National City and Harbor Florida Bancshares Announce Agreement for National City to Acquire Harbor Florida Bancshares - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Ladies and gentlemen, thank you for standing by and welcome to the National City Corporation investor conference call. (OPERATOR INSTRUCTIONS). As a reminder today's call is being recorded. At this time then, I would like to turn the conference over to the Treasurer of National City Corporation, Mr. Tom Richlovsky. Please go ahead, sir.

TOM RICHLOVSKY, TREASURER, NATIONAL CITY CORP.: Thank you and good morning everyone. We appreciate the opportunity to talk to you this morning regarding National City's acquisition of Harbor Florida Bancshares Inc. If you haven't already done so, we encourage you to review the news release and the presentation slides which are accessible on our web site, nationalcity.com. Those materials, as well as the management's commentary that you're about to hear, contain forward-looking statements. These statements are based on management's views and expectations as of today and should not be relied upon as representing management's views as of any subsequent date. While we may elect to update forward-looking statements at some future point, we specifically disclaim any obligation to do so. Although management believes that its views and expectations are reasonable, actual results may differ materially from those indicated by these statements, which are subject to numerous risks and uncertainties as described in Form 10-K and subsequent filings with the SEC. You are also urged to read the proxy statement and prospectus when it becomes available.

On the call this morning on site at Harbor's headquarters in Fort Pierce, Florida, are Dave Daberko, National City Chairman and CEO and Peter Raskind, National City Vice Chairman. With me in Cleveland are Jeff Kelly, Vice Chairman and CFO, and Jen Hammarlund, Director of Investor Relations. Dave, Jeff and Peter will each have a few minutes of remarks, following which, we will have a brief question and answer session. With that, I will turn to call over to Dave Daberko. Dave?

DAVE DABERKO, CHAIRMAN, CEO, NATIONAL CITY CORP.: Thanks, Tom. As you may have read in our press release this morning, National City has entered into an agreement to acquire Harbor Florida Bancshares of Fort Pierce, Florida. With 3.2 billion in assets, Harbor is the largest independent banking institution in its eight-county footprint. That makes this transaction a meaningful entree for National City into a market with very attractive demographics and growth potential.

Harbor has a good-sized, well-situated branch networks along the central East Coast of Florida, from Martin County in the South to Volusia County in the North, and inland toward Orlando. Other cities in this region include Stuart, Fort St. Lucie, Fort Pierce, Vero Beach, Melbourne and Daytona.

Harbor's management team, led by Mike Brown, has extensive contacts and long-term ties to the central East Coast Florida market. They have done a tremendous job in building the franchise and we're thrilled to the work with them as a partner. They have built a very solid retail banking and real estate lending operation which we think offers a great platform for growth. In a minute, Jeff Kelly will discuss the terms of the transaction and Peter Raskind will explain our strategy for capitalizing on this opportunity by leveraging our capabilities in Harbor's market.

First, though, let me spend a few minutes walking through our rationale for undertaking this transaction. Like other strategic initiatives we have underway, this transaction brings us into a market with attractive growth characteristics. Demographics do not determine success, but given our proven business model, greater resources and dedication to execution, combined with Harbor's well-situated, well-run franchise, we can well and will compete effectively in this market. Increased name recognition also will benefit our existing Florida businesses.

A couple of points. First, this transaction is about National City expanding into a new growth market. We have a disciplined M&A strategy in place. Our focus is on markets where favorable demographics and competitive dynamics will enable us to apply our proven business model and create shareholder value over time. In times of demographics, the overall household growth rate for National City's seven-state Midwestern franchise is below the national average. Our growth comes mostly from taking market share from competitors and getting a greater share of wallet with our existing customers. Over the last several years, we have been focusing our investments through acquisitions and de novo branch expansion in markets with household growth rates that exceed the overall growth rate of our entire core footprint. The strategic rationale for our 2004 acquisitions in St. Louis and Cincinnati can be seen in their projected five-year household growth rates -- 4.6% and 5.5%, respectively, compared with only 2.2% for our overall footprint. Chicago also is growing faster than the average and we continue to make investments to expand our presence there.

Harbor's market area has growth rates two to three times greater than our fastest-growing Midwestern markets. Clearly, there is an opportunity to enhance National City's growth prospects overall through the addition of this franchise.

Second, in addition to being in a market with favorable demographics, Harbor is a very well-run franchise. Harbor has produced solid double-digit growth in loans, assets, deposits and net income over the past five years and more. I believe their 10-year compound growth rate of net income is around 17%. In its most recent fiscal year, Harbor had an impressive return on …