-19.25
 1990 14.00-18.00 15.00-25.00 21.00-25.25 23.00-29.88
 1989 25.50-32.00 28.00-31.75 26.00-31.00 25.50-27.75
 There were approximately 4,000 shareholders of record on Dec. 31, 1991.
 Merchants National Corporation and Subsidiaries
 Financial Summary
 (Dollars are in Millions on a
 Fully Taxable Equivalent Basis and Unaudited)
 1991 Interest 1991 Interest
 Avg. Income/ Avg. Avg. Income/ Avg.
 Balance Expense Rate Balance Expense Rate
 Assets: (pct) (pct)
 Money Market Instruments 237 $14 5.86 165 $13 8.27
 Investment Securities:
 Taxable 587 48 8.11 678 58 8.54
 Nontaxable 186 19 10.45 214 23 10.53
 Total Investments 1,010 81 8.02 1,057 94 8.90
 Loans(A):
 Commercial 1,584 152 9.63 1,471 164 11.08
 R/E Construction 312 28 9.05 423 43 10.28
 Mortgage 767 78 10.12 725 75 10.33
 Consumer 973 111 11.38 946 116 12.31
 Total Loans 3,636 369 10.15 3,565 398 11.16
 Total Earnings
 Assets 4,646 450 9.69 4,622 492 10.64
 Allow. for Credit Losses (80) (60)
 Cash and Due from Banks 338 342
 Property and Equipment 77 73
 Military Banking Assets 440 393
 Other Assets 230 192
 Total Assets 5,651 5,562
 Liabilities and Shareholders' Equity
 Interest-bearing Liabilities:
 Deposits:
 Savings and NOW 1,655 79 4.78 1,452 79 5.47
 Time 1,442 104 7.24 1,490 123 8.23
 Time over $100 446 30 6.77 464 38 8.19
 Borrowed Funds 438 25 5.67 551 44 7.92
 Long-term Debt 80 8 9.78 72 7 9.91
 Total Interest-
 bearing Liabilities 4,061 246 6.07 4,029 291 7.22
 Noninterest - bearing
 Deposits 737 718
 Military Banking
 Liabilities 440 393
 Other Liabilities 65 62
 Shareholders' Equity 348 360
 Total Liabilities &
 Shareholders' Equity 5,651 246 5.30(B) 5,562 291 6.29(B)
 Net Interest Income 204 4.39 201 4.35
 Provision for Credit Losses (60)(1.30) (63) (1.37)
 Net Interest Income After
 Provision 144 3.09 138 2.98
 Other Operating Income 96 2.07 86 1.87
 Other Operating Expense (227)(4.90) (194) (4.20)
 Income Tax (7) (.14) (14) (.31)
 Net Income $6 .12 $16 .34
 Tax Equivalent Adjustment(C) $9 $10
 (A) Nonaccruing loans and leases are included in the average balances.
 (B) Total interest expense and all following headings are percentages of total earning assets.
 (C) Interest income exempt from Federal income taxes has been grossed up equal to taxable income.
 Nonperforming Assets at Dec. 31
 Merchants National Corporation and Subsidiaries
 (Dollars in Thousands and Unaudited)
 1991 1990 1989 1988 1987
 Restructured Loans 3,238 1,282 1,929 4,335 3,766
 Nonaccrual Loans 70,703 70,541 35,728 18,533 34,821
 Total Nonperforming Loans 73,941 71,823 37,657 22,868 38,587
 Other Real Estate 57,202 53,716 9,690 13,615 9,444
 Total Nonperforming Assets 131,143 125,539 47,347 36,483 48,031
 Past Due Loans Over 90 Days 13,791 34,769 20,274 8,428 7,762
 Allowance for Losses to:
 Nonperforming Loans (pct) 114.55 109.72 121.19 260.04 140.60
 Nonperforming Loans and
 Over 90 Days 96.54 73.93 78.78 190.01 117.06
 Nonperforming Assets 64.59 62.77 96.39 163.00 112.96
 Loans 2.31 2.16 1.30 1.98 2.25
 Nonperforming Assets to:
 Loans 3.58 3.45 1.35 1.22 1.99
 Assets 2.26 2.16 .85 .69 1.14
 Shareholders' Equity
 & Allowance 31.73 30.19 11.41 9.07 13.33
 -0- 1/21/92 R
 /CONTACT: Kenneth Carr (media), 317-267-6200, or David J. Lebedeff (investor), 317-267-3701, both of Merchants National/
 (MCHN) CO: Merchants National Corporation ST: Indiana IN: FIN SU: ERN


LC -- CL011R -- 1901 01/21/92 13:40 EST
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