TABLE OF CONTENTS  2005 ANNUAL REPORTFINANCIAL HIGHLIGHTSTO OUR STOCKHOLDERS:DOING WHATS RIGHT FOR OUR CUSTOMERSBECOMING BEST IN CLASS2005 HIGHLIGHTSENGAGING OUR COMMUNITIES AND EMPLOYEESEX-10.17 National City Corporation Rentention PlanEX-10.62 Amendment Number 6EX-10.70 Appendixes AS, AT, AU, AV, and AWEX-12.1 Computation of Ratio of Earnings to Fixed ChargesEX-21.1 Subsidiaries of RegistrantEX-23.1 Consent of E & YEX-24.1 Power of AttorneyEX-31.1 302 Certification CEOEX-31.2 302 Certification CFOEX-32.1 906 Certification CEOEX-32.2 906 Certification CFO    Table of Contents




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(Dollars in Millions, Except Per Share Amounts)
 For the Year
    
    2005
    
    
    2004*
    
    
    2003RevenueTax-Equivalent Net Interest Income
    
    $
    4,727
    
    
    $
    4,460
    
    
    $
    4,364Noninterest Income
    
    
    3,304
    
    
    
    4,440
    
    
    
    3,593Total Revenue
    
    $
    8,031
    
    
    $
    8,900
    
    
    $
    7,957Net Income
    
    $
    1,985
    
    
    $
    2,780
    
    
    $
    2,117Net Income Per Common ShareBasic
    
    $
    3.13
    
    
    $
    4.37
    
    
    $
    3.46Diluted
    
    
    3.09
    
    
    
    4.31
    
    
    
    3.43Dividends Paid Per Common Share
    
    
    1.44
    
    
    
    1.34
    
    
    
    1.25Average
Shares  Basic
    
    
    633,431,660
    
    
    
    635,450,188
    
    
    
    611,205,682Average
Shares  Diluted
    
    
    641,600,969
    
    
    
    645,510,514
    
    
    
    616,410,043At Year EndAssets
    
    $
    142,397
    
    
    $
    139,414
    
    
    $
    114,102Portfolio Loans
    
    
    106,039
    
    
    
    100,271
    
    
    
    79,344Earning Assets
    
    
    125,990
    
    
    
    123,219
    
    
    
    102,571Core Deposits
    
    
    68,408
    
    
    
    67,297
    
    
    
    58,922Stockholders Equity
    
    
    12,613
    
    
    
    12,804
    
    
    
    9,329Book Value Per Common Share
    
    
    20.51
    
    
    
    19.80
    
    
    
    15.39Market Value Per Common Share
    
    
    33.57
    
    
    
    37.55
    
    
    
    33.94Equity to Assets Ratio
    
    
    8.86
    %
    
    
    9.18
    %
    
    
    8.18
    %Common Shares Outstanding
    
    
    615,047,663
    
    
    
    646,749,650
    
    
    
    605,996,120Common Stockholders of Record
    
    
    62,966
    
    
    
    65,943
    
    
    
    61,370Full-Time Equivalent Employees
    
    
    34,270
    
    
    
    35,230
    
    
    
    33,331
 
 *
    
    2004 results include a pre-tax gain of $714 million,
equivalent to $.74 per diluted share after-tax, from
the sale of National Processing, Inc.
    1
    
    Financial Highlights2
    
    Chairmans Letter4
    
    2005 In Focus8
    
    Board of Directors
and Officers9
    
    Financial Review
Consolidated Financial
Statements and Notes
Form 10-K
Certifications of Chief
Executive Officer and
Chief Financial Officer




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2 2005




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2005 3




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4 2005




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National City customer Lauren Wolf (R)
and Small Business Banking Officer Elena Ray
(L) were key contributors to the success of
the Ohio Womens Economic Development
Outreach Tour. 
 National City celebrated its arrival in
Greater Cincinnati by painting the town green
 including this transit bus, making a stop at
the citys renowned Cincinnati Museum Center
at Union Terminal.  ®
 
 An American
Red Cross volunteer
colors with a young
Hurricane Katrina
survivor. In 2005,
National City and
its employees
donated more than
$1 million in aid
to those affected
by the disaster. 5 2005




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2 0 0 5 H I G H L I G H T S 1 . 2 0 . 0 5 National City Consumer2 . 1 4 . 0 5 National City introduces2 . 2 2 . 0 5 National City and the
Loan Services Loss Mitigation Call            its Switch Service allowing retail            National Breast Cancer Foundation
Center recognized as a Center of            customers to easily end old banking            present $400,000 to six hospitals
Excellence by BenchmarkPortal, a            relationships and start fresh with            for education and research.
prestigious distinction earned later            National City. in 2005 by Home Loan Services and Direct Banking call centers. 2 . 2 5 . 0 5 Together, National City3 . 7 . 0 5 Conversion of Provident3 . 2 8 . 0 5 National City opens
and employees contribute more            Bank is complete, making National            Nashville Corporate Banking
than $835,000 to aid Tsunami            City the largest bank in Ohio. office, providing Tennessee victims in Southeast Asia. businesses greater access to a full suite of banking solutions. 4 . 1 2 . 0 5 National City receives5 . 1 7 . 0 5 National City celebrates NACHA Quality Award for the 160 years of serving customers, complete integration of paper- stockholders and the community. based checking account and electronic payment systems. 5 . 1 8 . 0 5 National City enhances6 . 8 . 0 5 National City aligns home ownership opportunities            Asset Management units under for Latinos by offering new            the Allegiant name. Allegiant National Dream product on            completes a series of strategic MSN Latino Finanzas and in the            initiatives to enhance the asset companys markets. management business. 9 . 1 . 0 5 National City and its9 . 1 . 0 5 National City launches1 0 . 0 5 National City supports
employees donate more than            a comprehensive online application            Breast Cancer Awareness Month
$1 million to the American Red            allowing retail and small-business            through the launch of its Diamond
Cross to support Hurricane            customers to securely apply for            Edition® Visa®CheckCard, local
Katrina relief efforts. different products  lines of            community initiatives, and the
credit, loans, even IRAs  on one Real Men Wear Pink campaign
application at NationalCity.com. with its NFL partners. 1 1 . 1 . 0 5 National City is among1 1 . 1 0 . 0 5 National City announces1 2 . 2 2 . 0 5 National City
the first banks to introduce a retail            receipt of Silver Award from the            announces agreement to expand
Health Savings Account product for            The Brandon Hall Excellence in            in St. Louis through the acquisition
individuals with high deductible            Learning Awards for outstanding            of Forbes First Financial, parent
health plans. case study, Customer Education: company of Pioneer Bank and
A New Application of E-Learning. Trust Company. Simplify is a service mark of National City Corporation ® .




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Embracing diversity at the inaugural National City
Diversity Summit are, from left, Mike Price, CEO,
Cincinnati-Northern Kentucky Market; Terri Hamilton
Brown, SVP, Corporate Diversity; Alfonso Martinez,
SVP, Human Resources, Sodexho USA.; and William E.
MacDonald III, Vice Chairman. 
 To show its
support for breast
cancer research,
prevention and
education, National
City illuminated
its headquarters
building pink
throughout October,
National Breast
Cancer Awareness
Month.




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BOARD            OF DIRECTORS James S. Christopher M.
David A. Jon E. Barfield            Broadhurst (1,4) Connor (2, 5)
Daberko (3) (1,4) Chairman & Chairman & CEO            Chairman, President
Chairman & CEO            PresidentThe            Eatn Park S CEOThe
National City            Bartech Group, Hospitality Group, Sherwin-Williams
Corporation            Inc. Inc. Company Bernadine P.
Healy, M.D. (2,5) S.Craig Lindner            Paul A. Orrnond
Joseph T. Medical Columnist(1,4) Co-Cf O &(2,5) Chairman,
Gorman (2,5) and Health Editor            Co-President            President & CEO
Retired Chairman            U.S. News & WorldAmerican Financial            Manor Care,
TRW Inc. ReportGroup, Inc. Inc. COMMITTEES: (1) Audit {2} Compensation (3) Dividend (4) Risk and Public Policy (5) Nominating Robert A. Paul            Gerald L. Jerry Sue
(1,3,4) Chairman &Shaheen (2,5) CroupThornton, Ph.D. Morry Weiss
CEO            President(1,3,4) President (1,3,4) Chairman
Ampco-Pittsburgh            Caterpillar            Cuyahoga Community            American Greetings
Corporation            Inc. College            Corporation  David A. Daberko
    
    Jeffrey D. Kelly
    
    William E. MacDonald III
    
    Peter E. RaskindChairman
and CEO
    
    Vice Chairman and CFO
    
    Vice Chairman
    
    Vice Chairman
 
             General Counsel  and Secretary
 
   Comptroller
     General Auditor
          Treasurer
                  8 2005




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FINANCIAL REVIEW





FINANCIAL REVIEW



ANNUAL REPORT2005  9


This Annual Report contains forward-looking statements. See
page 32 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 81.

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. The most
significant market factors affecting 2005 results were the
increasing interest rate environment, narrower loan spreads, and
a slowdown in the mortgage industry.

Tax-equivalent net interest income in 2005 was up 6% over 2004
and 8% over 2003, reflecting strong growth in earning assets.
Net interest margin was 3.74% for 2005, compared with 4.02% in
2004, and 4.08% in 2003. The lower net interest margin in 2005
reflects lower spreads on both portfolio loans and loans held
for sale, due to the flattening of the yield curve and increased
competition, and a lower balance of mortgages held for sale,
partially offset by wider deposit spreads. Management does not
expect much variability in net interest margin in the first half
of 2006.

Average portfolio loans increased 18% over 2004. Strong growth
was experienced in commercial, residential real estate and home
equity. The Corporation sold $1.4 billion of home equity
lines of credit and securitized $2.2 billion of indirect
automobile loans in 2005. Management plans to sell or securitize
most of its future production of home equity and nonconforming
residential mortgage loans, subject to market conditions.
Accordingly, portfolio loan growth is expected to slow in future
periods.

Mortgage banking revenue decreased by 11% compared with 2004 due
to lower gains on sales of nonconforming residential mortgage
loans, lower net hedging gains on mortgage servicing rights, and
lower mortgage originations. Compared with 2003, mortgage
banking revenue decreased by 27% for similar reasons, with 2003
being a record year for mortgage production. A slowing housing
market and overcapacity in the mortgage industry has resulted in
lower mortgage production and a decline in the gain on sale
recognized upon sale of these loans into the secondary markets.
Management believes that the mortgage industry is cyclical and
the low point of the cycle has arrived. However, it is not known
when the overall mortgage environment will begin to show
significant improvement.

Deposit service fees increased 10% over 2004 and 27% over 2003
which reflects good growth in personal deposit accounts,
including the effects of 2004 acquisitions, and fee-generating
transactions. Average core deposits grew 6% compared with the
prior year reflecting an increase in consumer household
relationships of 3.4%.

Noninterest expenses in 2005 included $65 million of costs
and other charges related to the implementation of the
Corporations Best In Class program for
long-term performance
improvement. See further discussion on page 31. Noninterest
expenses in 2005 included $45 million of acquisition
integration costs as described on
pages 15-16.

Credit quality remained sound in 2005. Net charge-offs as a
percentage of average portfolio loans were .36%, 3 basis
points better than 2004 and 44 basis points better than
2003. Credit card charge-offs increased due to a record level of
consumer bankruptcy filings precipitated by a change in these
laws in October 2005. Improved credit quality in the commercial
portfolio more than offset higher consumer losses. Management
expects that commercial losses will increase in 2006 compared
with the very low levels experienced in 2005.

During 2005, the Corporation initiated a plan to consolidate six
of its subsidiary banks under a single national banking charter.
This move, expected to be completed in July 2006, will improve
operating efficiencies and facilitate customer transactions
across National Citys banking footprint.

Comparisons of results to prior periods were affected by
acquisitions and divestitures which occurred during 2005 and
2004. In January 2005, the Corporation completed the acquisition
of Charter One Vendor Finance. In August 2005, the Corporation
sold Madison Bank and Trust, a five branch bank. In November
2005, the Corporation announced the exit of its indirect retail
automobile and motorsports lending business. In 2004, the
Corporation completed the acquisition of three financial
institutions: Allegiant Bancorp (Allegiant) in April 2004,
Provident Financial Group (Provident) in July 2004, and
Wayne Bancorp (Wayne) in October 2004. In addition, the
Corporation sold its former subsidiary, National Processing, in
October 2004, and sold its Corporate Bond Administration
business in June 2004. The financial results of acquired
companies are included in the consolidated financial results of
the Corporation from their respective acquisition dates. The
financial results of divested businesses are included up to
their respective sale or exit dates.



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10ANNUAL
REPORT2005



________________________________________________________________________________FINANCIAL REVIEW
(Continued)


Consolidated Average Balance Sheets

|                                                         |                                                              |                                                                              |                                                     |                                                                     |        |        |         |        |        |        |         |        |        |        |         |        |        |        |        |        |        |        |        | 
|-------------------------------------------------------- | ------------------------------------------------------------ | ---------------------------------------------------------------------------- | --------------------------------------------------- | ------------------------------------------------------------------- | ------ | ------ | ------- | ------ | ------ | ------ | ------- | ------ | ------ | ------ | ------- | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | 
|                                                         |                                                             
|                                                         |                                                              | Daily Average Balance                                                        |                                                    
|                                                         |                                                             
|(Dollars in Millions)                                    |                                                              | 2005                                                                         |                                                     |                                                                     | 2004   |        |         | 2003   |        |        | 2002    |        |        | 2001   |        
|                                                         |                                                             
|Assets                                                   |                                                              |                                                                              |                                                     |                                                                     |        |        |         |        |        |        |         |        |        |        |         |        |        |        |        |       
|                                                         | Earning Assets:                                              |                                                                              |                                                     |                                                                     |        |        |         |        |        |        |         |        |        |        |         |        |        |        |        |        |       
|                                                         |                                                              | Loans(a):                                                                    |                                                     |                                                                     |        |        |         |        |        |        |         |        |        |        |         |        |        |        |        |        |        |       
|                                                         |                                                              |                                                                              | Commercial                                          |                                                                     | $      | 26,919 |         |        | $      | 22,131 |         |        | $      | 21,403 |         |        | $      | 23,989 |        |        | $      | 26,029 |       
|                                                         |                                                              |                                                                              | Commercial construction                             |                                                                     |        | 3,068  |         |        |        | 2,568  |         |        |        | 2,343  |         |        |        | 1,380  |        |        |        | 1,262  |       
|                                                         |                                                              |                                                                              | Real estate  commercial                            |                                                                     |        | 12,231 |         |        |        | 11,326 |         |        |        | 9,483  |         |        |        | 8,005  |        |        |        | 6,788  |       
|                                                         |                                                              |                                                                              | Real estate  residential                           |                                                                     |        | 42,684 |         |        |        | 40,889 |         |        |        | 45,972 |         |        |        | 29,615 |        |        |        | 21,796 |       
|                                                         |                                                              |                                                                              | Home equity lines of
    credit(b)                  |                                                                     |        | 21,122 |         |        |        | 14,743 |         |        |        | 9,293  |         |        |        | 7,014  |        |        |        | 5,222  |       
|                                                         |                                                              |                                                                              | Credit card and other unsecured
    lines of credit |                                                                     |        | 2,523  |         |        |        | 2,286  |         |        |        | 2,155  |         |        |        | 1,900  |        |        |        | 2,197  |       
|                                                         |                                                              |                                                                              | Other consumer                                      |                                                                     |        | 7,818  |         |        |        | 7,659  |         |        |        | 8,059  |         |        |        | 11,384 |        |        |        | 12,318 |       
|                                                        
|                                                         |                                                              |                                                                              |                                                     | Total
    loans(b)                                                  |        |        | 116,365 |        |        |        | 101,602 |        |        |        | 98,708  |        |        |        | 83,287 |        |        |        | 75,612 | 
|                                                         |                                                              | Securities available for sale, at
    amortized cost:                        |                                                     |                                                                     |        |        |         |        |        |        |         |        |        |        |         |        |        |        |        |        |        |       
|                                                         |                                                              |                                                                              | Taxable                                             |                                                                     |        | 7,134  |         |        |        | 7,033  |         |        |        | 6,195  |         |        |        | 7,675  |        |        |        | 7,619  |       
|                                                         |                                                              |                                                                              | Tax-exempt                                          |                                                                     |        | 625    |         |        |        | 665    |         |        |        | 669    |         |        |        | 674    |        |        |        | 733    |       
|                                                        
|                                                         |                                                              |                                                                              | Total securities available for sale                 |                                                                     |        | 7,759  |         |        |        | 7,698  |         |        |        | 6,864  |         |        |        | 8,349  |        |        |        | 8,352  |       
|                                                         |                                                              | Federal funds sold and security
    resale agreements, and other investments |                                                     |                                                                     | 2,100  |        |         |        | 1,621  |        |         |        | 1,326  |        |         |        | 1,333  |        |        |        | 880    |       
|                                                        
|                                                         |                                                              |                                                                              |                                                     | Total earning assets/total interest
    income/rate(b)              |        |        | 126,224 |        |        |        | 110,921 |        |        |        | 106,898 |        |        |        | 92,969 |        |        |        | 84,844 | 
|                                                         | Allowance for loan losses                                    |                                                                              |                                                     | (1,143                                                              | )      |        |         | (1,101 | )      |        |         | (1,028 | )      |        |         | (951   | )      |        |        | (897   | )     
|                                                         | Fair value appreciation of
    securities available for sale |                                                                              |                                                     | 72                                                                  |        |        |         | 150    |        |        |         | 257    |        |        |         | 255    |        |        |        | 167    |       
|                                                         | Nonearning assets                                            |                                                                              |                                                     | 16,403                                                              |        |        |         | 14,433 |        |        |         | 12,398 |        |        |         | 11,260 |        |        |        | 9,055  |       
|                                                        
|Total
    assets(b)                                      |                                                              | $                                                                            | 141,556                                             |                                                                     |        | $      | 124,403 |        |        | $      | 118,525 |        |        | $      | 103,533 |        |        | $      | 93,169 |       
|                                                        
|Liabilities and
    stockholders equity                 |                                                              |                                                                              |                                                     |                                                                     |        |        |         |        |        |        |         |        |        |        |         |        |        |        |        |       
|                                                         | Interest bearing liabilities:                                |                                                                              |                                                     |                                                                     |        |        |         |        |        |        |         |        |        |        |         |        |        |        |        |        |       
|                                                         |                                                              | NOW and money market                                                         |                                                     | $                                                                   | 28,589 |        |         | $      | 28,897 |        |         | $      | 25,378 |        |         | $      | 20,740 |        |        | $      | 18,120 |       
|                                                         |                                                              | Savings                                                                      |                                                     |                                                                     | 2,361  |        |         |        | 2,583  |        |         |        | 2,423  |        |         |        | 2,561  |        |        |        | 2,713  |       
|                                                         |                                                              | Consumer time deposits                                                       |                                                     |                                                                     | 18,662 |        |         |        | 14,875 |        |         |        | 13,729 |        |         |        | 15,064 |        |        |        | 15,332 |       
|                                                         |                                                              | Other deposits                                                               |                                                     |                                                                     | 6,087  |        |         |        | 3,062  |        |         |        | 2,752  |        |         |        | 3,613  |        |        |        | 5,802  |       
|                                                         |                                                              | Foreign deposits                                                             |                                                     |                                                                     | 8,787  |        |         |        | 8,946  |        |         |        | 7,002  |        |         |        | 6,302  |        |        |        | 4,319  |       
|                                                         |                                                              | Federal funds borrowed                                                       |                                                     |                                                                     | 4,021  |        |         |        | 4,920  |        |         |        | 7,895  |        |         |        | 5,459  |        |        |        | 4,637  |       
|                                                         |                                                              | Security repurchase agreements                                               |                                                     |                                                                     | 3,317  |        |         |        | 2,918  |        |         |        | 3,013  |        |         |        | 3,327  |        |        |        | 3,887  |       
|                                                         |                                                              | Borrowed funds                                                               |                                                     |                                                                     | 2,253  |        |         |        | 1,477  |        |         |        | 1,556  |        |         |        | 2,406  |        |        |        | 1,748  |       
|                                                         |                                                              | Long-term debt                                                               |                                                     |                                                                     | 32,752 |        |         |        | 24,028 |        |         |        | 24,854 |        |         |        | 19,558 |        |        |        | 16,415 |       
|                                                        
|                                                         |                                                              |                                                                              |                                                     | Total interest bearing
    liabilities/total interest expense/rates |        |        | 106,829 |        |        |        | 91,706  |        |        |        | 88,602  |        |        |        | 79,030 |        |        |        | 72,973 | 
|                                                        
|                                                         | Noninterest bearing deposits                                 |                                                                              |                                                     | 18,257                                                              |        |        |         | 17,763 |        |        |         | 17,203 |        |        |         | 13,685 |        |        |        | 11,622 |       
|                                                         | Accrued expenses and other
    liabilities(b)                |                                                                              |                                                     | 3,705                                                               |        |        |         | 3,618  |        |        |         | 3,748  |        |        |         | 2,845  |        |        |        | 1,600  |       
|                                                        
|Total
    liabilities(b)                                 |                                                              |                                                                              | 128,791                                             |                                                                     |        |        | 113,087 |        |        |        | 109,553 |        |        |        | 95,560  |        |        |        | 86,195 |       
|                                                        
|Total stockholders
    equity                           |                                                              |                                                                              | 12,765                                              |                                                                     |        |        | 11,316  |        |        |        | 8,972   |        |        |        | 7,973   |        |        |        | 6,974  |       
|                                                        
|Total liabilities and
    stockholders
    equity(b)    |                                                              | $                                                                            | 141,556                                             |                                                                     |        | $      | 124,403 |        |        | $      | 118,525 |        |        | $      | 103,533 |        |        | $      | 93,169 |       
|                                                        
|Net interest
    income(b)                               |                                                              |                                                                              |                                                     |                                                                     |        |        |         |        |        |        |         |        |        |        |         |        |        |        |        |       
|                                                        
|Interest
    spread(b)                                   |                                                              |                                                                              |                                                     |                                                                     |        |        |         |        |        |        |         |        |        |        |         |        |        |        |        |       
|Contribution of noninterest bearing
    sources of funds |                                                              |                                                                              |                                                     |                                                                     |        |        |         |        |        |        |         |        |        |        |         |        |        |        |        |       
|                                                        
|Net interest
    margin(b)                               |                                                              |                                                                              |                                                     |                                                                     |        |        |         |        |        |        |         |        |        |        |         |        |        |        |        |       
|                                                        



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



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | During 2005, the Corporation reclassified the amortization of
    certain deferred loan origination fees and costs associated with
    home equity lines of credit from noninterest income to interest
    income. The effect of this reclassification was to increase
    noninterest income and reduce net interest income with no effect
    on net income. In addition, net deferred origination costs were
    reclassified from other liabilities to home equity lines of
    credit. Prior period financial information has been updated to
    reflect this reclassification.



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ANNUAL REPORT2005  11



________________________________________________________________________________

|                                                         |                                                              |                                                                              |                                                     |                                                                     |              |       |       |      |     |       |       |   |     |       |       |   |      |       |       |      |     |       |       |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      |      |   |      |       |      |  
|-------------------------------------------------------- | ------------------------------------------------------------ | ---------------------------------------------------------------------------- | --------------------------------------------------- | ------------------------------------------------------------------- | ------------ | ----- | ----- | ---- | --- | ----- | ----- | - | --- | ----- | ----- | - | ---- | ----- | ----- | ---- | --- | ----- | ----- | - | ---- | ---- | ---- | - | ---- | ---- | ---- | - | ---- | ---- | ---- | - | ---- | ---- | ---- | - | ---- | ----- | ---- | -
|                                                         |                                                              |                                                                              |                                                    
|                                                         |                                                              | Interest                                                                     |                                                     |                                                                     | Average Rate |      
|                                                         |                                                              |                                                                              |                                                    
|                                                         |                                                              | 2005                                                                         |                                                     |                                                                     | 2004         |       |       | 2003 |     |       | 2002  |   |     | 2001  |       |   | 2005 |       |       | 2004 |     |       | 2003  |   |      | 2002 |      |   | 2001 |     
|                                                         |                                                              |                                                                              |                                                    
|Assets                                                   |                                                              |                                                                              |                                                     |                                                                     |              |       |       |      |     |       |       |   |     |       |       |   |      |       |       |      |     |       |       |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      |      |  
|                                                         | Earning Assets:                                              |                                                                              |                                                     |                                                                     |              |       |       |      |     |       |       |   |     |       |       |   |      |       |       |      |     |       |       |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      |      |   |     
|                                                         |                                                              | Loans(a):                                                                    |                                                     |                                                                     |              |       |       |      |     |       |       |   |     |       |       |   |      |       |       |      |     |       |       |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      
|                                                         |                                                              |                                                                              | Commercial                                          |                                                                     | $            | 1,589 |       |      | $   | 936   |       |   | $   | 818   |       |   | $    | 1,133 |       |      | $   | 1,791 |       |   |      | 5.90 | %    |   |      | 4.23 | %    |   |      | 3.82 | %    |   |      | 4.72 | %    |   |      | 6.88  | %   
|                                                         |                                                              |                                                                              | Commercial construction                             |                                                                     |              | 193   |       |      |     | 119   |       |   |     | 103   |       |   |      | 79    |       |      |     | 100   |       |   |      | 6.29 |      |   |      | 4.63 |      |   |      | 4.41 |      |   |      | 5.72 |      |   |      | 7.92  |     
|                                                         |                                                              |                                                                              | Real estate  commercial                            |                                                                     |              | 778   |       |      |     | 648   |       |   |     | 581   |       |   |      | 534   |       |      |     | 540   |       |   |      | 6.36 |      |   |      | 5.72 |      |   |      | 6.13 |      |   |      | 6.68 |      |   |      | 7.96  |     
|                                                         |                                                              |                                                                              | Real estate  residential                           |                                                                     |              | 2,757 |       |      |     | 2,591 |       |   |     | 2,964 |       |   |      | 2,119 |       |      |     | 1,712 |       |   |      | 6.46 |      |   |      | 6.34 |      |   |      | 6.45 |      |   |      | 7.15 |      |   |      | 7.85  |     
|                                                         |                                                              |                                                                              | Home equity lines of
    credit(b)                  |                                                                     |              | 1,194 |       |      |     | 581   |       |   |     | 355   |       |   |      | 336   |       |      |     | 390   |       |   |      | 5.65 |      |   |      | 3.94 |      |   |      | 3.81 |      |   |      | 4.79 |      |   |      | 7.46  |     
|                                                         |                                                              |                                                                              | Credit card and other unsecured
    lines of credit |                                                                     |              | 251   |       |      |     | 200   |       |   |     | 173   |       |   |      | 176   |       |      |     | 264   |       |   |      | 9.93 |      |   |      | 8.73 |      |   |      | 8.01 |      |   |      | 9.26 |      |   |      | 12.04 |     
|                                                         |                                                              |                                                                              | Other consumer                                      |                                                                     |              | 493   |       |      |     | 496   |       |   |     | 569   |       |   |      | 953   |       |      |     | 1,072 |       |   |      | 6.31 |      |   |      | 6.48 |      |   |      | 7.07 |      |   |      | 8.38 |      |   |      | 8.70  |     
|                                                        
|                                                         |                                                              |                                                                              |                                                     | Total
    loans(b)                                                  |              |       | 7,255 |      |     |       | 5,571 |   |     |       | 5,563 |   |      |       | 5,330 |      |     |       | 5,869 |   |      |      | 6.23 |   |      |      | 5.48 |   |      |      | 5.64 |   |      |      | 6.40 |   |      |       | 7.76 |  
|                                                         |                                                              | Securities available for sale, at
    amortized cost:                        |                                                     |                                                                     |              |       |       |      |     |       |       |   |     |       |       |   |      |       |       |      |     |       |       |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      
|                                                         |                                                              |                                                                              | Taxable                                             |                                                                     |              | 352   |       |      |     | 345   |       |   |     | 322   |       |   |      | 483   |       |      |     | 454   |       |   |      | 4.93 |      |   |      | 4.90 |      |   |      | 5.19 |      |   |      | 6.29 |      |   |      | 5.96  |     
|                                                         |                                                              |                                                                              | Tax-exempt                                          |                                                                     |              | 45    |       |      |     | 49    |       |   |     | 51    |       |   |      | 55    |       |      |     | 59    |       |   |      | 7.27 |      |   |      | 7.36 |      |   |      | 7.68 |      |   |      | 8.15 |      |   |      | 8.13  |     
|                                                        
|                                                         |                                                              |                                                                              | Total securities available for sale                 |                                                                     |              | 397   |       |      |     | 394   |       |   |     | 373   |       |   |      | 538   |       |      |     | 513   |       |   |      | 5.12 |      |   |      | 5.11 |      |   |      | 5.43 |      |   |      | 6.44 |      |   |      | 6.15  |     
|                                                         |                                                              | Federal funds sold and security
    resale agreements, and other investments |                                                     |                                                                     | 111          |       |       |      | 88  |       |       |   | 58  |       |       |   | 63   |       |       |      | 59  |       |       |   | 5.28 |      |      |   | 5.46 |      |      |   | 4.35 |      |      |   | 4.72 |      |      |   | 6.66 |      
|                                                        
|                                                         |                                                              |                                                                              |                                                     | Total earning assets/total interest
    income/rate(b)              |              | $     | 7,763 |      |     | $     | 6,053 |   |     | $     | 5,994 |   |      | $     | 5,931 |      |     | $     | 6,441 |   |      |      | 6.15 | % |      |      | 5.46 | % |      |      | 5.61 | % |      |      | 6.38 | % |      |       | 7.59 | %
|                                                         | Allowance for loan losses                                    |                                                                              |                                                     |                                                                     |              |       |       |      |     |       |       |   |     |       |       |   |      |       |       |      |     |       |       |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      |      |   |     
|                                                         | Fair value appreciation of
    securities available for sale |                                                                              |                                                     |                                                                     |              |       |       |      |     |       |       |   |     |       |       |   |      |       |       |      |     |       |       |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      |      |   |     
|                                                         | Nonearning assets                                            |                                                                              |                                                     |                                                                     |              |       |       |      |     |       |       |   |     |       |       |   |      |       |       |      |     |       |       |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      |      |   |     
|Total
    assets(b)                                      |                                                              |                                                                              |                                                     |                                                                     |              |       |       |      |     |       |       |   |     |       |       |   |      |       |       |      |     |       |       |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      |      |  
|Liabilities and
    stockholders equity                 |                                                              |                                                                              |                                                     |                                                                     |              |       |       |      |     |       |       |   |     |       |       |   |      |       |       |      |     |       |       |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      |      |  
|                                                         | Interest bearing liabilities:                                |                                                                              |                                                     |                                                                     |              |       |       |      |     |       |       |   |     |       |       |   |      |       |       |      |     |       |       |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      |      |   |     
|                                                         |                                                              | NOW and money market                                                         |                                                     | $                                                                   | 488          |       |       | $    | 252 |       |       | $ | 257 |       |       | $ | 301  |       |       | $    | 503 |       |       |   | 1.71 | %    |      |   | .87  | %    |      |   | 1.01 | %    |      |   | 1.45 | %    |      |   | 2.78 | %    
|                                                         |                                                              | Savings                                                                      |                                                     |                                                                     | 10           |       |       |      | 9   |       |       |   | 11  |       |       |   | 21   |       |       |      | 36  |       |       |   | .44  |      |      |   | .35  |      |      |   | .45  |      |      |   | .82  |      |      |   | 1.33 |      
|                                                         |                                                              | Consumer time deposits                                                       |                                                     |                                                                     | 642          |       |       |      | 467 |       |       |   | 506 |       |       |   | 646  |       |       |      | 843 |       |       |   | 3.44 |      |      |   | 3.14 |      |      |   | 3.69 |      |      |   | 4.28 |      |      |   | 5.50 |      
|                                                         |                                                              | Other deposits                                                               |                                                     |                                                                     | 203          |       |       |      | 50  |       |       |   | 34  |       |       |   | 67   |       |       |      | 244 |       |       |   | 3.33 |      |      |   | 1.64 |      |      |   | 1.23 |      |      |   | 1.84 |      |      |   | 4.20 |      
|                                                         |                                                              | Foreign deposits                                                             |                                                     |                                                                     | 261          |       |       |      | 118 |       |       |   | 84  |       |       |   | 114  |       |       |      | 152 |       |       |   | 2.97 |      |      |   | 1.32 |      |      |   | 1.20 |      |      |   | 1.81 |      |      |   | 3.53 |      
|                                                         |                                                              | Federal funds borrowed                                                       |                                                     |                                                                     | 134          |       |       |      | 71  |       |       |   | 114 |       |       |   | 116  |       |       |      | 186 |       |       |   | 3.34 |      |      |   | 1.45 |      |      |   | 1.44 |      |      |   | 2.12 |      |      |   | 4.02 |      
|                                                         |                                                              | Security repurchase agreements                                               |                                                     |                                                                     | 76           |       |       |      | 23  |       |       |   | 19  |       |       |   | 35   |       |       |      | 111 |       |       |   | 2.28 |      |      |   | .78  |      |      |   | .63  |      |      |   | 1.04 |      |      |   | 2.86 |      
|                                                         |                                                              | Borrowed funds                                                               |                                                     |                                                                     | 68           |       |       |      | 15  |       |       |   | 18  |       |       |   | 37   |       |       |      | 64  |       |       |   | 3.01 |      |      |   | 1.03 |      |      |   | 1.20 |      |      |   | 1.55 |      |      |   | 3.66 |      
|                                                         |                                                              | Long-term debt                                                               |                                                     |                                                                     | 1,154        |       |       |      | 588 |       |       |   | 587 |       |       |   | 573  |       |       |      | 837 |       |       |   | 3.52 |      |      |   | 2.45 |      |      |   | 2.36 |      |      |   | 2.94 |      |      |   | 5.10 |      
|                                                        
|                                                         |                                                              |                                                                              |                                                     | Total interest bearing
    liabilities/total interest expense/rates |              | $     | 3,036 |      |     | $     | 1,593 |   |     | $     | 1,630 |   |      | $     | 1,910 |      |     | $     | 2,976 |   |      |      | 2.84 | % |      |      | 1.74 | % |      |      | 1.84 | % |      |      | 2.42 | % |      |       | 4.08 | %
|                                                         | Noninterest bearing deposits                                 |                                                                              |                                                     |                                                                     |              |       |       |      |     |       |       |   |     |       |       |   |      |       |       |      |     |       |       |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      |      |   |     
|                                                         | Accrued expenses and other
    liabilities(b)                |                                                                              |                                                     |                                                                     |              |       |       |      |     |       |       |   |     |       |       |   |      |       |       |      |     |       |       |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      |      |   |     
|Total
    liabilities(b)                                 |                                                              |                                                                              |                                                     |                                                                     |              |       |       |      |     |       |       |   |     |       |       |   |      |       |       |      |     |       |       |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      |      |  
|Total stockholders
    equity                           |                                                              |                                                                              |                                                     |                                                                     |              |       |       |      |     |       |       |   |     |       |       |   |      |       |       |      |     |       |       |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      |      |  
|Total liabilities and
    stockholders
    equity(b)    |                                                              |                                                                              |                                                     |                                                                     |              |       |       |      |     |       |       |   |     |       |       |   |      |       |       |      |     |       |       |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      |      |  
|                                                        
|Net interest
    income(b)                               |                                                              | $                                                                            | 4,727                                               |                                                                     |              | $     | 4,460 |      |     | $     | 4,364 |   |     | $     | 4,021 |   |      | $     | 3,465 |      |     |       |       |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      |      |  
|                                                        
|Interest
    spread(b)                                   |                                                              |                                                                              |                                                     |                                                                     |              |       |       |      |     |       |       |   |     |       |       |   |      |       |       |      |     |       | 3.31  | % |      |      | 3.72 | % |      |      | 3.77 | % |      |      | 3.96 | % |      |      | 3.51 | %
|Contribution of noninterest bearing
    sources of funds |                                                              |                                                                              |                                                     |                                                                     |              |       |       |      |     |       |       |   |     |       |       |   |      |       |       |      |     |       | .43   |   |      |      | .30  |   |      |      | .31  |   |      |      | .37  |   |      |      | .57  |  
|                                                        
|Net interest
    margin(b)                               |                                                              |                                                                              |                                                     |                                                                     |              |       |       |      |     |       |       |   |     |       |       |   |      |       |       |      |     |       | 3.74  | % |      |      | 4.02 | % |      |      | 4.08 | % |      |      | 4.33 | % |      |      | 4.08 | %
|                                                        



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##### Table of Contents

12ANNUAL
REPORT2005



________________________________________________________________________________FINANCIAL REVIEW
(Continued)


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. Because noninterest bearing
sources of funds, or free funding, principally demand deposits
and stockholders equity, also support earning assets, the
net interest margin exceeds the interest spread.

To compare the tax-exempt asset yields to taxable yields,
amounts are adjusted to the pretax-equivalent amounts based on
the marginal corporate Federal tax rate of 35%. The
tax-equivalent adjustments to net interest income for 2005,
2004, and 2003 were $31 million, $27 million, and
$29 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 24 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.

Net interest income and net interest margin are also affected by
amortization of fair value premiums and discounts recognized on
earning assets and interest bearing liabilities of acquired
businesses. Refer to Note 3 to the consolidated financial
statements for further discussion on acquisitions. These
adjustments are amortized into interest income and expense based
upon the estimated remaining lives of the assets and liabilities
acquired.

The increase in net interest income in 2005 resulted from growth
in earning assets which more than offset the increase in deposit
and funding costs. The increase in net interest income in 2004
over 2003 was due to mortgage and home equity portfolio growth,
higher levels of noninterest bearing core deposits, and the
effects of acquisitions, partially offset by lower balances of
mortgage loans held for sale.

The net interest margin decline in 2005 resulted from lower
spreads on both portfolio loans and loans held for sale, due to
the flattening of the yield curve and increased competition, and
a lower balance of mortgages held for sale, partially offset by
wider deposit spreads. The decline in the net interest margin
for 2004 was related to the ongoing effects of a low interest
rate environment, which resulted in reduced asset yields and
narrower spreads on deposits.

Further discussion of trends in the loan and securities
portfolios and detail on the mix of funding sources is included
in the Financial Condition section beginning on page 18.

The following table shows changes in tax-equivalent interest
income, interest expense, and tax-equivalent net interest income
arising from volume and rate changes 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.

|                                                                               |                                                     |              |     |     |              |   |           |        |   |   |        |     |   |      |     |      |        |   |     |     |   |   |     |      |  
|------------------------------------------------------------------------------ | --------------------------------------------------- | ------------ | --- | --- | ------------ | - | --------- | ------ | - | - | ------ | --- | - | ---- | --- | ---- | ------ | - | --- | --- | - | - | --- | ---- | -
|                                                                               |                                                     | 2005 vs 2004 |     |     | 2004 vs 2003 |  
|                                                                               |                                                    
|                                                                               |                                                     | Due to       |     |     |              |   | Due to    |        |   |  
|                                                                               |                                                     | Change in    |     |     |              |   | Change in |        |   |  
|                                                                               |                                                     |              |     |     | Net          |   |           |        |   |   | Net    |    
|(In Millions)                                                                  |                                                     | Volume       |     |     | Rate         |   |           | Change |   |   | Volume |     |   | Rate |     |      | Change |  
|                                                                               |                                                    
|Increase (decrease) in
    tax-equivalent interest income                     |                                                     |              |     |     |              |   |           |        |   |   |        |     |   |      |     |      |        |   |     |    
|Loans:                                                                         |                                                     |              |     |     |              |   |           |        |   |   |        |     |   |      |     |      |        |   |     |     |   |   |     |     
|                                                                               | Commercial                                          |              | $   | 203 |              |   | $         | 450    |   |   | $      | 653 |   |      | $   | 28   |        |   | $   | 90  |   |   | $   | 118  |  
|                                                                               | Commercial construction                             |              |     | 23  |              |   |           | 51     |   |   |        | 74  |   |      |     | 10   |        |   |     | 6   |   |   |     | 16   |  
|                                                                               | Real estate  commercial                            |              |     | 52  |              |   |           | 78     |   |   |        | 130 |   |      |     | 113  |        |   |     | (46 | ) |   |     | 67   |  
|                                                                               | Real estate  residential                           |              |     | 115 |              |   |           | 51     |   |   |        | 166 |   |      |     | (328 | )      |   |     | (45 | ) |   |     | (373 | )
|                                                                               | Home equity lines of credit                         |              |     | 251 |              |   |           | 362    |   |   |        | 613 |   |      |     | 207  |        |   |     | 19  |   |   |     | 226  |  
|                                                                               | Credit card and other unsecured
    lines of credit |              |     | 21  |              |   |           | 30     |   |   |        | 51  |   |      |     | 10   |        |   |     | 17  |   |   |     | 27   |  
|                                                                               | Other consumer                                      |              |     | 10  |              |   |           | (13    | ) |   |        | (3  | ) |      |     | (28  | )      |   |     | (45 | ) |   |     | (73  | )
|Securities available for sale                                                  |                                                     |              | 2   |     |              |   | 1         |        |   |   | 3      |     |   |      | 47  |      |        |   | (26 | )   |   |   | 21  |     
|Federal funds sold, security resale
    agreements, and other investments      |                                                     |              | 27  |     |              |   | (4        | )      |   |   | 23     |     |   |      | 13  |      |        |   | 17  |     |   |   | 30  |     
|                                                                              
|Total                                                                          |                                                     | $            | 704 |     |              | $ | 1,006     |        |   | $ | 1,710  |     |   | $    | 72  |      |        | $ | (13 | )   |   | $ | 59  |     
|                                                                              
|Increase (decrease) in interest
    expense                                    |                                                     |              |     |     |              |   |           |        |   |   |        |     |   |      |     |      |        |   |     |    
|Deposits:                                                                      |                                                     |              |     |     |              |   |           |        |   |   |        |     |   |      |     |      |        |   |     |     |   |   |     |     
|                                                                               | NOW and money market accounts                       |              | $   | (3  | )            |   | $         | 239    |   |   | $      | 236 |   |      | $   | 45   |        |   | $   | (50 | ) |   | $   | (5   | )
|                                                                               | Savings accounts                                    |              |     | (1  | )            |   |           | 2      |   |   |        | 1   |   |      |     | 1    |        |   |     | (3  | ) |   |     | (2   | )
|                                                                               | Consumer time deposits                              |              |     | 119 |              |   |           | 56     |   |   |        | 175 |   |      |     | 41   |        |   |     | (80 | ) |   |     | (39  | )
|                                                                               | Purchased deposits                                  |              |     | 40  |              |   |           | 256    |   |   |        | 296 |   |      |     | 28   |        |   |     | 22  |   |   |     | 50   |  
|Federal funds borrowed, security
    repurchase agreements, and borrowed funds |                                                     |              | 3   |     |              |   | 166       |        |   |   | 169    |     |   |      | (53 | )    |        |   | 11  |     |   |   | (42 | )   
|Long-term debt                                                                 |                                                     |              | 215 |     |              |   | 351       |        |   |   | 566    |     |   |      | (6  | )    |        |   | 7   |     |   |   | 1   |     
|                                                                              
|Total                                                                          |                                                     | $            | 373 |     |              | $ | 1,070     |        |   | $ | 1,443  |     |   | $    | 56  |      |        | $ | (93 | )   |   | $ | (37 | )   
|                                                                              
|Increase in tax-equivalent net
    interest income                             |                                                     |              |     |     |              | $ | 267       |        |   |   |        |     |   |      |     |      |        | $ | 96  |    
|                                                                              



---



##### Table of Contents

ANNUAL REPORT2005  13



________________________________________________________________________________




Noninterest Income

Details of noninterest income follow:

|                                                      |  |      |       |  |      |   |       |      |  |   |       | 
|----------------------------------------------------- |  | ---- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                                                      | 
|(In Millions)                                         |  | 2005 |       |  | 2004 |   |       | 2003 | 
|                                                      | 
|Mortgage banking revenue                              |  | $    | 1,054 |  |      | $ | 1,190 |      |  | $ | 1,447 | 
|Deposit service charges                               |  |      | 722   |  |      |   | 656   |      |  |   | 568   | 
|Trust and investment management fees                  |  |      | 296   |  |      |   | 301   |      |  |   | 291   | 
|Leasing revenue                                       |  |      | 267   |  |      |   | 180   |      |  |   | 37    | 
|Card-related fees                                     |  |      | 212   |  |      |   | 212   |      |  |   | 201   | 
|Brokerage revenue                                     |  |      | 159   |  |      |   | 145   |      |  |   | 122   | 
|Other service fees                                    |  |      | 125   |  |      |   | 113   |      |  |   | 106   | 
|Insurance revenue                                     |  |      | 103   |  |      |   | 91    |      |  |   | 73    | 
|Ineffective hedge and other
    derivative gains, net |  |      | 64    |  |      |   | 73    |      |  |   | 100   | 
|Commercial real estate loan sales
    and servicing   |  |      | 59    |  |      |   | 33    |      |  |   |      | 
|Principal investment gains                            |  |      | 57    |  |      |   | 69    |      |  |   | 7     | 
|Gain on sale of National Processing                   |  |      |      |  |      |   | 714   |      |  |   |      | 
|Payment processing revenue                            |  |      | 2     |  |      |   | 409   |      |  |   | 478   | 
|Other                                                 |  |      | 157   |  |      |   | 235   |      |  |   | 116   | 
|                                                     
|Total fees and other
    income                       |  |      | 3,277 |  |      |   | 4,421 |      |  |   | 3,546 | 
|Securities gains, net                                 |  |      | 27    |  |      |   | 19    |      |  |   | 47    | 
|                                                     
|Total noninterest
    income                          |  | $    | 3,304 |  |      | $ | 4,440 |      |  | $ | 3,593 | 
|                                                     



|                                                 |                                                                                |      |       |      |      |   |       |      |   |   |       |      |  
|------------------------------------------------ | ------------------------------------------------------------------------------ | ---- | ----- | ---- | ---- | - | ----- | ---- | - | - | ----- | ---- | -
|                                                 |                                                                               
|(In Millions)                                    |                                                                                | 2005 |       |      | 2004 |   |       | 2003 |  
|                                                 |                                                                               
|NCM Servicing revenue:                           |                                                                                |      |       |      |      |   |       |      |   |   |       |     
|                                                 | Net servicing fees                                                             |      | $     | 490  |      |   | $     | 478  |   |   | $     | 422  |  
|                                                 | Amortization of mortgage servicing
    rights                                  |      |       | (492 | )    |   |       | (493 | ) |   |       | (514 | )
|                                                 | Mortgage servicing right impairment
    recovery (charge)                      |      |       | 89   |      |   |       | (105 | ) |   |       | 195  |  
|                                                 | Mortgage servicing right
    ineffective hedge and other derivative gains, net |      |       | 196  |      |   |       | 493  |   |   |       | 176  |  
|                                                 | Other                                                                          |      |       |     |      |   |       | 1    |   |   |       | 5    |  
|                                                
|Net NCM servicing revenue                        |                                                                                |      | 283   |      |      |   | 374   |      |   |   | 284   |     
|NCM origination and sales revenue                |                                                                                |      | 488   |      |      |   | 391   |      |   |   | 881   |     
|First Franklin origination and
    sales revenue |                                                                                |      | 264   |      |      |   | 417   |      |   |   | 282   |     
|NCHLS mortgage banking revenue                   |                                                                                |      | 19    |      |      |   |      |      |   |   |      |     
|Other mortgage banking revenue                   |                                                                                |      |      |      |      |   | 8     |      |   |   |      |     
|                                                
|Total mortgage banking
    revenue               |                                                                                | $    | 1,054 |      |      | $ | 1,190 |      |   | $ | 1,447 |     
|                                                









|                                             |                                   |                                                    |        |        |        |   |        |        |        |   |         |         |         | 
|-------------------------------------------- | --------------------------------- | -------------------------------------------------- | ------ | ------ | ------ | - | ------ | ------ | ------ | - | ------- | ------- | ------- | 
|                                             |                                  
|(In Millions)                                |                                   | 2005                                               |        |        | 2004   |   |        | 2003   |       
|                                             |                                  
|NCM loan originations:                       |                                   |                                                    |        |        |        |   |        |        |        |   |         |        
|                                             | Total loan originations           |                                                    | $      | 59,031 |        |   | $      | 65,664 |        |   | $       | 105,561 |        
|                                             | Less: portfolio originations      |                                                    |        | (5,719 | )      |   |        | (5,121 | )      |   |         | (4,545  | )      
|                                            
|                                             |                                   | Total NCM loans originated for sale                |        |        | 53,312 |   |        |        | 60,543 |   |         |         | 101,016 | 
|First Franklin loan
    originations:        |                                   |                                                    |        |        |        |   |        |        |        |   |         |        
|                                             | Total loan originations           |                                                    |        | 29,560 |        |   |        | 29,151 |        |   |         | 20,138  |        
|                                             | Less: portfolio loan originations |                                                    |        | (8,192 | )      |   |        | (9,598 | )      |   |         | (10,233 | )      
|                                            
|                                             |                                   | Total First Franklin loans
    originated for sale |        |        | 21,368 |   |        |        | 19,553 |   |         |         | 9,905   | 
|                                            
|Total mortgage loans originated
    for sale |                                   | $                                                  | 74,680 |        |        | $ | 80,096 |        |        | $ | 110,921 |        
|                                            
|NCM loan sales:                              |                                   |                                                    |        |        |        |   |        |        |        |   |         |        
|                                             | Servicing retained                |                                                    | $      | 49,320 |        |   | $      | 58,793 |        |   | $       | 107,318 |        
|                                             | Servicing released                |                                                    |        | 1,997  |        |   |        | 1,514  |        |   |         | 1,196   |        
|                                            
|                                             |                                   | Total NCM loan sales                               |        |        | 51,317 |   |        |        | 60,307 |   |         |         | 108,514 | 
|First Franklin loan
    sales:               |                                   |                                                    |        |        |        |   |        |        |        |   |         |        
|                                             | Servicing retained                |                                                    |        | 16,403 |        |   |        | 1,919  |        |   |         |        |        
|                                             | Servicing released                |                                                    |        | 4,414  |        |   |        | 17,163 |        |   |         | 8,937   |        
|                                            
|                                             |                                   | Total First Franklin loan sales                    |        |        | 20,817 |   |        |        | 19,082 |   |         |         | 8,937   | 
|                                            
|Total mortgage loan
    sales                |                                   | $                                                  | 72,134 |        |        | $ | 79,389 |        |        | $ | 117,451 |        
|                                            





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##### Table of Contents

14ANNUAL
REPORT2005



________________________________________________________________________________FINANCIAL REVIEW
(Continued)


In late 2004, the Corporation began selling certain First
Franklin loans with servicing retained. In 2005, approximately
80% of First Franklin loans were sold with servicing retained
versus only 10% in the prior year. These loans are serviced by
the NCHLS business unit. At December 31, 2005 and 2004, the
unpaid principal balance of loans serviced for third parties by
NCHLS was $16.9 billion and $1.9 billion,
respectively. The carrying value of MSRs at NCHLS was
$108 million at December 31, 2005, up from
$15 million at December 31, 2004.

The value of MSRs is sensitive to changes in interest rates. In
a low rate environment, mortgage loan refinancings generally
increase, causing actual and expected loan prepayments to
increase, which drives down the value of existing MSRs.
Conversely, as interest rates rise, mortgage loan refinancings
generally decline, causing actual and expected loan prepayments
to decrease, which drives up the value of MSRs. The Corporation
manages the risk associated with declines in the 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 11 to the consolidated financial
statements.

Deposit service charges increased 10% over 2004 and 27% over
2003 levels, reflective of higher debit and interchange fees and
overdraft and nonsufficient funds (NSF) fees. Debit and
interchange fees had an annual growth rate of approximately 20%
due to a higher number of cardholders and increased usage of
debit cards. Overdraft and NSF fees grew 23% in 2005 and 29% in
2004 reflecting growth in the number of deposit accounts and
increased incidence rates.

Trust and investment management fees, which include both
institutional and personal accounts, are based primarily on the
market value of assets under administration. At
December 31, 2005, 2004, and 2003, the Corporation had
total assets under administration of $107.8 billion,
$108.8 billion and $111.8 billion, respectively. The
growth in trust and investment management fees in 2004 reflects
business acquired with 2004 acquisitions.

Leasing revenue represents rental income and fees associated
with portfolios of commercial equipment and automobile leases.
Leasing revenue increased in 2005 due to a full year of revenue
associated with acquisitions completed in 2004. The same reason
accounted for the increase in leasing revenue in 2004. The
Corporation is no longer originating automobile leases;
therefore, revenues related to the automobile lease portfolio
will continue to decline in future periods as these leases run
off.

Brokerage revenue increased in 2005 and 2004 due to business
acquired with the Provident and Allegiant acquisitions in 2004.
Other service fees increased because of higher check and money
order fees and higher letter of credit fees. Net ineffective
hedge and other derivative gains declined in 2005 due to lower
gains recognized on derivatives acquired to offset deferred
compensation liabilities. Insurance revenue was higher in both
2005 and 2004 due to increased volumes of borrower paid private
mortgage and title insurance. Commercial real estate loan sale
and servicing income increased in both 2005 and 2004 due to
business units acquired with the Provident acquisition in 2004.
No commercial real estate servicing income was recognized in
2003.

Principal investments represent direct investments in private
and public companies and indirect investments in private equity
funds. These investments are carried at estimated fair value
with gains and losses recognized in earnings each period for
market value adjustments, realized gains and losses, and
investment write-offs. Further detail on the principal
investments portfolio is included in Notes 1 and 9 to the
consolidated financial statements.

The Corporation recognized a pretax gain of $714 million on
the sale of its former subsidiary, National Processing, in late
2004. Payment processing revenue substantially ceased with the
sale of this subsidiary.

Other fee income included a number of unusual items in both 2005
and 2004. In 2005, the Corporation recognized a $16 million
gain on the sale of Madison Bank & Trust, an
$18 million gain on the sale of home equity lines of
credit, and a $29 million loss on the securitization of
indirect automobile loans. Other fee income for 2004 included a
$62 million gain on the sale of the Corporate
Trust Bond Administration business, a $14 million gain
on the sale of seven branches located in the Upper Peninsula of
Michigan, a $9 million gain on the securitization of
indirect automobile loans, and $16 million of gains on the
sale of student loans versus only $7 million of such gains
in 2003.

Net securities gains are summarized as follows:

|                                           |                   |      |     |    |      |   |     |      |  |   |     |    | 
|------------------------------------------ | ----------------- | ---- | --- | -- | ---- | - | --- | ---- |  | - | --- | -- | 
|                                           |                  
|(In Millions,                              |                   |      |     |   
|Except Per Share Amounts)                  |                   | 2005 |     |    | 2004 |   |     | 2003 | 
|                                           |                  
|Net gains:                                 |                   |      |     |    |      |   |     |      |  |   |     |   
|                                           | Equity securities |      | $   | 13 |      |   | $   | 3    |  |   | $   | 40 | 
|                                           | Debt securities   |      |     | 14 |      |   |     | 16   |  |   |     | 7  | 
|                                          
|Net pretax gains                           |                   |      | 27  |    |      |   | 19  |      |  |   | 47  |   
|Tax provision                              |                   |      | 7   |    |      |   | 2   |      |  |   | 11  |   
|                                          
|Effect on net income                       |                   | $    | 20  |    |      | $ | 17  |      |  | $ | 36  |   
|                                          
|Effect on diluted net income per
    share |                   | $    | .03 |    |      | $ | .03 |      |  | $ | .06 |   
|                                          





---



##### Table of Contents

ANNUAL REPORT2005  15



________________________________________________________________________________




Noninterest Expense

Details of noninterest expense follow:

|                                            |  |      |       |  |      |   |       |      |  |   |       | 
|------------------------------------------- |  | ---- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                                            | 
|(In Millions)                               |  | 2005 |       |  | 2004 |   |       | 2003 | 
|                                            | 
|Salaries, benefits, and other
    personnel |  | $    | 2,560 |  |      | $ | 2,363 |      |  | $ | 2,157 | 
|Third-party services                        |  |      | 332   |  |      |   | 350   |      |  |   | 318   | 
|Net occupancy                               |  |      | 316   |  |      |   | 254   |      |  |   | 233   | 
|Equipment                                   |  |      | 303   |  |      |   | 300   |      |  |   | 245   | 
|Leasing expense                             |  |      | 179   |  |      |   | 126   |      |  |   | 52    | 
|Marketing and public relations              |  |      | 165   |  |      |   | 115   |      |  |   | 136   | 
|Postage and supplies                        |  |      | 143   |  |      |   | 148   |      |  |   | 138   | 
|Impairment, fraud & other
    losses        |  |      | 108   |  |      |   | 71    |      |  |   | 72    | 
|Travel and entertainment                    |  |      | 85    |  |      |   | 82    |      |  |   | 61    | 
|Telecommunications                          |  |      | 82    |  |      |   | 85    |      |  |   | 84    | 
|State and local taxes                       |  |      | 74    |  |      |   | 60    |      |  |   | 62    | 
|Intangible asset amortization               |  |      | 52    |  |      |   | 46    |      |  |   | 23    | 
|Card processing                             |  |      | 21    |  |      |   | 190   |      |  |   | 218   | 
|Other                                       |  |      | 335   |  |      |   | 282   |      |  |   | 254   | 
|                                           
|Total noninterest
    expense               |  | $    | 4,755 |  |      | $ | 4,472 |      |  | $ | 4,053 | 
|                                           





|                                                  |  |      |        |   |      |   |        |      |  |   |        |  
|------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                  | 
|                                                  |  | 2005 |        |   | 2004 |   |        | 2003 | 
|(Dollars in Millions)                             |  |      |        |   |      |  
|                                                  | 
|Salaries and wages                                |  | $    | 1,422  |   |      | $ | 1,347  |      |  | $ | 1,225  |  
|Incentive compensation                            |  |      | 809    |   |      |   | 774    |      |  |   | 843    |  
|Deferred personnel costs                          |  |      | (457   | ) |      |   | (505   | )    |  |   | (570   | )
|Contract labor                                    |  |      | 199    |   |      |   | 149    |      |  |   | 110    |  
|Medical and other benefits                        |  |      | 175    |   |      |   | 166    |      |  |   | 163    |  
|Payroll taxes                                     |  |      | 156    |   |      |   | 149    |      |  |   | 141    |  
|Retirement plans                                  |  |      | 82     |   |      |   | 81     |      |  |   | 51     |  
|Severance                                         |  |      | 61     |   |      |   | 37     |      |  |   | 75     |  
|Stock-based compensation                          |  |      | 57     |   |      |   | 67     |      |  |   | 30     |  
|Deferred compensation                             |  |      | 16     |   |      |   | 32     |      |  |   | 39     |  
|Other personnel costs                             |  |      | 40     |   |      |   | 66     |      |  |   | 50     |  
|                                                 
|Total salaries, benefits, and
    other personnel |  | $    | 2,560  |   |      | $ | 2,363  |      |  | $ | 2,157  |  
|                                                 
|Full-time equivalent employees
    at year end    |  |      | 34,270 |   |      |   | 35,230 |      |  |   | 33,331 |  
|                                                 







Third-party








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##### Table of Contents

16ANNUAL
REPORT2005



________________________________________________________________________________FINANCIAL REVIEW
(Continued)


and $6 million in 2005 and 2004, respectively, compared
with write-downs of
$14 million in 2003, on the automobile lease portfolio. The
net recoveries in 2005 included a $21 million insurance
settlement, representing a partial recovery of previously
incurred residual value losses.

Marketing and public relations for 2005 and 2003 contained
contributions of appreciated securities to the
Corporations charitable foundation in the amount of
$30 million and $40 million, respectively, with no
similar contribution in 2004. Advertising and promotional
spending also increased in both 2005 and 2004 compared with
prior years. In 2005, the Corporation increased spending on
corporate sponsorships, direct mail marketing and promotional
activities associated with free checking and home equity
products. In 2004, higher advertising costs were incurred to
introduce National Citys products and services to the
St. Louis and Cincinnati markets.

Impairment, fraud and other losses increased in 2005 due to
an $18 million impairment charge on several underutilized
buildings offered for sale, $11 million of higher costs
associated with the Corporations insurance subsidiary, and
a $5 million charge for lease exit costs and asset
impairments associated with the Best In Class program.

State and local taxes increased in 2005 compared to prior years
due to acquisitions and lower tax credits. Intangible asset
amortization increased in both 2005 and 2004 as a result of
intangibles recognized in 2004 acquisitions. Card processing
costs decreased in 2005 as these costs were primarily associated
with the former National Processing subsidiary, which was sold
in late 2004.

In 2005, other noninterest expense increased compared to the
prior year due to $20 million of higher foreclosure losses,
$10 million of higher losses on community development and
civic partnerships, and $9 million of higher private
mortgage insurance costs. The foreclosure provision increased in
2005 due to higher loss rates. The increase in insurance costs
was primarily related to higher premiums for private mortgage
insurance, coupled with an increase in the number of insured
portfolio loans. The higher losses for community development and
civic partnerships in 2005 reflects both new investments and
accelerated amortization to match the expected timing of receipt
of tax credits. In 2004, other noninterest expense increased
compared to the prior year due to $14 million of higher
losses on community development and civic partnerships, as well
as $13 million of higher minority interest expense
associated with subsidiaries acquired in 2004.

The efficiency ratio, equal to noninterest expense as a
percentage of tax-equivalent net interest income and total fees
and other income, was 59.41% in 2005, 50.35% in 2004, and 51.24%
in 2003. The higher efficiency ratio in 2005 was reflective of
higher noninterest expense driven by 2004 acquisitions, lower
mortgage banking revenue, and the prior year gain on the sale of
the former National Processing subsidiary. The lower efficiency
ratio in 2004 when compared with 2003 was primarily the result
of that gain. Management expects the implementation of the Best
In Class program will ultimately drive the efficiency ratio
toward 50%.

Income Taxes

The effective tax rates for 2005, 2004, and 2003 were 33.0%,
31.8%, and 34.6%, respectively. The tax provisions for 2005 and
2004 included $11 million and $67 million,
respectively, of tax benefits related to return to provision
true-ups, the favorable conclusion of tax examinations, and the
regular reassessment of certain tax accruals. In addition, the
effective tax rate for 2004 included a lower effective rate
applied to the gain on the sale of National Processing. The
effective tax rate in 2003 reflected higher state taxes
associated with higher volumes of mortgage banking activities. A
reconciliation of the effective tax rate to the statutory rate
is included in Note 20 to the consolidated financial
statements. Management forecasts the effective tax rate for 2006
to approximate 33%.

Line of Business Results

National City is functionally managed along five major business
lines as discussed in Note 26 to the consolidated financial
statements. National Processing, reported as a separate segment
in prior periods, was sold in October 2004. Net income (loss) by
line of business follows:

|                                                   |  |      |       |   |      |   |       |      |  |   |       |  
|-------------------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                   | 
|(In Millions)                                      |  | 2005 |       |   | 2004 |   |       | 2003 | 
|                                                   | 
|Wholesale Banking                                  |  | $    | 770   |   |      | $ | 662   |      |  | $ | 329   |  
|Consumer and Small Business
    Financial Services |  |      | 699   |   |      |   | 676   |      |  |   | 615   |  
|National Consumer Finance                          |  |      | 559   |   |      |   | 639   |      |  |   | 419   |  
|National City Mortgage                             |  |      | 284   |   |      |   | 442   |      |  |   | 939   |  
|Asset Management                                   |  |      | 80    |   |      |   | 133   |      |  |   | 93    |  
|National Processing                                |  |      |      |   |      |   | 34    |      |  |   | 49    |  
|Parent and Other                                   |  |      | (407  | ) |      |   | 194   |      |  |   | (327  | )
|                                                  
|Consolidated net
    income                        |  | $    | 1,985 |   |      | $ | 2,780 |      |  | $ | 2,117 |  
|                                                  

Wholesale Banking:




---



##### Table of Contents

ANNUAL REPORT2005  17



________________________________________________________________________________




Consumer and Small Business Financial
Services (CSB): Net interest income increased in
both 2005 and 2004 on higher earning assets and wider deposit
spreads. Deposit and other service fee income had strong growth
in 2005 resulting from a higher number of accounts and
fee-generating transactions. Noninterest income for 2005
included a $29 million loss on the securitization of
indirect automobile loans, offset partially by a
$16 million gain on the sale of Madison Bank &
Trust. In the prior year, a $14 million gain on the sale of
Upper Michigan branches was realized. Noninterest expense in
2005 benefited from a $21 million insurance settlement,
representing the partial recovery of previously incurred
residual value losses associated with CSBs former
automobile leasing business. Automobile lease residual value
recoveries (write-downs) were $6 million in 2004 and
$(14) million in 2003. The provision for credit losses
increased in 2005 due to credit losses related to a record
number of consumer bankruptcy filings. Average core deposits
were $53 billion in 2005 versus $49 billion in 2004.
Household acquisition trends remained strong as evidenced by
3.4% growth during 2005.

National Consumer
Finance: Net income declined in 2005 due to
lower earnings at First Franklin, partially offset by higher
earnings at National Home Equity. First Franklins
noninterest income fell sharply in 2005 on lower gains on sale
of mortgages due to intensely competitive market conditions.
Average margins realized on the sale of nonconforming mortgage
loans decreased 139 basis points compared to 2004. First
Franklins net interest income also declined in 2005 due to
narrower loan spreads associated with a flattened yield curve.
In contrast, First Franklins net income increased in 2004
compared with 2003 due to record origination volumes, which more
than offset a decline in gain on sale margins. National Home
Equitys net interest income grew significantly in both
2005 and 2004 due to portfolio growth associated with strong
production in both years. Noninterest income for 2005 included
an $18 million gain on the sale of home equity lines of
credit. The provision for credit losses increased to
$21 million for 2005, compared with $4 million in
2004, and $8 million in 2003. The higher provision reflects
the growth and continued seasoning of this portfolio. The First
Franklin retained portfolio was $18.7 billion at
December 31, 2005, up from $18.3 billion at
December 31, 2004. Home equity lines and loans retained in
portfolio grew to $14.6 billion at December 31, 2005,
up from $11.9 billion at December 31, 2004. Management
plans to sell or securitize most of its National Home Equity and
First Franklin production in future periods.

National City
Mortgage: Net interest income decreased in 2005
compared to the prior two years due to narrower spreads on
mortgage loans held for sale, reflecting a flattened yield
curve, and a lower average balance of mortgages held for sale,
particularly compared with 2003. Mortgage banking revenue
increased slightly compared to 2004 but dropped sharply versus
2003, due to cyclically lower volumes. Gain on sale margins
decreased 22 basis points compared with 2004. Net MSR
hedging gains were $285 million in 2005, down from
$388 million in 2004 and $371 million in 2003.
Noninterest expense increased in 2005 due to higher contract
labor and consulting fees associated with a project to improve
the efficiency of the origination function. Foreclosure losses
were also higher in 2005 due to higher loss rates. Loans
originated for sale were $53.3 billion in 2005 versus
$60.5 billion in 2004 and $101 billion in 2003. The
provision for credit losses was $37 million in 2005,
$12 million in 2004, and $6 million in 2003.

Asset Management: Net
income declined in 2005 as the prior year included a
$62 million realized gain on the sale of the Corporate Bond
Administration business. Net interest income increased in 2005
on loan growth and improved deposit spreads. Noninterest expense
increased due to higher incentive compensation and trust system
replacement costs. Assets under administration were
$107.8 billion at December 31, 2005 and
$108.8 billion at December 31, 2004. Investment
management and personal trust assets increased in 2005 but were
more than offset by declines in charitable endowment and
corporate trust assets.

Parent and Other: This
category includes the results of investment funding activities,
unallocated corporate income and expense, and intersegment
revenue and expense eliminations. Comparisons with prior periods
are affected by derivatives gains, acquisition integration
costs, and other unusual or infrequently occurring items. The
single largest item affecting comparisons between years was a
$714 million realized gain ($487 million after tax) on
the sale of National Processing in 2004. Net interest expense
was lower in 2005 compared to the prior two years due to
maintaining a slightly more asset sensitive balance sheet.
Severance and related costs were $68 million in 2005,
$39 million in 2004, and $81 million in 2003. The
higher severance costs in 2005 were related to the Best In Class
initiative. Severance costs for 2004 included approximately
$19 million of retention benefits to acquired employees.
Severance costs for 2003 were associated with an early
retirement and positions elimination program. Acquisition
integration costs incurred in 2005 were $45 million, down
from $74 million in 2004. Noninterest expense for 2005
included a $30 million contribution to the
Corporations charitable foundation, compared with a
$40 million contribution in 2003, with no similar
contribution in 2004. Noninterest expense for 2005 also included
an $18 million building impairment charge and a
$29 million one-time adjustment for lease accounting. Net
securities gains from the Corporations bank stock fund
were $13 million, $3 million, and $40 million in
2005, 2004, and 2003, respectively. Tax benefits of
$11 million and $67 million were recorded in 2005 and
2004, respectively, from the regular reassessment of tax
accruals.



---



##### Table of Contents

18ANNUAL
REPORT2005



________________________________________________________________________________FINANCIAL REVIEW
(Continued)


Financial Condition

Portfolio
Loans: End-of-period and average portfolio loan
balances by category follow:

|                                                    |  |      |         |  |      |   |         |      |  |   |        |  |  |      |        |  |  |   |        | 
|--------------------------------------------------- |  | ---- | ------- |  | ---- | - | ------- | ---- |  | - | ------ |  |  | ---- | ------ |  |  | - | ------ | 
|                                                    | 
|(In Millions)                                       |  | 2005 |         |  | 2004 |   |         | 2003 |  |   | 2002   |  |  | 2001 |       
|                                                    | 
|As of December 31:                                  |  |      |         |  |      |   |         |      |  |   |        |  |  |      |        |  |  |   |        | 
|Commercial                                          |  | $    | 27,572  |  |      | $ | 25,160  |      |  | $ | 19,164 |  |  | $    | 22,632 |  |  | $ | 25,438 | 
|Commercial construction                             |  |      | 3,367   |  |      |   | 2,923   |      |  |   | 2,289  |  |  |      | 2,090  |  |  |   | 1,314  | 
|Real estate  commercial                            |  |      | 12,407  |  |      |   | 12,193  |      |  |   | 9,828  |  |  |      | 9,385  |  |  |   | 7,281  | 
|Real estate  residential                           |  |      | 32,823  |  |      |   | 30,398  |      |  |   | 27,394 |  |  |      | 19,972 |  |  |   | 14,764 | 
|Home equity lines of credit                         |  |      | 21,439  |  |      |   | 19,018  |      |  |   | 11,016 |  |  |      | 8,102  |  |  |   | 5,845  | 
|Credit card and other unsecured
    lines of credit |  |      | 2,612   |  |      |   | 2,414   |      |  |   | 2,324  |  |  |      | 2,030  |  |  |   | 1,867  | 
|Other consumer                                      |  |      | 5,819   |  |      |   | 8,165   |      |  |   | 7,329  |  |  |      | 7,963  |  |  |   | 11,549 | 
|                                                   
|Total
    portfolio loans                           |  | $    | 106,039 |  |      | $ | 100,271 |      |  | $ | 79,344 |  |  | $    | 72,174 |  |  | $ | 68,058 | 
|                                                   
|Average:                                            |  |      |         |  |      |   |         |      |  |   |        |  |  |      |        |  |  |   |        | 
|Commercial                                          |  | $    | 26,901  |  |      | $ | 22,103  |      |  | $ | 21,390 |  |  | $    | 23,978 |  |  | $ | 26,010 | 
|Commercial construction                             |  |      | 3,068   |  |      |   | 2,568   |      |  |   | 2,343  |  |  |      | 1,380  |  |  |   | 1,262  | 
|Real estate  commercial                            |  |      | 12,033  |  |      |   | 11,162  |      |  |   | 9,483  |  |  |      | 8,005  |  |  |   | 6,788  | 
|Real estate  residential                           |  |      | 32,137  |  |      |   | 28,818  |      |  |   | 23,301 |  |  |      | 15,682 |  |  |   | 14,007 | 
|Home equity lines of credit                         |  |      | 21,118  |  |      |   | 14,743  |      |  |   | 9,293  |  |  |      | 7,014  |  |  |   | 5,222  | 
|Credit card and other unsecured
    lines of credit |  |      | 2,381   |  |      |   | 2,286   |      |  |   | 2,155  |  |  |      | 1,865  |  |  |   | 2,164  | 
|Other consumer                                      |  |      | 7,637   |  |      |   | 7,527   |      |  |   | 7,906  |  |  |      | 11,136 |  |  |   | 12,198 | 
|                                                   
|Total
    portfolio loans                           |  | $    | 105,275 |  |      | $ | 89,207  |      |  | $ | 75,871 |  |  | $    | 69,060 |  |  | $ | 67,651 | 
|                                                   



|                      |  |             |        |  |         |  |     |             |  |   |             |  |  |   |     | 
|--------------------- |  | ----------- | ------ |  | ------- |  | --- | ----------- |  | - | ----------- |  |  | - | --- | 
|                      | 
|                      |  | Average     |        |  | Largest | 
|                      |  | %           |        |  | Loan    |  |     | Loan        | 
|                      |  | Outstanding |        |  | of      |  |     | Balance     |  |   | to a Single | 
|                      |  | Balance     |        |  | Total   |  |     | Per Obligor |  |   | Obligor     | 
|(Dollars in Millions) |  |             |        |  |         |  |     |            
|                      | 
|Real estate           |  | $           | 13,410 |  |         |  | 31  | %           |  | $ | .9          |  |  | $ | 58  | 
|Consumer cyclical     |  |             | 6,763  |  |         |  | 16  |             |  |   | 1.0         |  |  |   | 115 | 
|Consumer noncyclical  |  |             | 5,594  |  |         |  | 13  |             |  |   | .5          |  |  |   | 45  | 
|Industrial            |  |             | 5,322  |  |         |  | 12  |             |  |   | 1.1         |  |  |   | 71  | 
|Basic materials       |  |             | 3,297  |  |         |  | 8   |             |  |   | 1.5         |  |  |   | 40  | 
|Financial             |  |             | 3,170  |  |         |  | 7   |             |  |   | 1.7         |  |  |   | 103 | 
|Services              |  |             | 1,654  |  |         |  | 4   |             |  |   | .4          |  |  |   | 47  | 
|Energy and utilities  |  |             | 827    |  |         |  | 2   |             |  |   | 1.3         |  |  |   | 24  | 
|Technology            |  |             | 355    |  |         |  | 1   |             |  |   | 2.3         |  |  |   | 30  | 
|Miscellaneous         |  |             | 2,954  |  |         |  | 6   |             |  |   | .2          |  |  |   | 27  | 
|                     
|Total                 |  | $           | 43,346 |  |         |  | 100 | %           |  |   |             |  |  |   |     | 
|                     

Commercial:










|              |  |          |       |  |            |   |        |            |  |   |       |  |  |   |        | 
|------------- |  | -------- | ----- |  | ---------- | - | ------ | ---------- |  | - | ----- |  |  | - | ------ | 
|              | 
|              |  | One Year |       |  | One to     |   |        | Over       |  |   |      
|(In Millions) |  | or Less  |       |  | Five Years |   |        | Five Years |  |   | Total | 
|              | 
|Variable-rate |  | $        | 5,305 |  |            | $ | 13,267 |            |  | $ | 2,277 |  |  | $ | 20,849 | 
|Fixed-rate    |  |          | 806   |  |            |   | 3,726  |            |  |   | 2,191 |  |  |   | 6,723  | 
|             
|Total         |  | $        | 6,111 |  |            | $ | 16,993 |            |  | $ | 4,468 |  |  | $ | 27,572 | 
|             



---



##### Table of Contents

ANNUAL REPORT2005  19



________________________________________________________________________________




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. Commercial
construction loans are governed by the same lending policies and
are subject to the same credit risk as described for commercial
loans. Growth in the commercial construction balances during
2005 resulted from new business generation and increased
borrowings from existing customers. The increase in the
commercial construction balances in 2004 was primarily due to
acquisition-related activity.

A distribution of total commercial construction loans by
maturity and interest rate at December 31, 2005 follows:

|              |  |          |       |  |            |   |       |           |  |   |       |  |  |   |       | 
|------------- |  | -------- | ----- |  | ---------- | - | ----- | --------- |  | - | ----- |  |  | - | ----- | 
|              | 
|              |  | One Year |       |  | One to     |   |       | Over Five |  |   |      
|(In Millions) |  | or Less  |       |  | Five Years |   |       | Years     |  |   | Total | 
|              | 
|Variable-rate |  | $        | 1,340 |  |            | $ | 1,676 |           |  | $ | 150   |  |  | $ | 3,166 | 
|Fixed-rate    |  |          | 30    |  |            |   | 111   |           |  |   | 60    |  |  |   | 201   | 
|             
|Total         |  | $        | 1,370 |  |            | $ | 1,787 |           |  | $ | 210   |  |  | $ | 3,367 | 
|             

Commercial Real
Estate:


Residential real
estate:












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##### Table of Contents

20ANNUAL
REPORT2005



________________________________________________________________________________FINANCIAL REVIEW
(Continued)


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 three 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. There
were no such sales during 2005.

Home Equity Lines of
Credit: The home equity category consists mainly
of revolving lines of credit secured by residential real estate.
Home equity lines of credit 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
through brokers on a nationwide basis through the National Home
Equity division, as well as directly 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. Going forward, management expects to
sell or securitize most home equity production originated by
National Home Equity, which will have the effect of reducing the
future rate of growth in the portfolio. During 2005, the
Corporation sold $1.4 billion of home equity lines of
credit.

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. During 2005, the Corporation
securitized $600 million of credit card balances.
Management expects to securitize additional credit card balances
in the future, with $425 million of credit card loans held
for securitization at December 31, 2005.

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 repay the loan, 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 end-of-period balance
of the other consumer portfolio decreased in 2005 due to the
securitization of $2.2 billion of indirect automobile loans
as a result of the decision to exit the indirect automobile and
motorsports lending business. Also contributing to this decrease
was the continued run-off of the automobile lease portfolio. The
Corporation ceased the origination of automobile leases in
December 2000; however, additional automobile leases were
acquired in connection with the 2004 acquisition of Provident.
No new automobile leases were originated since the acquisition
date and these balances will run off over time. Automobile lease
receivable balances at December 31, 2005 and 2004, totaled
$411 million and $530 million, respectively. The
average balance of the other consumer portfolio in the previous
years was affected by the $3.2 billion loan
reclassification described in the residential real estate
discussion above, the continued run-off of the automobile lease
portfolio, and the securitization of automobile loans, offset by
the impact of acquisitions.

Loans Held for Sale or
Securitization: End-of-period and average loans
held for sale or securitization follow:

|                                                |  |      |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |        | 
|----------------------------------------------- |  | ---- | ------ |  | ---- | - | ------ | ---- |  | - | ------ |  |  | ---- | ------ |  |  | - | ------ | 
|                                                | 
|(In Millions)                                   |  | 2005 |        |  | 2004 |   |        | 2003 |  |   | 2002   |  |  | 2001 |       
|                                                | 
|As of December 31:                              |  |      |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |        | 
|Commercial                                      |  | $    | 11     |  |      | $ | 24     |      |  | $ | 16     |  |  | $    | 15     |  |  | $ | 51     | 
|Real estate  commercial                        |  |      | 35     |  |      |   | 546    |      |  |   |       |  |  |      |       |  |  |   |       | 
|Real estate  residential                       |  |      | 9,192  |  |      |   | 11,860 |      |  |   | 14,497 |  |  |      | 24,486 |  |  |   | 15,553 | 
|Automobile                                      |  |      |       |  |      |   |       |      |  |   | 854    |  |  |      |       |  |  |   | 825    | 
|Credit card                                     |  |      | 425    |  |      |   |       |      |  |   |       |  |  |      |       |  |  |   | 402    | 
|Student loans                                   |  |      | 4      |  |      |   |       |      |  |   |       |  |  |      |       |  |  |   |       | 
|                                               
|Total loans held for sale or
    securitization |  | $    | 9,667  |  |      | $ | 12,430 |      |  | $ | 15,367 |  |  | $    | 24,501 |  |  | $ | 16,831 | 
|                                               
|Average:                                        |  |      |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |        | 
|Commercial                                      |  | $    | 18     |  |      | $ | 28     |      |  | $ | 13     |  |  | $    | 11     |  |  | $ | 19     | 
|Real estate  commercial                        |  |      | 198    |  |      |   | 164    |      |  |   |       |  |  |      |       |  |  |   |       | 
|Real estate  residential                       |  |      | 10,547 |  |      |   | 12,071 |      |  |   | 22,671 |  |  |      | 13,933 |  |  |   | 7,789  | 
|Automobile                                      |  |      | 179    |  |      |   | 132    |      |  |   | 153    |  |  |      | 248    |  |  |   | 120    | 
|Credit card                                     |  |      | 142    |  |      |   |       |      |  |   |       |  |  |      | 35     |  |  |   | 33     | 
|Student loans                                   |  |      | 2      |  |      |   |       |      |  |   |       |  |  |      |       |  |  |   |       | 
|Home equity lines
    of credit                 |  |      | 4      |  |      |   |       |      |  |   |       |  |  |      |       |  |  |   |       | 
|                                               
|Total loans held for sale or
    securitization |  | $    | 11,090 |  |      | $ | 12,395 |      |  | $ | 22,837 |  |  | $    | 14,227 |  |  | $ | 7,961  | 
|                                               





---



##### Table of Contents

ANNUAL REPORT2005  21



________________________________________________________________________________




At December 31, 2005, $425 million of credit card
receivables were classified as held for sale or securitization
as management intends to securitize these balances in early 2006.

Securities: Securities
balances at December 31 follow:

|                                                |  |      |       |  |      |   |       |      |  |   |       |  |  |      |       |  |  |   |       | 
|----------------------------------------------- |  | ---- | ----- |  | ---- | - | ----- | ---- |  | - | ----- |  |  | ---- | ----- |  |  | - | ----- | 
|                                                | 
|(In Millions)                                   |  | 2005 |       |  | 2004 |   |       | 2003 |  |   | 2002  |  |  | 2001 |      
|                                                | 
|U.S. Treasury and Federal
    agency debentures |  | $    | 1,174 |  |      | $ | 653   |      |  | $ | 637   |  |  | $    | 1,084 |  |  | $ | 977   | 
|Mortgage-backed securities                      |  |      | 5,437 |  |      |   | 6,309 |      |  |   | 3,928 |  |  |      | 4,553 |  |  |   | 6,447 | 
|Asset-backed and corporate
    debt securities  |  |      | 246   |  |      |   | 510   |      |  |   | 931   |  |  |      | 1,815 |  |  |   | 760   | 
|States and political subdivisions               |  |      | 608   |  |      |   | 705   |      |  |   | 672   |  |  |      | 651   |  |  |   | 703   | 
|Other securities                                |  |      | 416   |  |      |   | 423   |      |  |   | 154   |  |  |      | 229   |  |  |   | 435   | 
|                                               
|Total
    amortized cost                        |  | $    | 7,881 |  |      | $ | 8,600 |      |  | $ | 6,322 |  |  | $    | 8,332 |  |  | $ | 9,322 | 
|                                               
|Total fair value                                |  | $    | 7,875 |  |      | $ | 8,765 |      |  | $ | 6,525 |  |  | $    | 8,675 |  |  | $ | 9,479 | 
|                                               



Funding:


|                                      |                    |      |         |        |      |   |         |        |  |   |         |        |  |      |        |        |  |   |        |        | 
|------------------------------------- | ------------------ | ---- | ------- | ------ | ---- | - | ------- | ------ |  | - | ------- | ------ |  | ---- | ------ | ------ |  | - | ------ | ------ | 
|                                      |                   
|(In Millions)                         |                    | 2005 |         |        | 2004 |   |         | 2003   |  |   | 2002    |        |  | 2001 |       
|                                      |                   
|Noninterest bearing                   |                    | $    | 18,257  |        |      | $ | 17,763  |        |  | $ | 17,203  |        |  | $    | 13,685 |        |  | $ | 11,622 |       
|NOW and money market                  |                    |      | 28,589  |        |      |   | 28,897  |        |  |   | 25,378  |        |  |      | 20,740 |        |  |   | 18,120 |       
|Savings                               |                    |      | 2,361   |        |      |   | 2,583   |        |  |   | 2,423   |        |  |      | 2,561  |        |  |   | 2,713  |       
|Consumer time                         |                    |      | 18,662  |        |      |   | 14,875  |        |  |   | 13,729  |        |  |      | 15,064 |        |  |   | 15,332 |       
|                                     
|                                      | Core deposits      |      |         | 67,869 |      |   |         | 64,118 |  |   |         | 58,733 |  |      |        | 52,050 |  |   |        | 47,787 | 
|                                     
|Other deposits                        |                    |      | 6,087   |        |      |   | 3,062   |        |  |   | 2,752   |        |  |      | 3,613  |        |  |   | 5,802  |       
|Foreign deposits                      |                    |      | 8,787   |        |      |   | 8,946   |        |  |   | 7,002   |        |  |      | 6,302  |        |  |   | 4,319  |       
|                                     
|                                      | Purchased deposits |      |         | 14,874 |      |   |         | 12,008 |  |   |         | 9,754  |  |      |        | 9,915  |  |   |        | 10,121 | 
|                                     
|Total deposits                        |                    |      | 82,743  |        |      |   | 76,126  |        |  |   | 68,487  |        |  |      | 61,965 |        |  |   | 57,908 |       
|                                     
|Short-term borrowings                 |                    |      | 9,591   |        |      |   | 9,315   |        |  |   | 12,464  |        |  |      | 11,192 |        |  |   | 10,272 |       
|Long-term debt                        |                    |      | 32,752  |        |      |   | 24,028  |        |  |   | 24,854  |        |  |      | 19,558 |        |  |   | 16,415 |       
|                                     
|Total deposits and
    borrowed funds |                    | $    | 125,086 |        |      | $ | 109,469 |        |  | $ | 105,805 |        |  | $    | 92,715 |        |  | $ | 84,595 |       
|                                     



















---



##### Table of Contents

22ANNUAL
REPORT2005



________________________________________________________________________________FINANCIAL REVIEW
(Continued)


debt in 2004 was primarily the result of principal paydowns and
maturities more than offsetting the increase in new debt
issuances and balances acquired through acquisitions.

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 17 and 18 to the consolidated financial statements.
Information on stockholders equity at December 31 is
presented in the following table.

|                                 |  |      |        |   |      |   |        |  
|-------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                 | 
|(Dollars in Millions,            | 
|except per share)                |  | 2005 |        |   | 2004 |  
|                                 | 
|Stockholders equity             |  | $    | 12,613 |   |      | $ | 12,804 |  
|Equity as a percentage of assets |  |      | 8.86   | % |      |   | 9.18   | %
|Book value per common share      |  | $    | 20.51  |   |      | $ | 19.80  |  
|                                



|                |       |                |           |            |             |   |       |                   |  |  |                   |            |  |  |            |  | 
|--------------- | ----- | -------------- | --------- | ---------- | ----------- | - | ----- | ----------------- |  |  | ----------------- | ---------- |  |  | ---------- |  | 
|                |      
|                |       | Total Number   |           |            | Maximum     |  
|                |       | of Shares      |           |            | Number of   |  
|                |       | Purchased      |           |            | Shares that |  
|                |       | Under Publicly |           |            | May Yet Be  |  
|                |       | Total          |           |            | Average     |   |       | Announced         |  |  | Purchased         |           
|                |       | Number of      |           |            | Price       |   |       | Share             |  |  | Under the Share   |           
|                |       | Shares         |           |            | Paid Per    |   |       | Repurchase        |  |  | Repurchase        |           
|Period          |       | Purchased(a)   |           |            | Share       |   |       | Authorizations(b) |  |  | Authorizations(c) |           
|                |      
|Oct 1 to Oct 31 |       |                | 9,699,744 |            |             | $ | 32.64 |                   |  |  | 9,665,000         |            |  |  | 38,632,200 | 
|Nov 1 to Nov 30 |       |                | 4,633,400 |            |             |   | 32.71 |                   |  |  | 4,598,500         |            |  |  | 34,033,700 | 
|Dec 1 to Dec 31 |       |                | 565,405   |            |             |   | 34.00 |                   |  |  | 417,200           |            |  |  | 33,616,500 | 
|               
|                | Total |                |           | 14,898,549 |             |   | $     | 32.71             |  |  |                   | 14,680,700 |  |  |            |  | 
|               



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Includes shares repurchased under the October 24, 2005
    and December 21, 2004 share repurchase authorizations
    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 October 24,
    2005 share repurchase authorization.







Risk Management




Credit Risk




10-year






---



##### Table of Contents

ANNUAL REPORT2005  23



________________________________________________________________________________




thresholds, the counterparty to this arrangement would bear the
risk of additional losses. As of December 31, 2005, the
outstanding balance of nonconforming mortgages subject to this
credit risk transfer agreement was $4.0 billion.

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

|                                                         |  |      |       |   |      |  |       |      |  |  |       |   |  |      |       |   |  |  |       |  
|-------------------------------------------------------- |  | ---- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | - |  | ---- | ----- | - |  |  | ----- | -
|                                                         | 
|                                                         |  | 2005 |       |   | 2004 |  |       | 2003 |  |  | 2002  |   |  | 2001 |      
|                                                         | 
|Commercial                                               |  |      | 26.0  | % |      |  | 25.1  | %    |  |  | 24.2  | % |  |      | 31.3  | % |  |  | 37.4  | %
|Commercial construction and
    real estate  commercial |  |      | 14.9  |   |      |  | 15.1  |      |  |  | 15.3  |   |  |      | 15.9  |   |  |  | 12.6  |  
|Real estate  residential                                |  |      | 30.9  |   |      |  | 30.3  |      |  |  | 34.5  |   |  |      | 27.7  |   |  |  | 21.7  |  
|Home equity lines of credit
    and other consumer loans |  |      | 25.7  |   |      |  | 27.1  |      |  |  | 23.1  |   |  |      | 22.3  |   |  |  | 25.6  |  
|Credit card and other
    unsecured lines of credit      |  |      | 2.5   |   |      |  | 2.4   |      |  |  | 2.9   |   |  |      | 2.8   |   |  |  | 2.7   |  
|                                                        
|Total                                                    |  |      | 100.0 | % |      |  | 100.0 | %    |  |  | 100.0 | % |  |      | 100.0 | % |  |  | 100.0 | %
|                                                        



Nonperforming Assets and Delinquent
Loans:


|                                             |                                                               |      |     |     |      |   |     |      |   |   |      |     |   |      |     |      |   |   |     |     |  
|-------------------------------------------- | ------------------------------------------------------------- | ---- | --- | --- | ---- | - | --- | ---- | - | - | ---- | --- | - | ---- | --- | ---- | - | - | --- | --- | -
|                                             |                                                              
|(Dollars in Millions)                        |                                                               | 2005 |     |     | 2004 |   |     | 2003 |   |   | 2002 |     |   | 2001 |    
|                                             |                                                              
|Commercial                                   |                                                               | $    | 181 |     |      | $ | 161 |      |   | $ | 257  |     |   | $    | 408 |      |   | $ | 350 |    
|Commercial construction                      |                                                               |      | 20  |     |      |   | 12  |      |   |   | 7    |     |   |      | 6   |      |   |   | 14  |    
|Real estate  commercial                     |                                                               |      | 114 |     |      |   | 102 |      |   |   | 67   |     |   |      | 60  |      |   |   | 64  |    
|Real estate  residential                    |                                                               |      | 175 |     |      |   | 188 |      |   |   | 219  |     |   |      | 228 |      |   |   | 166 |    
|                                            
|Total nonperforming
    loans                |                                                               |      | 490 |     |      |   | 463 |      |   |   | 550  |     |   |      | 702 |      |   |   | 594 |    
|Other real estate owned (OREO)               |                                                               |      | 97  |     |      |   | 89  |      |   |   | 99   |     |   |      | 115 |      |   |   | 64  |    
|Mortgage loans held for sale                 |                                                               |      | 9   |     |      |   | 11  |      |   |   | 8    |     |   |      |    |      |   |   |    |    
|                                            
|Total nonperforming
    assets               |                                                               | $    | 596 |     |      | $ | 563 |      |   | $ | 657  |     |   | $    | 817 |      |   | $ | 658 |    
|                                            
|Nonperforming assets as a
    percentage of: |                                                               |      |     |     |      |   |     |      |   |   |      |     |   |      |     |      |   |   |     |    
|                                             | Period-end portfolio loans and
    other nonperforming assets |      |     | .56 | %    |   |     | .56  | % |   |      | .83 | % |      |     | 1.13 | % |   |     | .97 | %
|                                             | Period-end total
    assets                                   |      |     | .42 |      |   |     | .40  |   |   |      | .58 |   |      |     | .69  |   |   |     | .62 |  
|                                            



|                                                    |  |      |     |  |      |   |     |      |  |   |      |  |  |      |     |  |  |   |     | 
|--------------------------------------------------- |  | ---- | --- |  | ---- | - | --- | ---- |  | - | ---- |  |  | ---- | --- |  |  | - | --- | 
|                                                    | 
|(In Millions)                                       |  | 2005 |     |  | 2004 |   |     | 2003 |  |   | 2002 |  |  | 2001 |    
|                                                    | 
|Commercial                                          |  | $    | 36  |  |      | $ | 44  |      |  | $ | 20   |  |  | $    | 41  |  |  | $ | 52  | 
|Commercial construction                             |  |      | 5   |  |      |   | 12  |      |  |   | 3    |  |  |      | 1   |  |  |   | 6   | 
|Real estate  commercial                            |  |      | 9   |  |      |   | 29  |      |  |   | 32   |  |  |      | 26  |  |  |   | 30  | 
|Real estate  residential                           |  |      | 510 |  |      |   | 467 |      |  |   | 428  |  |  |      | 450 |  |  |   | 442 | 
|Home equity lines of credit                         |  |      | 23  |  |      |   | 10  |      |  |   | 15   |  |  |      | 16  |  |  |   | 17  | 
|Credit card and other unsecured
    lines of credit |  |      | 20  |  |      |   | 21  |      |  |   | 18   |  |  |      | 8   |  |  |   | 12  | 
|Other consumer                                      |  |      | 17  |  |      |   | 13  |      |  |   | 12   |  |  |      | 19  |  |  |   | 28  | 
|Mortgage loans held for sale and
    other          |  |      | 16  |  |      |   | 25  |      |  |   | 37   |  |  |      | 14  |  |  |   | 26  | 
|                                                   
|Total loans 90 days past
    due accruing interest  |  | $    | 636 |  |      | $ | 621 |      |  | $ | 565  |  |  | $    | 575 |  |  | $ | 613 | 
|                                                   



120-150 year-end








Allowance for Loan Losses and Allowance
for Losses on Lending-Related Commitments:




---



##### Table of Contents

24ANNUAL
REPORT2005



________________________________________________________________________________FINANCIAL REVIEW
(Continued)


geographical areas, and other pertinent factors, including
general economic conditions, unemployment levels, and regulatory
guidance.

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

|                                                             |                                                     |      |         |       |      |   |         |       |   |   |        |       |   |      |        |       |   |   |        |       |  
|------------------------------------------------------------ | --------------------------------------------------- | ---- | ------- | ----- | ---- | - | ------- | ----- | - | - | ------ | ----- | - | ---- | ------ | ----- | - | - | ------ | ----- | -
|                                                             |                                                    
|(Dollars in Millions)                                        |                                                     | 2005 |         |       | 2004 |   |         | 2003  |   |   | 2002   |       |   | 2001 |       
|                                                             |                                                    
|Balance at beginning
    of year                             |                                                     | $    | 1,188   |       |      | $ | 1,023   |       |   | $ | 1,006  |       |   | $    | 925    |       |   | $ | 844    |      
|Provision for loan losses                                    |                                                     |      | 300     |       |      |   | 339     |       |   |   | 628    |       |   |      | 661    |       |   |   | 618    |      
|Allowance related to loans
    acquired, sold or securitized |                                                     |      | (14     | )     |      |   | 172     |       |   |   | (2     | )     |   |      | (4     | )     |   |   | (74    | )    
|Charge-offs:                                                 |                                                     |      |         |       |      |   |         |       |   |   |        |       |   |      |        |       |   |   |        |      
|                                                             | Commercial                                          |      |         | 160   |      |   |         | 170   |   |   |        | 328   |   |      |        | 317   |   |   |        | 199   |  
|                                                             | Commercial construction                             |      |         | 4     |      |   |         | 12    |   |   |        | 3     |   |      |        | 2     |   |   |        | 1     |  
|                                                             | Real estate  commercial                            |      |         | 32    |      |   |         | 23    |   |   |        | 31    |   |      |        | 21    |   |   |        | 16    |  
|                                                             | Real estate  residential                           |      |         | 134   |      |   |         | 126   |   |   |        | 152   |   |      |        | 86    |   |   |        | 60    |  
|                                                             | Home equity lines of credit                         |      |         | 42    |      |   |         | 27    |   |   |        | 24    |   |      |        | 21    |   |   |        | 14    |  
|                                                             | Credit card and other unsecured
    lines of credit |      |         | 130   |      |   |         | 109   |   |   |        | 98    |   |      |        | 83    |   |   |        | 98    |  
|                                                             | Other consumer                                      |      |         | 100   |      |   |         | 104   |   |   |        | 121   |   |      |        | 171   |   |   |        | 199   |  
|                                                            
|Total charge-offs                                            |                                                     |      | 602     |       |      |   | 571     |       |   |   | 757    |       |   |      | 701    |       |   |   | 587    |      
|                                                            
|Recoveries:                                                  |                                                     |      |         |       |      |   |         |       |   |   |        |       |   |      |        |       |   |   |        |      
|                                                             | Commercial                                          |      |         | 97    |      |   |         | 101   |   |   |        | 44    |   |      |        | 32    |   |   |        | 17    |  
|                                                             | Commercial construction                             |      |         | 2     |      |   |         | 1     |   |   |        |      |   |      |        |      |   |   |        |      |  
|                                                             | Real estate  commercial                            |      |         | 10    |      |   |         | 13    |   |   |        | 5     |   |      |        | 5     |   |   |        | 6     |  
|                                                             | Real estate  residential                           |      |         | 56    |      |   |         | 52    |   |   |        | 37    |   |      |        | 8     |   |   |        | 1     |  
|                                                             | Home equity lines of credit                         |      |         | 8     |      |   |         | 10    |   |   |        | 7     |   |      |        | 5     |   |   |        | 3     |  
|                                                             | Credit card and other unsecured
    lines of credit |      |         | 12    |      |   |         | 8     |   |   |        | 8     |   |      |        | 8     |   |   |        | 23    |  
|                                                             | Other consumer                                      |      |         | 37    |      |   |         | 40    |   |   |        | 47    |   |      |        | 67    |   |   |        | 74    |  
|                                                            
|Total recoveries                                             |                                                     |      | 222     |       |      |   | 225     |       |   |   | 148    |       |   |      | 125    |       |   |   | 124    |      
|                                                            
|Net charge-offs                                              |                                                     |      | 380     |       |      |   | 346     |       |   |   | 609    |       |   |      | 576    |       |   |   | 463    |      
|                                                            
|Balance at end of year                                       |                                                     | $    | 1,094   |       |      | $ | 1,188   |       |   | $ | 1,023  |       |   | $    | 1,006  |       |   | $ | 925    |      
|                                                            
|Portfolio loans outstanding at
    December 31               |                                                     | $    | 106,039 |       |      | $ | 100,271 |       |   | $ | 79,344 |       |   | $    | 72,174 |       |   | $ | 68,058 |      
|                                                            
|Allowance as a percentage
    of:                            |                                                     |      |         |       |      |   |         |       |   |   |        |       |   |      |        |       |   |   |        |      
|                                                             | Portfolio loans                                     |      |         | 1.03  | %    |   |         | 1.19  | % |   |        | 1.29  | % |      |        | 1.39  | % |   |        | 1.36  | %
|                                                             | Nonperforming loans                                 |      |         | 223.1 |      |   |         | 256.9 |   |   |        | 186.1 |   |      |        | 143.3 |   |   |        | 155.9 |  
|                                                             | Net charge-offs                                     |      |         | 287.3 |      |   |         | 343.8 |   |   |        | 167.8 |   |      |        | 174.7 |   |   |        | 200.1 |  
|                                                            



|                                                            |  |      |     |   |      |   |     |      |  |   |      |  |  |      |     |  |  |   |     |  
|----------------------------------------------------------- |  | ---- | --- | - | ---- | - | --- | ---- |  | - | ---- |  |  | ---- | --- |  |  | - | --- | -
|                                                            | 
|(Dollars in Millions)                                       |  | 2005 |     |   | 2004 |   |     | 2003 |  |   | 2002 |  |  | 2001 |    
|                                                            | 
|Balance at beginning of
    year                            |  | $    | 100 |   |      | $ | 102 |      |  | $ | 92   |  |  | $    | 71  |  |  | $ | 84  |  
|Net provision for losses on
    lending-related commitments |  |      | (16 | ) |      |   | (16 | )    |  |   | 10   |  |  |      | 21  |  |  |   | (13 | )
|Allowance related to
    commitments acquired               |  |      |    |   |      |   | 14  |      |  |   |     |  |  |      |    |  |  |   |    |  
|                                                           
|Balance at end of year                                      |  | $    | 84  |   |      | $ | 100 |      |  | $ | 102  |  |  | $    | 92  |  |  | $ | 71  |  
|                                                           
|Total provision for credit
    losses                       |  | $    | 284 |   |      | $ | 323 |      |  | $ | 638  |  |  | $    | 682 |  |  | $ | 605 |  
|                                                           





|                                                     |  |      |      |   |      |  |      |      |  |  |      |   |  |      |      |   |  |  |      |  
|---------------------------------------------------- |  | ---- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | - |  | ---- | ---- | - |  |  | ---- | -
|                                                     | 
|                                                     |  | 2005 |      |   | 2004 |  |      | 2003 |  |  | 2002 |   |  | 2001 |     
|                                                     | 
|Commercial                                           |  |      | .23  | % |      |  | .31  | %    |  |  | 1.33 | % |  |      | 1.19 | % |  |  | .70  | %
|Commercial construction                              |  |      | .09  |   |      |  | .41  |      |  |  | .12  |   |  |      | .07  |   |  |  | .10  |  
|Real estate  commercial                             |  |      | .18  |   |      |  | .09  |      |  |  | .27  |   |  |      | .20  |   |  |  | .15  |  
|Real estate  residential                            |  |      | .25  |   |      |  | .26  |      |  |  | .49  |   |  |      | .50  |   |  |  | .42  |  
|Home equity lines of credit                          |  |      | .16  |   |      |  | .11  |      |  |  | .18  |   |  |      | .24  |   |  |  | .21  |  
|Credit card and other unsecured
    lines of credit  |  |      | 4.96 |   |      |  | 4.41 |      |  |  | 4.21 |   |  |      | 4.02 |   |  |  | 3.48 |  
|Other consumer                                       |  |      | .83  |   |      |  | .85  |      |  |  | .94  |   |  |      | .93  |   |  |  | 1.02 |  
|                                                    
|Total net charge-offs to average
    portfolio loans |  |      | .36  | % |      |  | .39  | %    |  |  | .80  | % |  |      | .83  | % |  |  | .68  | %
|                                                    









---



##### Table of Contents

ANNUAL REPORT2005  25








the allocation, all loan categories were affected in 2004 by
acquisitions.

|                                                         |            |      |       |    |      |   |       |      |  |   |       |     |  |      |       |    |  |   |     |    | 
|-------------------------------------------------------- | ---------- | ---- | ----- | -- | ---- | - | ----- | ---- |  | - | ----- | --- |  | ---- | ----- | -- |  | - | --- | -- | 
|                                                         |           
|(In Millions)                                            |            | 2005 |       |    | 2004 |   |       | 2003 |  |   | 2002  |     |  | 2001 |      
|                                                         |           
|Allowance for loan
    losses:                           |            |      |       |    |      |   |       |      |  |   |       |     |  |      |       |    |  |   |     |   
|Commercial                                               |            | $    | 494   |    |      | $ | 572   |      |  | $ | 283   |     |  | $    | 360   |    |  | $ | 340 |   
|Commercial construction and real
    estate  commercial |            |      | 136   |    |      |   | 146   |      |  |   | 54    |     |  |      | 56    |    |  |   | 55  |   
|Real estate  residential                                |            |      | 174   |    |      |   | 185   |      |  |   | 125   |     |  |      | 126   |    |  |   | 119 |   
|Home equity lines of credit and
    other consumer loans |            |      | 131   |    |      |   | 127   |      |  |   | 94    |     |  |      | 124   |    |  |   | 142 |   
|Credit card and other unsecured
    lines of credit      |            |      | 159   |    |      |   | 158   |      |  |   | 129   |     |  |      | 101   |    |  |   | 83  |   
|Unallocated                                              |            |      |      |    |      |   |      |      |  |   | 338   |     |  |      | 239   |    |  |   | 186 |   
|                                                        
|Total                                                    |            | $    | 1,094 |    |      | $ | 1,188 |      |  | $ | 1,023 |     |  | $    | 1,006 |    |  | $ | 925 |   
|                                                        
|Allowance for losses on
    lending-related commitments: |            |      |       |    |      |   |       |      |  |   |       |     |  |      |       |    |  |   |     |   
|                                                         | Commercial |      | $     | 84 |      |   | $     | 100  |  |   | $     | 102 |  |      | $     | 92 |  |   | $   | 71 | 
|                                                        

Market Risk




Asset/ Liability
Management:


Interest Rate Risk
Management:


Market Value
Modeling:






Earnings Simulation
Modeling:




---



##### Table of Contents

26ANNUAL
REPORT2005



________________________________________________________________________________FINANCIAL REVIEW
(Continued)


ical 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 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.

Net interest income is affected by changes in the absolute level
of interest rates and by 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. The earnings
simulations are also affected by changes in spread relationships
between certain rate indices, such as the prime rate and the
London Interbank Offering Rate (LIBOR).

Market implied forward rates over the next 12 months are
used as the base rate scenario in the earnings simulation model.
High and low rate scenarios are also modeled and consist of
statistically determined two-standard deviation 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 1.0% lower 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 1.4% 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 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.

Summary information about the interest-rate risk measures
follows:

|                                              |  |      |      |   |      |  |      |  
|--------------------------------------------- |  | ---- | ---- | - | ---- |  | ---- | -
|                                              | 
|                                              |  | 2005 |      |   | 2004 | 
|                                              | 
|One Year Net Income Simulation
    Projection |  |      |      |   |      |  |      |  
|2 SD below implied forward
    curve          |  |      | -1.4 | % |      |  | -2.9 | %
|2 SD above implied forward curve              |  |      | -1.0 |   |      |  | 1.9  |  
|Duration of Equity                            |  |      |      |  
|-150 bp shock vs. stable rate                 |  |      | -.6  | % |      |  | -2.0 | %
|+150 bp shock vs. stable rate                 |  |      | 1.6  |   |      |  | .6   |  
|                                             



Trading Risk
Management:


Liquidity Risk








---



##### Table of Contents

ANNUAL REPORT2005  27



________________________________________________________________________________




kets, 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
2005. Core deposits, which continue to be the most significant
source of funding, comprised approximately 50% of funding at
December 31, 2005 and 2004. 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 2005, the Corporation securitized
$2.2 billion of indirect automobile loans and
$600 million of credit card receivables. In 2004, the
Corporation securitized $890 million of automobile loans.
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. At
December 31, 2005, 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, 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 17 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. The Corporations bank and nonbank
subsidiaries declared and paid cash dividends totaling
$1.2 billion, $2.2 billion, and $1.3 billion in
2005, 2004, and 2003, respectively. During 2005, the bank
subsidiaries were granted regulatory approval to provide
liquidity to the holding company in the form of returns of
capital totaling $1.4 billion. Returns of capital paid to
the holding company by nonbank subsidiaries totaled
$28 million and $555 million in 2005 and 2003,
respectively, with none in 2004. During 2004, the holding
company received $1.2 billion in cash proceeds from
the sale of National Processing.

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, 2005 and 2004,
$1.1 billion and $415 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, 2005 and 2004.

The Corporation also has in place a shelf registration with the
Securities and Exchange Commission to allow for the sale, over
time, of up to $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 2005 and 2004, the holding company issued
$700 million and $200 million of senior notes under
this shelf registration, leaving $600 million available for
future issuance.

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, 2005, 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.

|                                                                      |  |                 |        |        |          |   |          |       |  |      |        |  |  |       |       |  |       |   |       |  |  |   |        | 
|--------------------------------------------------------------------- |  | --------------- | ------ | ------ | -------- | - | -------- | ----- |  | ---- | ------ |  |  | ----- | ----- |  | ----- | - | ----- |  |  | - | ------ | 
|                                                                      | 
|                                                                      |  | Payments Due In |        |        |         
|                                                                      |  |                 |        |        |         
|                                                                      |  |                 |        | One to |          |   | Three to |       |  | Over |        |  | 
|                                                                      |  | Note            |        |        | One Year |   |          | Three |  |      | Five   |  |  | Five  |       |  |      
|(In Millions)                                                         |  | Reference       |        |        | or Less  |   |          | Years |  |      | Years  |  |  | Years |       |  | Total |  
|                                                                      | 
|Deposits without a stated
    maturity(a)                             |  |                 |        |        |          | $ | 56,723   |       |  | $    |       |  |  | $     |      |  |       | $ |      |  |  | $ | 56,723 | 
|Consumer and brokered certificates
    of
    deposits(b)(c)          |  |                 |        |        |          |   | 18,534   |       |  |      | 6,924  |  |  |       | 1,877 |  |       |   | 3,510 |  |  |   | 30,845 | 
|Federal funds borrowed and security
    repurchase agreements
    (b) |  |                 | 13     |        |          |   | 6,503    |       |  |      |       |  |  |       |      |  |       |   |      |  |  |   | 6,503  | 
|Borrowed
    funds(b)                                                 |  |                 | 14     |        |          |   | 3,212    |       |  |      |       |  |  |       |      |  |       |   |      |  |  |   | 3,212  | 
|Long-term
    debt(b)(c)                                              |  |                 | 15, 16 |        |          |   | 12,788   |       |  |      | 11,397 |  |  |       | 6,077 |  |       |   | 5,555 |  |  |   | 35,817 | 
|Operating leases                                                      |  |                 |        |        |          |   | 146      |       |  |      | 251    |  |  |       | 178   |  |       |   | 449   |  |  |   | 1,024  | 
|Purchase obligations                                                  |  |                 |        |        |          |   | 172      |       |  |      | 179    |  |  |       | 32    |  |       |   | 21    |  |  |   | 404    | 
|                                                                     



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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, 2005. 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.                                                                                                                                                                                                                                                                                                

short-






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28ANNUAL
REPORT2005



________________________________________________________________________________FINANCIAL REVIEW
(Continued)


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, 2005, 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,
2005, 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 24 to the consolidated financial statements.

Commitments: The
following table details the amounts and expected maturities of
significant commitments as of December 31, 2005. Further
discussion of these commitments is included in Note 21 to
the consolidated financial statements.

|                                                                                 |                                                 |          |       |        |          |  |       |       |  |  |       |       |  |       |     |     |  |  |       |        | 
|-------------------------------------------------------------------------------- | ----------------------------------------------- | -------- | ----- | ------ | -------- |  | ----- | ----- |  |  | ----- | ----- |  | ----- | --- | --- |  |  | ----- | ------ | 
|                                                                                 |                                                
|                                                                                 |                                                 | One to   |       |        | Three to |  |       | Over  |  |  |      
|                                                                                 |                                                 | One Year |       |        | Three    |  |       | Five  |  |  | Five  |       |  |      
|(In Millions)                                                                    |                                                 | or Less  |       |        | Years    |  |       | Years |  |  | Years |       |  | Total |    
|                                                                                 |                                                
|Commitments to extend credit:                                                    |                                                 |          |       |        |          |  |       |       |  |  |       |       |  |       |     |     |  |  |       |       
|                                                                                 | Commercial                                      |          | $     | 7,426  |          |  | $     | 6,896 |  |  | $     | 8,175 |  |       | $   | 491 |  |  | $     | 22,988 | 
|                                                                                 | Residential real estate                         |          |       | 9,052  |          |  |       |      |  |  |       |      |  |       |     |    |  |  |       | 9,052  | 
|                                                                                 | Revolving home equity and credit
    card lines |          |       | 34,072 |          |  |       | 5     |  |  |       | 3     |  |       |     |    |  |  |       | 34,080 | 
|                                                                                 | Other                                           |          |       | 647    |          |  |       |      |  |  |       |      |  |       |     |    |  |  |       | 647    | 
|Standby letters of credit                                                        |                                                 |          | 1,727 |        |          |  | 1,432 |       |  |  | 1,460 |       |  |       | 127 |     |  |  | 4,746 |       
|Commercial letters of credit                                                     |                                                 |          | 345   |        |          |  | 5     |       |  |  | 12    |       |  |       |    |     |  |  | 362   |       
|Net commitments to sell mortgage
    loans and mortgage-backed securities        |                                                 |          | 1,495 |        |          |  |      |       |  |  |      |       |  |       |    |     |  |  | 1,495 |       
|Net commitments to sell commercial
    real estate loans                         |                                                 |          | 202   |        |          |  | 82    |       |  |  | 1     |       |  |       |    |     |  |  | 285   |       
|Commitments to fund principal
    investments                                    |                                                 |          | 66    |        |          |  | 22    |       |  |  | 62    |       |  |       | 145 |     |  |  | 295   |       
|Commitments to fund civic and
    community investments                          |                                                 |          | 181   |        |          |  | 105   |       |  |  | 35    |       |  |       | 30  |     |  |  | 351   |       
|Commitments to purchase beneficial
    interests in securitized automobile loans |                                                 |          | 995   |        |          |  |      |       |  |  |      |       |  |       |    |     |  |  | 995   |       
|                                                                                









Contingent
Liabilities:


Off-Balance Sheet
Arrangements:








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##### Table of Contents

ANNUAL REPORT2005  29








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 criteria of Financial Accounting
Standards Board Interpretation No. 45. These obligations
are discussed in Note 21.

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 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. Any material effect on the
financial statements related to these critical accounting areas
is also discussed in this financial review. 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, the valuation of derivative instruments, and income
taxes to be critical accounting policies.

Allowance for Loan Losses and Allowance
for Losses on 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.

Managements assessment of the adequacy of the allowance
for loan losses considers individual impaired loans, pools of
homogeneous loans with similar risk characteristics, 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. A loss migration analysis is
performed quarterly and loss factors are updated regularly based
on actual experience. This analysis examines historical loss
experience, the related internal gradings of loans charged off
and considers inherent but undetected losses within the
portfolio. Inherent but undetected 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, consumer bankruptcies,
delinquencies, 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 or 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



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##### Table of Contents

30ANNUAL
REPORT2005



FINANCIAL REVIEW
(Continued)


the allowance requires considerable management judgment.

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 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 allowance for loans losses addresses credit losses inherent
in the loan and lease portfolio and is presented as a reserve
against portfolio loans on the balance sheet. The allowance for
losses on lending-related commitments addresses credit losses
inherent in commitments to lend and letters of credit and is
presented in other liabilities on the balance sheet. The
allowance for losses on lending-related commitments 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. When a commitment is
funded, any previously established allowance for losses on
lending-related commitments is reversed and reestablished in the
allowance for loan losses.

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 (NCM) line of business. As of
December 31, 2005 and 2004, NCMs MSRs totaled
$2.1 billion and $1.5 billion, respectively. 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 11 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 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 11 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, 2005, the recorded fair
values of derivative assets and liabilities were
$773 million and $738 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 derivative 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 noninterest income on the income statement and are
primarily



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ANNUAL REPORT2005  31








generated from investment funding activities and are not
allocated to the business lines. Notes 1 and 24 to the
consolidated financial statements also provide further
discussion on the accounting and use of derivative instruments.

Income Taxes: The
Corporation is subject to the income tax laws of the U.S., its
states and other jurisdictions where it conducts business. These
laws are complex and subject to different interpretations by the
taxpayer and the various taxing authorities. In determining the
provision for income taxes, management must make judgments and
estimates about the application of these inherently complex
laws, related regulations, and case law. In the process of
preparing the Corporations tax returns, management
attempts to make reasonable interpretations of the tax laws.
These interpretations are subject to challenge by the tax
authorities upon audit or to reinterpretation based on
managements ongoing assessment of facts and evolving case
law.

On a quarterly basis, management assesses the reasonableness of
its effective tax rate based upon its current best estimate of
net income and the applicable taxes expected for the full year.
Deferred tax assets and liabilities are reassessed on an annual
basis, or sooner, if business events or circumstances warrant.
Reserves for contingent tax liabilities are reviewed quarterly
for adequacy based upon developments in tax law and the status
of examinations or audits. For the years ended December 31,
2005 and 2004, net tax benefits of $11 million and
$67 million, respectively, were recorded based on the
regular reassessment of required tax accruals. No such tax
benefits were recorded in 2003.

Recent Accounting Pronouncements and
Developments

Note 2 to the consolidated financial statements discusses
new accounting policies adopted by the Corporation during 2005
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.

The Financial Accounting Standard Board (FASB) has issued
an exposure draft on accounting for servicing rights. Based on
the guidance in the exposure draft and the FASBs
deliberations to date, if adopted, this standard will require
all servicing rights to initially be measured at fair value. It
will also permit an entity to elect to subsequently measure each
class of servicing rights using one of two methods. Consistent
with current practice, the value initially assigned to each
class of servicing rights may be amortized in proportion to, and
over, the servicing period, and the asset carried at the lower
of amortized cost or fair value. Alternatively, a company may
elect to measure classes of servicing rights at fair value.

The Corporation will be required to adopt this standard
beginning January 1, 2007; however, early adoption is
allowed if the Corporation has not previously issued interim
financial statements. As such, if the FASB finalizes this
statement in the first quarter of 2006, management plans to
adopt this standard effective January 1, 2006, and intends
to elect to subsequently measure NCMs mortgage servicing
rights at fair value. A cumulative-effect adjustment to retained
earnings will be recorded on the date of adoption to reflect the
difference between the fair value and carrying value of the then
existing servicing rights that have been elected to be carried
at fair value. As of December 31, 2005, the fair value of
NCMs mortgage servicing rights exceeded its carrying value
by $26 million. After adoption of this standard, all
changes in the fair value of NCMs mortgage servicing
rights will be recognized in earnings each period.

Best In Class

Best In Class is a program designed to drive long-term
performance improvement and cultural change. It includes
reengineering or replacement of business processes, incentive
systems, and management structures. The overall objectives are
sustainable revenue growth, a lower efficiency ratio, and a
culture of high performance. Best In Class is currently
estimated to improve pretax income by approximately
$750 million per annum at its completion in 2008.
Approximately 50-60% of
the increase is expected to be derived from revenue
enhancements, with the remainder to come from cost savings.

Best In Class includes six major areas of focus:




    Focusing and equipping the salesforce
    Deepening customer relationships
    Broadening the customer base
    Operating more effectively and efficiently
    Managing risk
    Aligning the organization for high performanceThirty-three projects are currently launched and active.
Completion will take approximately three years. For the 10
projects which are now completed or in implementation, projected
benefits to pretax income are approximately $155 million in
2006, $240 million in 2007, and $300 million in 2008.

Best In Class costs incurred in 2005 were $65 million,
including $53 million of severance and related costs,
$7 million of external consultant fees, and $5 million
of lease exit costs and asset impairments. External consultants
were utilized to identify and prioritize projects, to estimate
expected project benefits, and will be utilized in 2006 to
design and implement a project aimed at reengineering core
lending processes and infrastructures. All other project design
and implementation work is being done internally. The costs
identified above exclude any compensation and benefits of
National City employees working on these projects. Substantially
all costs incurred to date have been recorded in the
Parent & Other segment.

Additional severance and other costs are likely to be incurred
in 2006 as certain projects progress. At this time, such costs
cannot be reasonably estimated. Severance costs recognized in
2005 are expected to be fully paid out by August 2008. Lease
termination payments will continue through January 2010.



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##### Table of Contents

32ANNUAL
REPORT2005



________________________________________________________________________________FINANCIAL REVIEW
(Continued)


Fourth Quarter Review

Unaudited quarterly results are presented on page 33.

Net income for the fourth quarter of 2005 was $398 million,
or $.64 per diluted share, compared to $478 million,
or $.74 per diluted share for the third quarter of 2005,
and $960 million, or $1.46 per diluted share for the
fourth quarter of 2004. Fourth quarter 2005 net income
included after-tax charges totaling $75 million, or $.12
per diluted share, consisting of $37 million pertaining to
the Best In Class program, a $19 million loss from the
securitization of indirect automobile loans pursuant to the
discontinuance of the business, and $19 million of
contributions expense related to securities donated to the
Corporations charitable foundation. Net income for the
fourth quarter of 2004 included 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 2005 was
$1.2 billion, consistent with the prior quarter and fourth
quarter of 2004. Net interest margin was 3.74% for the fourth
quarter of 2005, up slightly from 3.72% in the third quarter of
2005, and down from 4.01% in the fourth quarter of 2004. The
lower margin reflects a flatter yield curve, a lower spread on
mortgages held for sale, and the effects of narrower commercial
and consumer loan spreads.

The provision for loan losses was $132 million for the
fourth quarter of 2005, compared to $56 million for the
third quarter of 2005 and $81 million for the fourth
quarter of 2004. The linked quarter and year-over-year increase
reflects higher commercial and consumer charge-offs, as well as
a $20 million one-time provision for estimated consumer
bankruptcy losses that have not yet been realized. See the
Credit Risk section of the Financial Review for further
discussion of the allowance for loan losses and credit quality.

Fees and other income were $768 million for the fourth
quarter of 2005, compared to $748 million in the prior
quarter and $1.4 billion in the fourth quarter of 2004.
Excluding the $714 million pretax gain on the sale of
National Processing, fees and other income for the fourth
quarter of 2004 would have been $727 million. Fees and
other income for the fourth quarter of 2005 included an
$18 million pretax gain on the sale of home equity lines of
credit and a $29 million pretax loss on the securitization
of indirect automobile loans. Mortgage banking revenue increased
on a year-over-year basis due to increased National City
Mortgage production revenue and First Franklin mortgage loan
sales. Fourth quarter 2005 mortgage banking revenue also
included $15 million of net pretax hedging gains on MSRs,
compared to a net pretax hedging loss of $10 million in the
fourth quarter of 2004. Deposit service charges increased by 13%
compared to the year ago quarter, reflecting growth in both the
number of accounts and fee-generating transactions.

Noninterest expense was $1.3 billion for the fourth quarter
of 2005, compared to $1.2 billion in both the prior quarter
and in the fourth quarter of 2004. The fourth quarter of 2005
included pretax charges of $56 million relating to
severance and other costs associated with the Best In Class
initiative, and $30 million of contribution expense
relating to securities donated to the Corporations
charitable foundation.

The income tax provision for the fourth quarter of 2005 and 2004
included benefits of $25 million and $44 million,
respectively, resulting from the regular reassessment of certain
tax accruals.

Average total assets for the fourth quarter of 2005 were
$143.0 billion, down from $145.0 billion in the third
quarter of 2005 and up from $138.0 billion in the fourth
quarter of 2004. The decrease in average assets on a linked
quarter basis reflects the securitization of $2.2 billion
of indirect automobile loans and the sale of $1.4 billion
of home equity lines of credit during the fourth quarter. The
growth in average assets on a year-over-year basis was mainly
due to loan growth.

Forward-Looking Statements



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, management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.



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##### Table of Contents

ANNUAL REPORT2005  33



________________________________________________________________________________




Quarterly Financial Information
(unaudited)

|                                                |                                  |       |   |       |        |  |   |       |   |  |        |       |   |           |   |       |   |  |   |       |  
|----------------------------------------------- | -------------------------------- | ----- | - | ----- | ------ |  | - | ----- | - |  | ------ | ----- | - | --------- | - | ----- | - |  | - | ----- | -
|                                                |                                 
|(Dollars in Millions, Except Per Share Amounts) |                                  | First |   |       | Second |  |   | Third |   |  | Fourth |       |   | Full Year |  
|                                                |                                 
|2005                                            |                                  |       |   |       |        |  |   |       |   |  |        |       |   |           |   |       |   |  |   |      
|Condensed Income
    Statement                  |                                  |       |   |       |        |  |   |       |   |  |        |       |   |           |   |       |   |  |   |      
|                                                | Interest
    income(a)           |       | $ | 1,744 |        |  | $ | 1,857 |   |  | $      | 2,027 |   |           | $ | 2,104 |   |  | $ | 7,732 |  
|                                                | Interest expense                 |       |   | 594   |        |  |   | 694   |   |  |        | 827   |   |           |   | 921   |   |  |   | 3,036 |  
|                                                | Net interest
    income(a)       |       |   | 1,150 |        |  |   | 1,163 |   |  |        | 1,200 |   |           |   | 1,183 |   |  |   | 4,696 |  
|                                                | Provision for credit losses      |       |   | 70    |        |  |   | 26    |   |  |        | 56    |   |           |   | 132   |   |  |   | 284   |  
|                                                | Fees and other
    income(a)     |       |   | 785   |        |  |   | 976   |   |  |        | 748   |   |           |   | 768   |   |  |   | 3,277 |  
|                                                | Net securities gains/(losses)    |       |   | 14    |        |  |   | 5     |   |  |        | (1    | ) |           |   | 9     |   |  |   | 27    |  
|                                                | Noninterest expense              |       |   | 1,145 |        |  |   | 1,181 |   |  |        | 1,158 |   |           |   | 1,271 |   |  |   | 4,755 |  
|                                                | Income before income tax expense |       |   | 734   |        |  |   | 937   |   |  |        | 733   |   |           |   | 557   |   |  |   | 2,961 |  
|                                                | Net income                       |       |   | 484   |        |  |   | 625   |   |  |        | 478   |   |           |   | 398   |   |  |   | 1,985 |  
|Financial Ratios                                |                                  |       |   |       |        |  |   |       |   |  |        |       |   |           |   |       |   |  |   |      
|                                                | Return on average common equity  |       |   | 15.35 | %      |  |   | 19.65 | % |  |        | 14.59 | % |           |   | 12.57 | % |  |   | 15.54 | %
|                                                | Return on average
    assets(a)  |       |   | 1.42  |        |  |   | 1.80  |   |  |        | 1.31  |   |           |   | 1.10  |   |  |   | 1.40  |  
|                                                | Net interest
    margin(a)       |       |   | 3.78  |        |  |   | 3.76  |   |  |        | 3.72  |   |           |   | 3.74  |   |  |   | 3.74  |  
|                                                | Efficiency
    ratio(a)          |       |   | 58.94 |        |  |   | 55.03 |   |  |        | 59.25 |   |           |   | 64.85 |   |  |   | 59.41 |  
|Per Common Share                                |                                  |       |   |       |        |  |   |       |   |  |        |       |   |           |   |       |   |  |   |      
|                                                | Basic net income                 |       | $ | .75   |        |  | $ | .98   |   |  | $      | .75   |   |           | $ | .65   |   |  | $ | 3.13  |  
|                                                | Diluted net income               |       |   | .74   |        |  |   | .97   |   |  |        | .74   |   |           |   | .64   |   |  |   | 3.09  |  
|                                                | Dividends declared and paid      |       |   | .35   |        |  |   | .35   |   |  |        | .37   |   |           |   | .37   |   |  |   | 1.44  |  
|                                               
|2004                                            |                                  |       |   |       |        |  |   |       |   |  |        |       |   |           |   |       |   |  |   |      
|Condensed Income
    Statement                  |                                  |       |   |       |        |  |   |       |   |  |        |       |   |           |   |       |   |  |   |      
|                                                | Interest
    income(a)           |       | $ | 1,331 |        |  | $ | 1,381 |   |  | $      | 1,593 |   |           | $ | 1,721 |   |  | $ | 6,026 |  
|                                                | Interest expense                 |       |   | 325   |        |  |   | 335   |   |  |        | 424   |   |           |   | 509   |   |  |   | 1,593 |  
|                                                | Net interest
    income(a)       |       |   | 1,006 |        |  |   | 1,046 |   |  |        | 1,169 |   |           |   | 1,212 |   |  |   | 4,433 |  
|                                                | Provision for credit losses      |       |   | 83    |        |  |   | 61    |   |  |        | 98    |   |           |   | 81    |   |  |   | 323   |  
|                                                | Fees and other
    income(a)     |       |   | 1,109 |        |  |   | 849   |   |  |        | 1,021 |   |           |   | 1,442 |   |  |   | 4,421 |  
|                                                | Net securities gains             |       |   |      |        |  |   | 5     |   |  |        | 3     |   |           |   | 11    |   |  |   | 19    |  
|                                                | Noninterest expense              |       |   | 965   |        |  |   | 1,049 |   |  |        | 1,211 |   |           |   | 1,247 |   |  |   | 4,472 |  
|                                                | Income before income tax expense |       |   | 1,067 |        |  |   | 790   |   |  |        | 884   |   |           |   | 1,337 |   |  |   | 4,078 |  
|                                                | Net income                       |       |   | 710   |        |  |   | 519   |   |  |        | 591   |   |           |   | 960   |   |  |   | 2,780 |  
|Financial Ratios                                |                                  |       |   |       |        |  |   |       |   |  |        |       |   |           |   |       |   |  |   |      
|                                                | Return on average common equity  |       |   | 29.58 | %      |  |   | 20.13 | % |  |        | 19.00 | % |           |   | 29.71 | % |  |   | 24.56 | %
|                                                | Return on average
    assets(a)  |       |   | 2.61  |        |  |   | 1.80  |   |  |        | 1.76  |   |           |   | 2.77  |   |  |   | 2.23  |  
|                                                | Net interest
    margin(a)       |       |   | 4.11  |        |  |   | 4.03  |   |  |        | 3.97  |   |           |   | 4.01  |   |  |   | 4.02  |  
|                                                | Efficiency
    ratio(a)          |       |   | 45.50 |        |  |   | 55.15 |   |  |        | 55.11 |   |           |   | 46.85 |   |  |   | 50.35 |  
|Per Common Share                                |                                  |       |   |       |        |  |   |       |   |  |        |       |   |           |   |       |   |  |   |      
|                                                | Basic net income                 |       | $ | 1.17  |        |  | $ | .84   |   |  | $      | .88   |   |           | $ | 1.48  |   |  | $ | 4.37  |  
|                                                | Diluted net income               |       |   | 1.16  |        |  |   | .83   |   |  |        | .86   |   |           |   | 1.46  |   |  |   | 4.31  |  
|                                                | Dividends declared and paid      |       |   | .32   |        |  |   | .32   |   |  |        | .35   |   |           |   | .35   |   |  |   | 1.34  |  
|                                               
|2003                                            |                                  |       |   |       |        |  |   |       |   |  |        |       |   |           |   |       |   |  |   |      
|Condensed Income
    Statement                  |                                  |       |   |       |        |  |   |       |   |  |        |       |   |           |   |       |   |  |   |      
|                                                | Interest
    income(a)           |       | $ | 1,513 |        |  | $ | 1,514 |   |  | $      | 1,538 |   |           | $ | 1,400 |   |  | $ | 5,965 |  
|                                                | Interest expense                 |       |   | 426   |        |  |   | 426   |   |  |        | 403   |   |           |   | 375   |   |  |   | 1,630 |  
|                                                | Net interest
    income(a)       |       |   | 1,087 |        |  |   | 1,088 |   |  |        | 1,135 |   |           |   | 1,025 |   |  |   | 4,335 |  
|                                                | Provision for credit losses      |       |   | 200   |        |  |   | 183   |   |  |        | 107   |   |           |   | 148   |   |  |   | 638   |  
|                                                | Fees and other
    income(a)     |       |   | 1,101 |        |  |   | 982   |   |  |        | 484   |   |           |   | 979   |   |  |   | 3,546 |  
|                                                | Net securities gains             |       |   |      |        |  |   | 32    |   |  |        | 5     |   |           |   | 10    |   |  |   | 47    |  
|                                                | Noninterest expense              |       |   | 1,001 |        |  |   | 1,020 |   |  |        | 998   |   |           |   | 1,034 |   |  |   | 4,053 |  
|                                                | Income before income tax expense |       |   | 987   |        |  |   | 899   |   |  |        | 519   |   |           |   | 832   |   |  |   | 3,237 |  
|                                                | Net income                       |       |   | 643   |        |  |   | 586   |   |  |        | 344   |   |           |   | 544   |   |  |   | 2,117 |  
|Financial Ratios                                |                                  |       |   |       |        |  |   |       |   |  |        |       |   |           |   |       |   |  |   |      
|                                                | Return on average common equity  |       |   | 30.60 | %      |  |   | 26.74 | % |  |        | 14.87 | % |           |   | 22.99 | % |  |   | 23.60 | %
|                                                | Return on average
    assets(a)  |       |   | 2.24  |        |  |   | 1.97  |   |  |        | 1.10  |   |           |   | 1.88  |   |  |   | 1.79  |  
|                                                | Net interest
    margin(a)       |       |   | 4.19  |        |  |   | 4.08  |   |  |        | 4.07  |   |           |   | 3.99  |   |  |   | 4.08  |  
|                                                | Efficiency
    ratio(a)          |       |   | 45.57 |        |  |   | 49.13 |   |  |        | 61.38 |   |           |   | 51.42 |   |  |   | 51.24 |  
|Per Common Share                                |                                  |       |   |       |        |  |   |       |   |  |        |       |   |           |   |       |   |  |   |      
|                                                | Basic net income                 |       | $ | 1.05  |        |  | $ | .96   |   |  | $      | .56   |   |           | $ | .89   |   |  | $ | 3.46  |  
|                                                | Diluted net income               |       |   | 1.05  |        |  |   | .94   |   |  |        | .56   |   |           |   | .88   |   |  |   | 3.43  |  
|                                                | Dividends declared and paid      |       |   | .305  |        |  |   | .305  |   |  |        | .32   |   |           |   | .32   |   |  |   | 1.25  |  
|                                               



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | During 2005, the Corporation reclassified the amortization of
    certain deferred loan origination fees and costs associated with
    home equity lines of credit from noninterest income to interest
    income. The effect of this reclassification was to increase
    non-interest income and reduce net interest income with no
    effect on net income. In addition, net deferred origination
    costs were reclassified from other liabilities to home equity
    lines of credit. Prior period financial information has been
    updated to reflect this reclassification.



---



##### Table of Contents

34ANNUAL
REPORT2005



________________________________________________________________________________STATISTICAL DATA


Consolidated Statements of Income and
Selected Financial
Data(a)
For the Calendar Year(In Millions, Except Per Share Amounts)
    
    2005
    
    2004(b)
    
    2003
    
    2002
    
    2001Statements of IncomeInterest income:Loans(d)
    
    
    $7,239
    
    
    $
    5,560
    
    
    $
    5,553
    
    
    $
    5,319
    
    
    $
    5,857Securities(e)
    
    
    382
    
    
    
    377
    
    
    
    355
    
    
    
    519
    
    
    
    492Other(e)
    
    
    111
    
    
    
    89
    
    
    
    57
    
    
    
    63
    
    
    
    59Total interest income
    
    
    7,732
    
    
    
    6,026
    
    
    
    5,965
    
    
    
    5,901
    
    
    
    6,408Interest expense:Deposits
    
    
    1,605
    
    
    
    896
    
    
    
    892
    
    
    
    1,148
    
    
    
    1,778Borrowings and long-term debt
    
    
    1,431
    
    
    
    697
    
    
    
    738
    
    
    
    762
    
    
    
    1,198Total interest expense
    
    
    3,036
    
    
    
    1,593
    
    
    
    1,630
    
    
    
    1,910
    
    
    
    2,976Net interest income
    
    
    4,696
    
    
    
    4,433
    
    
    
    4,335
    
    
    
    3,991
    
    
    
    3,432Provision for credit losses
    
    
    284
    
    
    
    323
    
    
    
    638
    
    
    
    682
    
    
    
    605Net interest income after provision
    for credit losses
    
    
    4,412
    
    
    
    4,110
    
    
    
    3,697
    
    
    
    3,309
    
    
    
    2,827Fees and other
    income(c)/(d)
    
    
    3,277
    
    
    
    4,421
    
    
    
    3,546
    
    
    
    2,467
    
    
    
    2,540Securities gains, net
    
    
    27
    
    
    
    19
    
    
    
    47
    
    
    
    81
    
    
    
    145Total noninterest income
    
    
    3,304
    
    
    
    4,440
    
    
    
    3,593
    
    
    
    2,548
    
    
    
    2,685Noninterest
    expense(c)
    
    
    4,755
    
    
    
    4,472
    
    
    
    4,053
    
    
    
    3,688
    
    
    
    3,345Income before income taxes
    
    
    2,961
    
    
    
    4,078
    
    
    
    3,237
    
    
    
    2,169
    
    
    
    2,167Income taxes
    
    
    976
    
    
    
    1,298
    
    
    
    1,120
    
    
    
    722
    
    
    
    779Net income
    
    
    $1,985
    
    
    $
    2,780
    
    
    $
    2,117
    
    
    $
    1,447
    
    
    $
    1,388Per Common ShareDiluted net income
    
    
    $3.09
    
    
    $
    4.31
    
    
    $
    3.43
    
    
    $
    2.35
    
    
    $
    2.27Dividends declared
    
    
    1.44
    
    
    
    1.34
    
    
    
    1.25
    
    
    
    1.20
    
    
    
    1.16Dividends paid
    
    
    1.44
    
    
    
    1.34
    
    
    
    1.25
    
    
    
    1.20
    
    
    
    1.16Average diluted shares
    
    
    641.60
    
    
    
    645.51
    
    
    
    616.41
    
    
    
    616.17
    
    
    
    611.94Book value
    
    
    $20.51
    
    
    $
    19.80
    
    
    $
    15.39
    
    
    $
    13.35
    
    
    $
    12.15Market value (close)
    
    
    33.57
    
    
    
    37.55
    
    
    
    33.94
    
    
    
    27.32
    
    
    
    29.24Financial RatiosReturn on average common equity
    
    
    15.54
    %
    
    
    24.56
    %
    
    
    23.60
    %
    
    
    18.14
    %
    
    
    19.94
    %Return on average total equity
    
    
    15.55
    
    
    
    24.57
    
    
    
    23.60
    
    
    
    18.14
    
    
    
    19.90Return on average
    assets(d)
    
    
    1.40
    
    
    
    2.23
    
    
    
    1.79
    
    
    
    1.40
    
    
    
    1.49Average stockholders equity
    to average
    assets(d)
    
    
    9.02
    
    
    
    9.10
    
    
    
    7.57
    
    
    
    7.70
    
    
    
    7.49Dividend payout ratio
    
    
    46.60
    
    
    
    31.09
    
    
    
    36.44
    
    
    
    51.06
    
    
    
    51.10Net interest
    margin(d)
    
    
    3.74
    
    
    
    4.02
    
    
    
    4.08
    
    
    
    4.33
    
    
    
    4.08Net charge-offs to average
    portfolio
    loans(d)
    
    
    .36
    
    
    
    .39
    
    
    
    .80
    
    
    
    .83
    
    
    
    .68Efficiency
    ratio(c)/(d)
    
    
    59.41
    
    
    
    50.35
    
    
    
    51.24
    
    
    
    56.85
    
    
    
    55.70At Year EndAssets(d)
    
    
    $142,397
    
    
    $
    139,414
    
    
    $
    114,102
    
    
    $
    118,153
    
    
    $
    105,905Portfolio
    loans(d)
    
    
    106,039
    
    
    
    100,271
    
    
    
    79,344
    
    
    
    72,174
    
    
    
    68,058Loans held for sale or
    securitization
    
    
    9,667
    
    
    
    12,430
    
    
    
    15,368
    
    
    
    24,501
    
    
    
    16,831Securities(e)
    
    
    7,875
    
    
    
    8,765
    
    
    
    6,525
    
    
    
    8,675
    
    
    
    9,479Deposits
    
    
    83,986
    
    
    
    85,955
    
    
    
    63,930
    
    
    
    65,119
    
    
    
    63,130Long-term debt
    
    
    30,970
    
    
    
    28,696
    
    
    
    23,666
    
    
    
    22,730
    
    
    
    17,316Total stockholders equity
    
    
    12,613
    
    
    
    12,804
    
    
    
    9,329
    
    
    
    8,161
    
    
    
    7,381Common shares outstanding
    
    
    615.05
    
    
    
    646.75
    
    
    
    606.00
    
    
    
    611.49
    
    
    
    607.35

[Additional columns below][Continued from above table, first column(s) repeated]
For the Calendar Year(In Millions, Except Per Share Amounts)
    
    2000
    
    1999
    
    1998
    
    1997
    
    1996
    
    1995Statements of IncomeInterest income:Loans(d)
    
    $
    5,793
    
    
    $
    4,938
    
    
    $
    4,812
    
    
    $
    4,487
    
    
    $
    4,425
    
    
    $
    4,383Securities(e)
    
    
    715
    
    
    
    895
    
    
    
    861
    
    
    
    825
    
    
    
    844
    
    
    
    960Other(e)
    
    
    62
    
    
    
    80
    
    
    
    84
    
    
    
    51
    
    
    
    50
    
    
    
    58Total interest income
    
    
    6,570
    
    
    
    5,913
    
    
    
    5,757
    
    
    
    5,363
    
    
    
    5,319
    
    
    
    5,401Interest expense:Deposits
    
    
    1,937
    
    
    
    1,636
    
    
    
    1,846
    
    
    
    1,813
    
    
    
    1,862
    
    
    
    1,975Borrowings and long-term debt
    
    
    1,671
    
    
    
    1,277
    
    
    
    999
    
    
    
    739
    
    
    
    612
    
    
    
    673Total interest expense
    
    
    3,608
    
    
    
    2,913
    
    
    
    2,845
    
    
    
    2,552
    
    
    
    2,474
    
    
    
    2,648Net interest income
    
    
    2,962
    
    
    
    3,000
    
    
    
    2,912
    
    
    
    2,811
    
    
    
    2,845
    
    
    
    2,753Provision for credit losses
    
    
    287
    
    
    
    250
    
    
    
    201
    
    
    
    225
    
    
    
    240
    
    
    
    205Net interest income after provision
    for credit losses
    
    
    2,675
    
    
    
    2,750
    
    
    
    2,711
    
    
    
    2,586
    
    
    
    2,605
    
    
    
    2,548Fees and other
    income(c)/(d)
    
    
    2,424
    
    
    
    2,243
    
    
    
    2,180
    
    
    
    1,766
    
    
    
    1,528
    
    
    
    1,332Securities gains, net
    
    
    57
    
    
    
    138
    
    
    
    134
    
    
    
    81
    
    
    
    109
    
    
    
    42Total noninterest income
    
    
    2,481
    
    
    
    2,381
    
    
    
    2,314
    
    
    
    1,847
    
    
    
    1,637
    
    
    
    1,374Noninterest
    expense(c)
    
    
    3,184
    
    
    
    2,983
    
    
    
    3,377
    
    
    
    2,793
    
    
    
    2,800
    
    
    
    2,714Income before income taxes
    
    
    1,972
    
    
    
    2,148
    
    
    
    1,648
    
    
    
    1,640
    
    
    
    1,442
    
    
    
    1,208Income taxes
    
    
    670
    
    
    
    743
    
    
    
    577
    
    
    
    518
    
    
    
    448
    
    
    
    380Net income
    
    $
    1,302
    
    
    $
    1,405
    
    
    $
    1,071
    
    
    $
    1,122
    
    
    $
    994
    
    
    $
    828Per Common ShareDiluted net income
    
    $
    2.13
    
    
    $
    2.22
    
    
    $
    1.61
    
    
    $
    1.71
    
    
    $
    1.48
    
    
    $
    1.22Dividends declared
    
    
    .855
    
    
    
    1.085
    
    
    
    .97
    
    
    
    .86
    
    
    
    .94
    
    
    
    .65Dividends paid
    
    
    1.14
    
    
    
    1.06
    
    
    
    .94
    
    
    
    .84
    
    
    
    .74
    
    
    
    .65Average diluted shares
    
    
    612.63
    
    
    
    632.45
    
    
    
    665.72
    
    
    
    655.47
    
    
    
    673.10
    
    
    
    676.48Book value
    
    $
    11.06
    
    
    $
    9.39
    
    
    $
    10.69
    
    
    $
    9.75
    
    
    $
    9.39
    
    
    $
    8.77Market value (close)
    
    
    28.75
    
    
    
    23.69
    
    
    
    36.25
    
    
    
    32.88
    
    
    
    22.44
    
    
    
    16.56Financial RatiosReturn on average common equity
    
    
    21.29
    %
    
    
    22.64
    %
    
    
    15.40
    %
    
    
    18.20
    %
    
    
    16.69
    %
    
    
    15.44
    %Return on average total equity
    
    
    21.21
    
    
    
    22.56
    
    
    
    15.37
    
    
    
    18.20
    
    
    
    16.61
    
    
    
    15.19Return on average
    assets(d)
    
    
    1.52
    
    
    
    1.67
    
    
    
    1.34
    
    
    
    1.56
    
    
    
    1.40
    
    
    
    1.15Average stockholders equity
    to average
    assets(d)
    
    
    7.17
    
    
    
    7.39
    
    
    
    8.70
    
    
    
    8.57
    
    
    
    8.44
    
    
    
    7.59Dividend payout ratio
    
    
    40.14
    
    
    
    48.87
    
    
    
    60.25
    
    
    
    50.29
    
    
    
    63.51
    
    
    
    53.28Net interest
    margin(d)
    
    
    3.85
    
    
    
    3.99
    
    
    
    4.11
    
    
    
    4.37
    
    
    
    4.47
    
    
    
    4.24Net charge-offs to average
    portfolio
    loans(d)
    
    
    .46
    
    
    
    .43
    
    
    
    .37
    
    
    
    .44
    
    
    
    .46
    
    
    
    .42Efficiency
    ratio(c)/(d)
    
    
    58.75
    
    
    
    56.49
    
    
    
    65.81
    
    
    
    60.45
    
    
    
    63.47
    
    
    
    65.85At Year EndAssets(d)
    
    $
    88,618
    
    
    $
    87,121
    
    
    $
    88,246
    
    
    $
    75,779
    
    
    $
    72,918
    
    
    $
    74,142Portfolio
    loans(d)
    
    
    65,603
    
    
    
    60,204
    
    
    
    58,011
    
    
    
    51,994
    
    
    
    50,442
    
    
    
    50,127Loans held for sale or
    securitization
    
    
    3,439
    
    
    
    2,731
    
    
    
    3,508
    
    
    
    1,250
    
    
    
    444
    
    
    
    416Securities(e)
    
    
    9,597
    
    
    
    14,565
    
    
    
    15,813
    
    
    
    13,651
    
    
    
    13,245
    
    
    
    15,315Deposits
    
    
    55,256
    
    
    
    50,066
    
    
    
    58,247
    
    
    
    52,617
    
    
    
    53,619
    
    
    
    54,923Long-term debt
    
    
    18,145
    
    
    
    15,038
    
    
    
    9,689
    
    
    
    6,297
    
    
    
    3,516
    
    
    
    3,515Total stockholders equity
    
    
    6,770
    
    
    
    5,728
    
    
    
    7,013
    
    
    
    6,158
    
    
    
    6,216
    
    
    
    5,892Common shares outstanding
    
    
    609.19
    
    
    
    607.06
    
    
    
    652.65
    
    
    
    631.39
    
    
    
    661.72
    
    
    
    650.96

(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 2000-2004 periods reflect the reclassification of certain
    loan origination costs from third-party expenses and personnel
    expense to mortgage banking revenue, consistent with the 2005
    presentation.(d)
    The 2000-2004 periods reflect the reclassification of the
    amortization of certain deferred loan origination fees and costs
    associated with home equity lines of credit from card-related
    fees in noninterest income to interest income, consistent with
    the 2005 presentation. Additionally, net deferred origination
    costs were reclassified from other liabilities to home equity
    lines of credit included within Portfolio loans.(e)
    The 1995-2004 periods reflect the reclassification of Federal
    Reserve Bank and Federal Home Loan Bank Stock from
    Securities, Available for Sale to Other Investments, consistent
    with the 2005 presentation.



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##### Table of Contents

ANNUAL REPORT2005  35



________________________________________________________________________________REPORT ON MANAGEMENTS ASSESSMENT OF

INTERNAL CONTROL OVER FINANCIAL REPORTING


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.

Management assessed the Corporations system of internal
control over financial reporting as of December 31, 2005,
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, 2005, 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. DaberkoDavid A. DaberkoChairman and Chief
    Executive Officer |  | -s- Jeffrey D. KellyJeffrey D. KellyVice Chairman and
    Chief Financial Officer









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##### Table of Contents

36ANNUAL
REPORT2005



________________________________________________________________________________REPORTS OF ERNST & YOUNG LLP,

INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

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, 2005, 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, 2005, 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, 2005, 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 of National City Corporation as of
December 31, 2005 and 2004, 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, 2005 and our report dated February 3,
2006, expressed an unqualified opinion thereon.

-s- Ernst & Young LLP

Cleveland, Ohio

February 3, 2006



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, 2005 and 2004, 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, 2005. 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, 2005 and 2004, and the consolidated results
of their operations and their cash flows for each of the three
years in the period ended December 31, 2005, 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, 2005,
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 3, 2006 expressed an
unqualified opinion thereon.

-s- Ernst & Young LLP

Cleveland, Ohio

February 3, 2006



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##### Table of Contents

ANNUAL REPORT2005  37



________________________________________________________________________________CONSOLIDATED FINANCIAL STATEMENTS


Consolidated Balance Sheets

|                                                 |                                                                                                                                                                               |                                                     |                                                 |            |            |             |             |            |            |             | 
|------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------- | ----------------------------------------------- | ---------- | ---------- | ----------- | ----------- | ---------- | ---------- | ----------- | 
|                                                 |                                                                                                                                                                              
|                                                 |                                                                                                                                                                               | December 31                                         |                                                
|                                                 |                                                                                                                                                                               |                                                     |                                                
|                                                 |                                                                                                                                                                               | 2005                                                |                                                 |            | 2004       |            
|(Dollars in Thousands, Except Per Share Amounts) |                                                                                                                                                                               |                                                     |                                                 |           
|                                                 |                                                                                                                                                                              
|Assets                                           |                                                                                                                                                                               |                                                     |                                                 |            |            |             |             |           
|                                                 | Cash and demand balances due from
    banks                                                                                                                                   |                                                     | $                                               | 3,707,665  |            |             | $           | 3,832,040  |           
|                                                 | Federal funds sold and security
    resale agreements                                                                                                                         |                                                     |                                                 | 301,260    |            |             |             | 302,534    |           
|                                                 | Securities available for sale, at
    fair value                                                                                                                              |                                                     |                                                 | 7,874,628  |            |             |             | 8,764,956  |           
|                                                 | Other investments                                                                                                                                                             |                                                     |                                                 | 2,108,622  |            |             |             | 1,450,197  |           
|                                                 | Loans held for sale or
    securitization:                                                                                                                                    |                                                     |                                                 |            |            |             |             |            |           
|                                                 |                                                                                                                                                                               | Commercial                                          |                                                 |            | 10,784     |             |             |            | 24,534     |            
|                                                 |                                                                                                                                                                               | Commercial real estate                              |                                                 |            | 35,306     |             |             |            | 546,072    |            
|                                                 |                                                                                                                                                                               | Mortgage                                            |                                                 |            | 9,192,282  |             |             |            | 11,859,715 |            
|                                                 |                                                                                                                                                                               | Credit card                                         |                                                 |            | 425,000    |             |             |            |           |            
|                                                 |                                                                                                                                                                               | Student loans                                       |                                                 |            | 3,758      |             |             |            |           |            
|                                                
|                                                 |                                                                                                                                                                               |                                                     | Total loans held for sale or
    securitization |            |            | 9,667,130   |             |            |            | 12,430,321  | 
|                                                 | Portfolio loans:                                                                                                                                                              |                                                     |                                                 |            |            |             |             |            |           
|                                                 |                                                                                                                                                                               | Commercial                                          |                                                 |            | 27,571,913 |             |             |            | 25,160,464 |            
|                                                 |                                                                                                                                                                               | Commercial construction                             |                                                 |            | 3,366,774  |             |             |            | 2,922,921  |            
|                                                 |                                                                                                                                                                               | Real estate - commercial                            |                                                 |            | 12,407,576 |             |             |            | 12,193,394 |            
|                                                 |                                                                                                                                                                               | Real estate - residential                           |                                                 |            | 32,822,947 |             |             |            | 30,398,068 |            
|                                                 |                                                                                                                                                                               | Home equity lines of credit                         |                                                 |            | 21,438,690 |             |             |            | 19,018,449 |            
|                                                 |                                                                                                                                                                               | Credit card and other unsecured
    lines of credit |                                                 |            | 2,611,679  |             |             |            | 2,413,465  |            
|                                                 |                                                                                                                                                                               | Other consumer                                      |                                                 |            | 5,819,144  |             |             |            | 8,164,633  |            
|                                                
|                                                 |                                                                                                                                                                               |                                                     | Total portfolio loans                           |            |            | 106,038,723 |             |            |            | 100,271,394 | 
|                                                 |                                                                                                                                                                               | Allowance for loan losses                           |                                                 |            | (1,094,047 | )           |             |            | (1,188,462 | )          
|                                                
|                                                 |                                                                                                                                                                               |                                                     | Net portfolio loans                             |            |            | 104,944,676 |             |            |            | 99,082,932  | 
|                                                 | Properties and equipment                                                                                                                                                      |                                                     |                                                 | 1,328,903  |            |             |             | 1,268,688  |           
|                                                 | Equipment leased to others                                                                                                                                                    |                                                     |                                                 | 696,327    |            |             |             | 1,050,787  |           
|                                                 | Other real estate owned                                                                                                                                                       |                                                     |                                                 | 97,008     |            |             |             | 89,362     |           
|                                                 | Mortgage servicing rights                                                                                                                                                     |                                                     |                                                 | 2,115,715  |            |             |             | 1,504,866  |           
|                                                 | Goodwill                                                                                                                                                                      |                                                     |                                                 | 3,313,109  |            |             |             | 3,302,413  |           
|                                                 | Other intangible assets                                                                                                                                                       |                                                     |                                                 | 168,353    |            |             |             | 213,461    |           
|                                                 | Derivative assets                                                                                                                                                             |                                                     |                                                 | 772,918    |            |             |             | 885,541    |           
|                                                 | Accrued income and other assets                                                                                                                                               |                                                     |                                                 | 5,300,800  |            |             |             | 5,235,838  |           
|                                                
|Total Assets                                     |                                                                                                                                                                               | $                                                   | 142,397,114                                     |            |            | $           | 139,413,936 |           
|                                                
|Liabilities                                      |                                                                                                                                                                               |                                                     |                                                 |            |            |             |             |           
|                                                 | Deposits:                                                                                                                                                                     |                                                     |                                                 |            |            |             |             |            |           
|                                                 |                                                                                                                                                                               | Noninterest bearing                                 |                                                 | $          | 17,429,227 |             |             | $          | 18,652,502 |            
|                                                 |                                                                                                                                                                               | NOW and money market                                |                                                 |            | 28,304,007 |             |             |            | 29,263,454 |            
|                                                 |                                                                                                                                                                               | Savings                                             |                                                 |            | 2,147,022  |             |             |            | 2,552,990  |            
|                                                 |                                                                                                                                                                               | Consumer time                                       |                                                 |            | 20,527,784 |             |             |            | 16,828,303 |            
|                                                 |                                                                                                                                                                               | Other                                               |                                                 |            | 6,734,915  |             |             |            | 4,635,416  |            
|                                                 |                                                                                                                                                                               | Foreign                                             |                                                 |            | 8,843,036  |             |             |            | 14,021,942 |            
|                                                
|                                                 |                                                                                                                                                                               |                                                     | Total deposits                                  |            |            | 83,985,991  |             |            |            | 85,954,607  | 
|                                                 | Federal funds borrowed and security
    repurchase agreements                                                                                                                 |                                                     |                                                 | 6,499,254  |            |             |             | 5,892,428  |           
|                                                 | Borrowed funds                                                                                                                                                                |                                                     |                                                 | 3,517,537  |            |             |             | 2,035,900  |           
|                                                 | Long-term debt                                                                                                                                                                |                                                     |                                                 | 30,496,093 |            |             |             | 28,091,363 |           
|                                                 | Junior subordinated debentures owed
    to unconsolidated subsidiary trusts                                                                                                   |                                                     |                                                 | 473,523    |            |             |             | 604,629    |           
|                                                 | Derivative liabilities                                                                                                                                                        |                                                     |                                                 | 738,343    |            |             |             | 596,822    |           
|                                                 | Accrued expenses and other
    liabilities                                                                                                                                    |                                                     |                                                 | 4,073,502  |            |             |             | 3,434,658  |           
|                                                
|Total Liabilities                                |                                                                                                                                                                               | $                                                   | 129,784,243                                     |            |            | $           | 126,610,407 |           
|                                                
|Stockholders
    Equity                         |                                                                                                                                                                               |                                                     |                                                 |            |            |             |             |           
|                                                 | Preferred stock, no par value, $100
    liquidation value per share, authorized 5,000,000 shares,
    70,272 shares outstanding in 2005 and 2004                              |                                                     | $                                               |           |            |             | $           |           |           
|                                                 | Common stock, par value $4 per
    share, 1,400,000,000 shares authorized, 615,047,663 and
    646,749,650 outstanding shares at December 31, 2005 and
    2004, respectively |                                                     |                                                 | 2,460,191  |            |             |             | 2,586,999  |           
|                                                 | Capital surplus                                                                                                                                                               |                                                     |                                                 | 3,681,603  |            |             |             | 3,647,711  |           
|                                                 | Retained earnings                                                                                                                                                             |                                                     |                                                 | 6,459,212  |            |             |             | 6,468,231  |           
|                                                 | Accumulated other comprehensive
    income                                                                                                                                    |                                                     |                                                 | 11,865     |            |             |             | 100,588    |           
|                                                
|Total Stockholders
    Equity                   |                                                                                                                                                                               |                                                     | 12,612,871                                      |            |            |             | 12,803,529  |           
|                                                
|Total Liabilities and
    Stockholders Equity   |                                                                                                                                                                               | $                                                   | 142,397,114                                     |            |            | $           | 139,413,936 |           
|                                                

See Notes to Consolidated Financial Statements




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##### Table of Contents

38ANNUAL
REPORT2005



________________________________________________________________________________





CONSOLIDATED FINANCIAL STATEMENTS
(Continued)


Consolidated Statements of Income

|                                                 |                                                               |                                  |                                                           |             |         |           |            |             |         |           |            |             |         |           | 
|------------------------------------------------ | ------------------------------------------------------------- | -------------------------------- | --------------------------------------------------------- | ----------- | ------- | --------- | ---------- | ----------- | ------- | --------- | ---------- | ----------- | ------- | --------- | 
|                                                 |                                                              
|                                                 |                                                               | For the Calendar Year            |                                                          
|                                                 |                                                               |                                  |                                                          
|(Dollars in Thousands, Except Per Share Amounts) |                                                               | 2005                             |                                                           |             | 2004    |           |            | 2003        |        
|                                                 |                                                              
|Interest Income                                  |                                                               |                                  |                                                           |             |         |           |            |             |         |           |            |            
|                                                 | Loans                                                         |                                  | $                                                         | 7,239,110   |         |           | $          | 5,560,221   |         |           | $          | 5,552,789   |        
|                                                 | Securities:                                                   |                                  |                                                           |             |         |           |            |             |         |           |            |             |        
|                                                 |                                                               | Taxable                          |                                                           |             | 342,797 |           |            |             | 338,724 |           |            |             | 318,304 |          
|                                                 |                                                               | Exempt from Federal income taxes |                                                           |             | 30,509  |           |            |             | 32,669  |           |            |             | 33,927  |          
|                                                 |                                                               | Dividends                        |                                                           |             | 8,857   |           |            |             | 5,906   |           |            |             | 3,345   |          
|                                                 | Federal funds sold and security
    resale agreements         |                                  |                                                           | 12,266      |         |           |            | 6,185       |         |           |            | 2,756       |        
|                                                 | Other investments                                             |                                  |                                                           | 98,280      |         |           |            | 82,298      |         |           |            | 54,809      |        
|                                                
|                                                 |                                                               |                                  | Total interest income                                     |             |         | 7,731,819 |            |             |         | 6,026,003 |            |             |         | 5,965,930 | 
|Interest Expense                                 |                                                               |                                  |                                                           |             |         |           |            |             |         |           |            |            
|                                                 | Deposits                                                      |                                  |                                                           | 1,604,601   |         |           |            | 896,131     |         |           |            | 891,731     |        
|                                                 | Federal funds borrowed and security
    repurchase agreements |                                  |                                                           | 209,893     |         |           |            | 94,097      |         |           |            | 132,397     |        
|                                                 | Borrowed funds                                                |                                  |                                                           | 67,896      |         |           |            | 15,237      |         |           |            | 18,672      |        
|                                                 | Long-term debt and capital
    securities                     |                                  |                                                           | 1,153,681   |         |           |            | 587,870     |         |           |            | 587,016     |        
|                                                
|                                                 |                                                               |                                  | Total interest expense                                    |             |         | 3,036,071 |            |             |         | 1,593,335 |            |             |         | 1,629,816 | 
|                                                
|Net Interest Income                              |                                                               |                                  | 4,695,748                                                 |             |         |           | 4,432,668  |             |         |           | 4,336,114  |            
|Provision for Credit
    Losses                  |                                                               |                                  | 283,594                                                   |             |         |           | 323,272    |             |         |           | 638,418    |            
|                                                
|                                                 |                                                               |                                  | Net interest income after provision
    for credit losses |             |         | 4,412,154 |            |             |         | 4,109,396 |            |             |         | 3,697,696 | 
|Noninterest Income                               |                                                               |                                  |                                                           |             |         |           |            |             |         |           |            |            
|                                                 | Mortgage banking revenue                                      |                                  |                                                           | 1,054,165   |         |           |            | 1,189,982   |         |           |            | 1,447,204   |        
|                                                 | Deposit service charges                                       |                                  |                                                           | 721,973     |         |           |            | 655,655     |         |           |            | 568,067     |        
|                                                 | Payment processing revenue                                    |                                  |                                                           | 1,571       |         |           |            | 408,617     |         |           |            | 477,888     |        
|                                                 | Trust and investment management fees                          |                                  |                                                           | 296,012     |         |           |            | 300,931     |         |           |            | 291,075     |        
|                                                 | Card-related fees                                             |                                  |                                                           | 211,527     |         |           |            | 212,462     |         |           |            | 200,839     |        
|                                                 | Brokerage revenue                                             |                                  |                                                           | 159,433     |         |           |            | 145,869     |         |           |            | 122,080     |        
|                                                 | Leasing revenue                                               |                                  |                                                           | 267,315     |         |           |            | 180,407     |         |           |            | 37,097      |        
|                                                 | Gain on sale of National Processing                           |                                  |                                                           |            |         |           |            | 714,195     |         |           |            |            |        
|                                                 | Other                                                         |                                  |                                                           | 565,236     |         |           |            | 613,089     |         |           |            | 401,669     |        
|                                                
|                                                 |                                                               |                                  | Total fees and other income                               |             |         | 3,277,232 |            |             |         | 4,421,207 |            |             |         | 3,545,919 | 
|                                                 | Securities gains, net                                         |                                  |                                                           | 27,087      |         |           |            | 18,974      |         |           |            | 47,152      |        
|                                                
|                                                 |                                                               |                                  | Total noninterest income                                  |             |         | 3,304,319 |            |             |         | 4,440,181 |            |             |         | 3,593,071 | 
|Noninterest Expense                              |                                                               |                                  |                                                           |             |         |           |            |             |         |           |            |            
|                                                 | Salaries, benefits, and other
    personnel                   |                                  |                                                           | 2,560,250   |         |           |            | 2,362,949   |         |           |            | 2,157,539   |        
|                                                 | Equipment                                                     |                                  |                                                           | 303,471     |         |           |            | 299,867     |         |           |            | 244,596     |        
|                                                 | Net occupancy                                                 |                                  |                                                           | 315,647     |         |           |            | 254,006     |         |           |            | 232,989     |        
|                                                 | Third-party services                                          |                                  |                                                           | 332,391     |         |           |            | 350,298     |         |           |            | 318,673     |        
|                                                 | Card processing                                               |                                  |                                                           | 21,096      |         |           |            | 190,396     |         |           |            | 218,093     |        
|                                                 | Marketing and public relations                                |                                  |                                                           | 164,533     |         |           |            | 115,403     |         |           |            | 135,569     |        
|                                                 | Leasing expense                                               |                                  |                                                           | 178,969     |         |           |            | 125,685     |         |           |            | 52,118      |        
|                                                 | Other                                                         |                                  |                                                           | 878,953     |         |           |            | 773,033     |         |           |            | 693,724     |        
|                                                
|                                                 |                                                               |                                  | Total noninterest expense                                 |             |         | 4,755,310 |            |             |         | 4,471,637 |            |             |         | 4,053,301 | 
|                                                
|Income before income tax expense                 |                                                               |                                  | 2,961,163                                                 |             |         |           | 4,077,940  |             |         |           | 3,237,466  |            
|Income tax expense                               |                                                               |                                  | 975,934                                                   |             |         |           | 1,298,006  |             |         |           | 1,120,402  |            
|                                                
|Net Income                                       |                                                               |                                  | $1,985,229                                                |             |         |           | $2,779,934 |             |         |           | $2,117,064 |            
|                                                
|Net Income Per Common
    Share                  |                                                               |                                  |                                                           |             |         |           |            |             |         |           |            |            
|                                                 | Basic                                                         |                                  |                                                           | $3.13       |         |           |            | $4.37       |         |           |            | $3.46       |        
|                                                 | Diluted                                                       |                                  |                                                           | 3.09        |         |           |            | 4.31        |         |           |            | 3.43        |        
|Average Common Shares
    Outstanding            |                                                               |                                  |                                                           |             |         |           |            |             |         |           |            |            
|                                                 | Basic                                                         |                                  |                                                           | 633,431,660 |         |           |            | 635,450,188 |         |           |            | 611,205,682 |        
|                                                 | Diluted                                                       |                                  |                                                           | 641,600,969 |         |           |            | 645,510,514 |         |           |            | 616,410,043 |        
|Dividend declared per common share               |                                                               |                                  | $1.44                                                     |             |         |           | $1.34      |             |         |           | $1.25      |            
|                                                

See Notes to Consolidated Financial Statements




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##### Table of Contents

ANNUAL REPORT2005  39



________________________________________________________________________________Consolidated Statements of Changes in
Stockholders Equity
Preferred
    
    Common
    
    Capital(Dollars in Thousands, Except  Per Share Amounts)
    
    Stock
    
    Stock
    
    SurplusBalance, December 31,
    2002
    
    $
    
    
    
    $
    2,445,966
    
    
    $
    989,346Comprehensive income:Net incomeOther comprehensive income, net of
    tax:Change in unrealized gains and
    losses on securities, net of reclassification adjustment for net
    gains included in net incomeChange in unrealized gains and
    losses on derivative instruments used in cash flow hedging
    relationships, net of reclassification adjustment for net losses
    included in net incomeTotal comprehensive incomeCommon dividends declared, $1.25
    per shareIssuance of 5,966,961 common shares
    under stock-based compensation plans, including related tax
    effects
    
    
    
    
    
    
    23,868
    
    
    
    146,609Repurchase of 11,462,200 common
    shares
    
    
    
    
    
    
    (45,849
    )
    
    
    (19,676
    )Balance, December 31,
    2003
    
    $
    
    
    
    $
    2,423,985
    
    
    $
    1,116,279Comprehensive income:Net incomeOther comprehensive income, net of
    tax:Change in unrealized gains and
    losses on securities, net of reclassification adjustment for net
    gains included in net incomeChange in unrealized gains and
    losses on derivative instruments used in cash flow hedging
    relationships, net of reclassification adjustment for net losses
    included in net incomeTotal comprehensive incomeCommon dividends declared, $1.34
    per sharePreferred dividends declared,
    $11.17 per shareIssuance of 9,926,163 common shares
    under stock-based compensation plans, including related tax
    effects
    
    
    
    
    
    
    38,215
    
    
    
    307,658Repurchase of 40,087,100 common
    shares
    
    
    
    
    
    
    (160,348
    )
    
    
    (134,120
    )Issuance of 71,286,645 common
    shares and 70,272 preferred shares pursuant to
    acquisition(1)
    
    
    
    
    
    
    285,147
    
    
    
    2,358,284Other
    
    
    
    
    
    
    
    
    
    
    (390
    )Balance, December 31,
    2004
    
    $
    
    
    
    $
    2,586,999
    
    
    $
    3,647,711Comprehensive income:Net incomeOther comprehensive income, net of
    tax:Change in unrealized gains and
    losses on securities, net of reclassification adjustment for net
    gains included in net incomeChange in unrealized gains and
    losses on derivative instruments used in cash flow hedging
    relationships, net of reclassification adjustment for net losses
    included in net incomeTotal comprehensive incomeCommon dividends declared,
    $1.44 per sharePreferred dividends declared,
    $23.00 per shareIssuance of 5,283,451 common shares
    under stock-based compensation plans, including related tax
    effects
    
    
    
    
    
    
    21,337
    
    
    
    142,194Issuance of 6,444,223 common shares
    pursuant to exercise of PRIDES forward contracts
    
    
    
    
    
    
    25,777
    
    
    
    139,224Repurchase of 43,480,400 common
    shares
    
    
    
    
    
    
    (173,922
    )
    
    
    (247,526
    )Balance,
    December 31, 2005
    
    $
    
    
    
    $
    2,460,191
    
    
    $
    3,681,603

[Additional columns below][Continued from above table, first column(s) repeated]
AccumulatedOtherRetained
    
    Comprehensive(Dollars in Thousands, Except  Per Share Amounts)
    
    Earnings
    
    Income (Loss)
    
    TotalBalance, December 31,
    2002
    
    $
    4,658,565
    
    
    $
    67,180
    
    
    $
    8,161,057Comprehensive income:Net income
    
    
    2,117,064
    
    
    
    
    
    
    
    2,117,064Other comprehensive income, net of
    tax:Change in unrealized gains and
    losses on securities, net of reclassification adjustment for net
    gains included in net income
    
    
    
    
    
    
    (90,755
    )
    
    
    (90,755
    )Change in unrealized gains and
    losses on derivative instruments used in cash flow hedging
    relationships, net of reclassification adjustment for net losses
    included in net income
    
    
    
    
    
    
    88,262
    
    
    
    88,262Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    2,114,571Common dividends declared, $1.25
    per share
    
    
    (764,817
    )
    
    
    
    
    
    
    (764,817
    )Issuance of 5,966,961 common shares
    under stock-based compensation plans, including related tax
    effects
    
    
    
    
    
    
    
    
    
    
    170,477Repurchase of 11,462,200 common
    shares
    
    
    (287,092
    )
    
    
    
    
    
    
    (352,617
    )Balance, December 31,
    2003
    
    $
    5,723,720
    
    
    $
    64,687
    
    
    $
    9,328,671Comprehensive income:Net income
    
    
    2,779,934
    
    
    
    
    
    
    
    2,779,934Other comprehensive income, net of
    tax:Change in unrealized gains and
    losses on securities, net of reclassification adjustment for net
    gains included in net income
    
    
    
    
    
    
    (25,125
    )
    
    
    (25,125
    )Change in unrealized gains and
    losses on derivative instruments used in cash flow hedging
    relationships, net of reclassification adjustment for net losses
    included in net income
    
    
    
    
    
    
    61,026
    
    
    
    61,026Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    2,815,835Common dividends declared, $1.34
    per share
    
    
    (860,354
    )
    
    
    
    
    
    
    (860,354
    )Preferred dividends declared,
    $11.17 per share
    
    
    (785
    )
    
    
    
    
    
    
    (785
    )Issuance of 9,926,163 common shares
    under stock-based compensation plans, including related tax
    effects
    
    
    
    
    
    
    
    
    
    
    345,873Repurchase of 40,087,100 common
    shares
    
    
    (1,174,284
    )
    
    
    
    
    
    
    (1,468,752
    )Issuance of 71,286,645 common
    shares and 70,272 preferred shares pursuant to
    acquisition(1)
    
    
    
    
    
    
    
    
    
    
    2,643,431Other
    
    
    
    
    
    
    
    
    
    
    (390
    )Balance, December 31,
    2004
    
    $
    6,468,231
    
    
    $
    100,588
    
    
    $
    12,803,529Comprehensive income:Net income
    
    
    1,985,229
    
    
    
    
    
    
    
    1,985,229Other comprehensive income, net of
    tax:Change in unrealized gains and
    losses on securities, net of reclassification adjustment for net
    gains included in net income
    
    
    
    
    
    
    (111,211
    )
    
    
    (111,211
    )Change in unrealized gains and
    losses on derivative instruments used in cash flow hedging
    relationships, net of reclassification adjustment for net losses
    included in net income
    
    
    
    
    
    
    22,488
    
    
    
    22,488Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    1,896,506Common dividends declared,
    $1.44 per share
    
    
    (922,377
    )
    
    
    
    
    
    
    (922,377
    )Preferred dividends declared,
    $23.00 per share
    
    
    (1,616
    )
    
    
    
    
    
    
    (1,616
    )Issuance of 5,283,451 common shares
    under stock-based compensation plans, including related tax
    effects
    
    
    
    
    
    
    
    
    
    
    163,531Issuance of 6,444,223 common shares
    pursuant to exercise of PRIDES forward contracts
    
    
    
    
    
    
    
    
    
    
    165,001Repurchase of 43,480,400 common
    shares
    
    
    (1,070,255
    )
    
    
    
    
    
    
    (1,491,703
    )Balance,
    December 31, 2005
    
    $
    6,459,212
    
    
    $
    11,865
    
    
    $
    12,612,871

(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



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##### Table of Contents

40ANNUAL
REPORT2005



________________________________________________________________________________





CONSOLIDATED FINANCIAL STATEMENTS
(Continued)


Consolidated Statements of Cash Flows

|                                                                       |                                                                                                          |                                                                                              |            |             |             |   |            |             |             |   |            |             |              |  
|---------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | ---------- | ----------- | ----------- | - | ---------- | ----------- | ----------- | - | ---------- | ----------- | ------------ | -
|                                                                       |                                                                                                         
|                                                                       |                                                                                                          | For the Calendar Year                                                                        |           
|                                                                       |                                                                                                          |                                                                                              |           
|(In Thousands)                                                         |                                                                                                          | 2005                                                                                         |            |             | 2004        |   |            | 2003        |            
|                                                                       |                                                                                                         
|Operating Activities                                                   |                                                                                                          |                                                                                              |            |             |             |   |            |             |             |   |            |            
|                                                                       | Net income                                                                                               |                                                                                              | $          | 1,985,229   |             |   | $          | 2,779,934   |             |   | $          | 2,117,064   |             
|                                                                       | Adjustments to reconcile net income
    to net cash provided by operating activities:                    |                                                                                              |            |             |             |   |            |             |             |   |            |             |             
|                                                                       |                                                                                                          | Provision for credit losses                                                                  |            |             | 283,594     |   |            |             | 323,272     |   |            |             | 638,418      |  
|                                                                       |                                                                                                          | Depreciation and amortization of
    properties and equipment and equipment leased to others |            |             | 426,011     |   |            |             | 343,001     |   |            |             | 194,877      |  
|                                                                       |                                                                                                          | Amortization of intangible assets
    and servicing assets                                   |            |             | 604,814     |   |            |             | 583,630     |   |            |             | 536,972      |  
|                                                                       |                                                                                                          | Accretion of premiums and discounts
    on securities, loans, deposits, and debt obligations |            |             | (44,301     | ) |            |             | (61,562     | ) |            |             | (20,085      | )
|                                                                       |                                                                                                          | Servicing asset
    (recoveries) impairment charges                                          |            |             | (73,651     | ) |            |             | 105,037     |   |            |             | (194,277     | )
|                                                                       |                                                                                                          | Ineffective hedge and other
    derivative gains, net                                        |            |             | (319,095    | ) |            |             | (652,557    | ) |            |             | (251,549     | )
|                                                                       |                                                                                                          | Gain on sale of National Processing                                                          |            |             |            |   |            |             | (714,195    | ) |            |             |             |  
|                                                                       |                                                                                                          | Securities gains, net                                                                        |            |             | (27,087     | ) |            |             | (18,974     | ) |            |             | (47,152      | )
|                                                                       |                                                                                                          | Gains on loans sold or securitized,
    net                                                  |            |             | (49,515     | ) |            |             | (3,379      | ) |            |             | (1,031,561   | )
|                                                                       |                                                                                                          | Other losses (gains), net                                                                    |            |             | 141,315     |   |            |             | (91,198     | ) |            |             | 191,984      |  
|                                                                       |                                                                                                          | Originations and purchases of loans
    held for sale or securitization                      |            |             | (74,928,227 | ) |            |             | (80,725,186 | ) |            |             | (111,133,636 | )
|                                                                       |                                                                                                          | Principal payments on and proceeds
    from sales of loans held for sale or securitization   |            |             | 77,793,467  |   |            |             | 82,601,040  |   |            |             | 119,666,635  |  
|                                                                       |                                                                                                          | Provision for deferred income taxes                                                          |            |             | 348,411     |   |            |             | (60,389     | ) |            |             | (107,880     | )
|                                                                       |                                                                                                          | (Increase) decrease in accrued
    interest receivable                                       |            |             | (83,639     | ) |            |             | (57,892     | ) |            |             | 12,383       |  
|                                                                       |                                                                                                          | Increase (decrease) in accrued
    interest payable                                          |            |             | 31,766      |   |            |             | 15,434      |   |            |             | (19,479      | )
|                                                                       |                                                                                                          | Other operating activities, net                                                              |            |             | 374,414     |   |            |             | 655,226     |   |            |             | 2,269,746    |  
|                                                                      
|Net cash provided by operating
    activities                          |                                                                                                          |                                                                                              | 6,463,506  |             |             |   | 5,021,242  |             |             |   | 12,822,460 |            
|                                                                      
|Lending and Investing
    Activities                                   |                                                                                                          |                                                                                              |            |             |             |   |            |             |             |   |            |            
|                                                                       | Net (increase) decrease in
    federal funds sold, security resale agreements, and other
    investments |                                                                                              |            | (801,305    | )           |   |            | 4,247       |             |   |            | 208,145     |             
|                                                                       | Purchases of available-for-sale
    securities                                                           |                                                                                              |            | (2,738,209  | )           |   |            | (1,356,198  | )           |   |            | (3,945,699  | )           
|                                                                       | Proceeds from sales of
    available-for-sale securities                                                 |                                                                                              |            | 1,693,294   |             |   |            | 1,457,137   |             |   |            | 1,513,196   |             
|                                                                       | Proceeds from maturities, calls,
    and prepayments of available-for-sale securities                    |                                                                                              |            | 1,817,125   |             |   |            | 2,376,281   |             |   |            | 4,488,063   |             
|                                                                       | Net increase in loans                                                                                    |                                                                                              |            | (10,868,840 | )           |   |            | (11,328,636 | )           |   |            | (10,984,291 | )           
|                                                                       | Proceeds from sales of loans                                                                             |                                                                                              |            | 1,294,862   |             |   |            | 1,193,824   |             |   |            | 1,795,078   |             
|                                                                       | Proceeds from securitizations of
    loans                                                               |                                                                                              |            | 2,730,822   |             |   |            | 811,185     |             |   |            | 40,269      |             
|                                                                       | Net increase in properties and
    equipment and equipment leased to others                              |                                                                                              |            | (189,505    | )           |   |            | (145,731    | )           |   |            | (296,887    | )           
|                                                                       | Net cash (paid) received for
    acquisitions                                                            |                                                                                              |            | (322,273    | )           |   |            | 172,526     |             |   |            | (35,118     | )           
|                                                                       | Proceeds from the sale of National
    Processing, net of cash sold                                      |                                                                                              |            |            |             |   |            | 1,085,320   |             |   |            |            |             
|                                                                       | Proceeds from divestitures, net of
    cash sold                                                         |                                                                                              |            | 24,241      |             |   |            | 28,710      |             |   |            |            |             
|                                                                      
|Net cash used in lending and
    investing activities                  |                                                                                                          |                                                                                              | (7,359,788 | )           |             |   | (5,701,335 | )           |             |   | (7,217,244 | )          
|                                                                      
|Deposit and Financing
    Activities                                   |                                                                                                          |                                                                                              |            |             |             |   |            |             |             |   |            |            
|                                                                       | Net (decrease) increase in
    deposits                                                                  |                                                                                              |            | (1,663,242  | )           |   |            | 9,710,994   |             |   |            | (1,161,690  | )           
|                                                                       | Net increase (decrease) in
    federal funds borrowed and security repurchase agreements                 |                                                                                              |            | 606,826     |             |   |            | (2,423,938  | )           |   |            | 165,658     |             
|                                                                       | Net increase (decrease) in
    borrowed funds                                                            |                                                                                              |            | 1,481,637   |             |   |            | (5,016,503  | )           |   |            | (4,878,449  | )           
|                                                                       | Repayments of long-term debt                                                                             |                                                                                              |            | (9,736,627  | )           |   |            | (13,382,078 | )           |   |            | (10,317,328 | )           
|                                                                       | Proceeds from issuances of
    long-term debt, net                                                       |                                                                                              |            | 12,159,635  |             |   |            | 14,011,970  |             |   |            | 11,372,830  |             
|                                                                       | Dividends paid                                                                                           |                                                                                              |            | (923,993    | )           |   |            | (861,139    | )           |   |            | (764,817    | )           
|                                                                       | Issuances of common stock                                                                                |                                                                                              |            | 339,374     |             |   |            | 345,873     |             |   |            | 170,477     |             
|                                                                       | Repurchases of common stock                                                                              |                                                                                              |            | (1,491,703  | )           |   |            | (1,468,752  | )           |   |            | (352,617    | )           
|                                                                      
|Net cash provided by (used in)
    deposit and financing activities    |                                                                                                          |                                                                                              | 771,907    |             |             |   | 916,427    |             |             |   | (5,765,936 | )          
|                                                                      
|Net (decrease) increase in
    cash and demand balances due from banks |                                                                                                          |                                                                                              | (124,375   | )           |             |   | 236,334    |             |             |   | (160,720   | )          
|Cash and demand balances due from
    banks, January 1                 |                                                                                                          |                                                                                              | 3,832,040  |             |             |   | 3,595,706  |             |             |   | 3,756,426  |            
|                                                                      
|Cash and Demand Balances Due
    from Banks, December 31               |                                                                                                          | $                                                                                            | 3,707,665  |             |             | $ | 3,832,040  |             |             | $ | 3,595,706  |            
|                                                                      
|Supplemental
    Information                                           |                                                                                                          |                                                                                              |            |             |             |   |            |             |             |   |            |            
|                                                                       | Cash paid for:                                                                                           |                                                                                              |            |             |             |   |            |             |             |   |            |             |             
|                                                                       |                                                                                                          | Interest                                                                                     |            | $           | 3,004,305   |   |            | $           | 1,577,901   |   |            | $           | 1,421,774    |  
|                                                                       |                                                                                                          | Income taxes                                                                                 |            |             | 835,635     |   |            |             | 1,181,574   |   |            |             | 1,177,170    |  
|                                                                       | Noncash items:                                                                                           |                                                                                              |            |             |             |   |            |             |             |   |            |             |             
|                                                                       |                                                                                                          | Transfers of loans to other real
    estate                                                  |            |             | 194,878     |   |            |             | 322,963     |   |            |             | 228,731      |  
|                                                                       |                                                                                                          | Transfers of loans to held for sale                                                          |            |             | 3,634,206   |   |            |             | 668,237     |   |            |             | 1,553,222    |  
|                                                                       |                                                                                                          | Common shares, preferred shares,
    and stock options issued for acquisitions               |            |             | (10,842     | ) |            |             | 2,643,431   |   |            |             |             |  
|                                                                       |                                                                                                          | Carrying value of securities
    donated to the National City Charitable Foundation          |            |             | 24,179      |   |            |             | 422         |   |            |             | 25,007       |  
|                                                                      

See Notes to Consolidated Financial Statements




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##### Table of Contents

ANNUAL REPORT2005  41



________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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, Illinois, Indiana, 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 PoliciesThe 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) and Charter One Vendor Finance on
April 9, 2004, July 1, 2004, October 5, 2004, and
January 15, 2005, respectively. On October 15, 2004,
the Corporation sold its former subsidiary, National Processing.
The consolidated financial statements include the results of
operations of these entities from their respective dates of
acquisition and up to their disposition date. 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 generally 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.



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________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)


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.

Loans and Leases: Loans
that the Corporation intends to hold for investment purposes are
classified as portfolio loans. Portfolio loans are carried at
the principal amount outstanding net of unearned income,
unamortized premiums or discounts, deferred loan fees and costs
and acquisition fair value adjustments, if any. Loans that the
Corporation has committed to sell or securitize are classified
as loans held for sale or securitization. Loans held for sale or
securitization are carried at the lower of the carrying amount
or fair value applied on an aggregate basis. Fair value is
measured based on purchase commitments, bids received from
potential purchasers, quoted prices for the same or similar
loans, or prices of recent sales or securitizations.

Conforming residential mortgage loans are typically classified
as held for sale upon origination based upon managements
intent to sell all the production of these loans. Other types of
loans may either be held for investment purposes, sold or
securitized. Loans originated for portfolio that are
subsequently transferred to held for sale based on
managements decision to sell are transferred at the lower
of cost or fair value. Write-downs of the loans carrying
value attributable to credit quality are charged to the
allowance for credit losses while write-downs attributable to
interest rates are charged to noninterest income.

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



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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 National City Mortgage business
unit, 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 percent 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, 2005 and 2004, residential real
estate portfolio loans included $311 million and
$233 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, 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
recorded 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: Investments
in debt securities and certain equity securities with readily
determinable fair values, other than those classified as
principal investments or accounted for under the equity method,
are accounted for under SFAS 115, Accounting for Certain
Investments in Debt and Equity Securities. SFAS 115
requires investments to be classified within one of three
categories, trading, held to maturity, or available for sale,
based on the type of security and managements intent with
regard to selling the security.

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, 2005 and 2004, trading account securities
totaled $409 million and $117 million, respectively.

Loans are classified as trading where positions are bought and
sold primarily to make profits on short-term appreciation or for
other trading purposes. Trading loans are included in other
investments on the balance sheet and are carried at fair value,
with gains and losses included in other noninterest income. At
December 31, 2005 and 2004, trading loans totaled
$527 million and $281 million, respectively, the
majority of which represented the guaranteed portion of Small
Business Administration loans.

Debt 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,
2005 or 2004.

Debt and marketable equity securities not classified as held to
maturity or trading are classified as available for



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44ANNUAL
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________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)


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.

Certain equity security investments that do not have readily
determinable fair values and for which the Corporation does not
exercise significant influence are carried at cost and
classified either within other investments or other assets on
the balance sheet depending on the frequency of dividend
declarations. As of December 31, 2005, cost-method
investments classified within other investments and other assets
totaled $541 million and $292 thousand, respectively,
compared to $516 million and $292 thousand, respectively,
at December 31, 2004. The securities classified within
other investments consisted solely of shares of Federal Home
Loan Bank and Federal Reserve Bank stock. Cost-method
investments are reviewed for impairment at least annually or
sooner if events or changes in circumstances indicate the
carrying value may not be recoverable.

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 that will ultimately be realized,
which depend on future events and circumstances.

Interest and dividends on direct mezzanine debt and preferred
stock investments are recorded in interest income on the
statement of income. All other income on principal investments,
including fair value adjustments, realized gains 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 impairment testing is
performed annually, or more frequently if events or
circumstances indicate possible impairment. Goodwill is
allocated to reporting units one level below business segments.
Fair values of reporting units are determined using either
discounted cash flow analyses based on internal financial
forecasts or, if available, market-based valuation multiples for
comparable businesses. No impairment was identified as a result
of the testing performed during 2005 or 2004. Note 10
contains additional information regarding goodwill and the
carrying values by major lines of business.

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
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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 is recognized in noninterest
expense. Amortization expense for operating lease intangibles is
recognized in noninterest income. Note 10 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, when
renewal is reasonably assured. 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 is 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, are 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.

A legal opinion regarding legal isolation for each credit card
securitization has been obtained by the Bank. The opinion
rendered in connection with the 2005 and 2002 credit card
securitizations 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 each automobile loan
securitization which were all structured as two-step
transactions. 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.



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46ANNUAL
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________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)


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 proportion to,
and over the period of, the estimated net servicing income and
is recorded in noninterest income.

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 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 receivables 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 credit card
receivables. Therefore, the principal dollar amount of the
investors interest in the receivables 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.



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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 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 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 compensation expected to be realized for
performing the servicing activities in excess of current market
rates. In addition, the Corporation may purchase the right to
service mortgage loans originated by others. MSRs, when
purchased, are initially recorded at fair value. 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. 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



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##### Table of Contents

48ANNUAL
REPORT2005



________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)


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 MSR 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 is generally not recognized if the
exercise price of the option equaled or exceeded the market
price of the stock on the date of grant. All stock options
granted prior to January 1, 2003, which were accounted for
under APB 25, became fully vested in 2004. Therefore, the
cost related to stock-based employee compensation included in
the determination of net income for 2005 reflects the fair value
method for 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 2003 and 2004 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.
Refer to Note 3 for discussion on the sale of this business
in October 2004.

|                                                                                                                        |                       |                                  |           |       |          |   |           |       |          |   |           |       |          | 
|----------------------------------------------------------------------------------------------------------------------- | --------------------- | -------------------------------- | --------- | ----- | -------- | - | --------- | ----- | -------- | - | --------- | ----- | -------- | 
|                                                                                                                        |                      
|                                                                                                                        |                       | For the Calendar Year            |          
|                                                                                                                        |                       |                                  |          
|(In Thousands, Except                                                                                                   |                       | 2005                             |           |       | 2004     |   |           | 2003  |         
|Per Share Amounts)                                                                                                      |                       |                                  |           |       |          |  
|                                                                                                                        |                      
|Net income, as reported                                                                                                 |                       | $                                | 1,985,229 |       |          | $ | 2,779,934 |       |          | $ | 2,117,064 |      
|Add: option expense included in
    reported net income, net of related tax effects                                     |                       |                                  |           |       |          |   |           |       |          |   |           |      
|                                                                                                                        |                       | National City common stock       |           |       | 13,693   |   |           |       | 17,324   |   |           |       | 8,548    | 
|                                                                                                                        |                       | National Processing common stock |           |       |         |   |           |       | 4,180    |   |           |       | 144      | 
|Less: total option expense
    determined under fair value method for all option awards, net of
    related tax effects |                       |                                  |           |       |          |   |           |       |          |   |           |      
|                                                                                                                        |                       | National City common stock       |           |       | (13,693) |   |           |       | (27,190) |   |           |       | (41,251) | 
|                                                                                                                        |                       | National Processing common stock |           |       |         |   |           |       | (6,684)  |   |           |       | (5,378)  | 
|                                                                                                                       
|Pro forma net income                                                                                                    |                       | $                                | 1,985,229 |       |          | $ | 2,767,564 |       |          | $ | 2,079,127 |      
|                                                                                                                       
|Pro forma net income per share:                                                                                         |                       |                                  |           |       |          |   |           |       |          |   |           |      
|                                                                                                                        | Basic  as reported   |                                  |           | $3.13 |          |   |           | $4.37 |          |   |           | $3.46 |         
|                                                                                                                        | Basic  pro forma     |                                  |           | 3.13  |          |   |           | 4.35  |          |   |           | 3.40  |         
|                                                                                                                        | Diluted  as reported |                                  |           | 3.09  |          |   |           | 4.31  |          |   |           | 3.43  |         
|                                                                                                                        | Diluted  pro forma   |                                  |           | 3.09  |          |   |           | 4.29  |          |   |           | 3.37  |         
|                                                                                                                       



|                                                      |  |                       |       |   |      |   |       |      |  |   |       |  
|----------------------------------------------------- |  | --------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                      | 
|                                                      |  | For the Calendar Year |      
|                                                      |  |                       |      
|                                                      |  | 2005                  |       |   | 2004 |   |       | 2003 | 
|                                                      | 
|Risk-free interest rate                               |  |                       | 3.87  | % |      |   | 3.69  | %    |  |   | 3.26  | %
|Expected dividend yield                               |  |                       | 4.17  |   |      |   | 3.93  |      |  |   | 4.14  |  
|Expected volatility                                   |  |                       | 20.31 |   |      |   | 22.50 |      |  |   | 27.15 |  
|Expected option life (in years)                       |  |                       | 6     |   |      |   | 6     |      |  |   | 5     |  
|Weighted-average grant-date fair
    value of options |  | $                     | 5.12  |   |      | $ | 5.91  |      |  | $ | 6.04  |  
|                                                     

Advertising
Costs:


Income Taxes:




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##### Table of Contents

ANNUAL REPORT2005  49



________________________________________________________________________________




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 PronouncementsMeaning of Other-Than-Temporary
Impairment: In November 2005, the Financial
Accounting Standards Board (FASB) issued FASB Staff Position
(FSP) 115-1, The Meaning of Other-Than-Temporary Impairment
and Its Application to Certain Investments.This FSP
provides additional guidance on when an investment in a debt or
equity security should be considered impaired and when that
impairment should be considered other-than-temporary and
recognized as a loss in earnings. Specifically, the guidance
clarifies that an investor should recognize an impairment loss
no later than when the impairment is deemed
other-than-temporary, even if a decision to sell has not been
made. The FSP also requires certain disclosures about unrealized
losses that have not been recognized as other-than-temporary
impairments. Management applied the guidance in this FSP in 2005.

Accounting Changes and Error
Corrections: In May 2005, the FASB issued
SFAS 154, Accounting Changes and Error Corrections,which changes the accounting for and reporting of a change
in accounting principle. This statement applies to all voluntary
changes in accounting principle and changes required by an
accounting pronouncement in the unusual instance that the
pronouncement does not include specific transition provisions.
This statement requires retrospective application to prior
period financial statements of changes in accounting principle,
unless it is impractical to determine either the period-specific
or cumulative effects of the change. SFAS 154 is effective
for accounting changes made in fiscal years beginning after
December 15, 2005. The adoption of this standard is not
expected to have a material effect on financial condition,
results of operations, or liquidity.

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. In 2005, the FASB issued further
guidance on the classification and measurement of freestanding
financial instruments originally issued for employee service and
the application of grant date as defined in SFAS 123R. The
Corporation will be required to adopt these statements on
January 1, 2006. 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 after this date.
SFAS 123R will require the Corporation to change its method
of accounting for share-based awards to include estimated
forfeitures in the initial estimate of compensation expense and
to accelerate the recognition of compensation expense for
retiree-eligible employees. The adoption of these standards is
not expected to have a material effect on financial condition,
results of operations, or liquidity.

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 Corporation adopted the
provisions of SOP 03-03 effective January 1, 2005. The
adoption of this standard did not have a material impact on
financial condition, results of operations, or liquidity.



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##### Table of Contents

50ANNUAL
REPORT2005



________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)




3.
    Acquisitions and DivestituresAcquisitions: On
January 15, 2005, the Corporation completed its acquisition
of Charter One Vendor Finance for a cash payment of
$312 million. Charter One Vendor Finance has been renamed
National City Vendor Finance (NCVF). NCVF 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.

In December 2005, the Corporation signed a definitive agreement
to acquire Forbes First Financial Corporation, the parent
company of Pioneer Bank and Trust Company (Pioneer). As of
December 31, 2005, Pioneer operated eight branches in the
St. Louis, Missouri metropolitan area and had total assets
and deposits of $530 million and $420 million,
respectively. The cash transaction is expected to be completed
in the second quarter of 2006, subject to shareholder and
regulatory approval.

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, for
$493 million, primarily in stock. 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 total cost of this all-stock transaction
was $2.2 billion. On October 5, 2004, the Corporation
completed its acquisition of Wayne Bancorp, Inc. (Wayne), a bank
holding company operating 23 branches in several northeastern
Ohio counties, for $182 million in cash.

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.

The following table shows the excess purchase price over
carrying value of net assets acquired, purchase price
allocations, and resulting goodwill for Wayne and NCVF whose
purchase price allocations were recently finalized:

|                                          |                                                                         |       |          |          |   |  |          |         | 
|----------------------------------------- | ----------------------------------------------------------------------- | ----- | -------- | -------- | - |  | -------- | ------- | 
|                                         
|(In Thousands)                            |                                                                         | Wayne |          | NCVF    
|                                         
|Purchase price                            |                                                                         |       | $181,764 |          |   |  | $311,764 |        
|Carrying value of net assets
    acquired |                                                                         |       | (71,254  | )        |   |  | (306,260 | )      
|                                         
|                                          | Excess of purchase price over
    carrying value of net assets acquired |       |          | 110,510  |   |  |          | 5,504   | 
|Purchase accounting adjustments           |                                                                         |       |          |          |   |  |          |        
|                                          | Securities                                                              |       |          | 477      |   |  |          |        | 
|                                          | Loans                                                                   |       |          | (7,234   | ) |  |          | 3,166   | 
|                                          | Premises and equipment                                                  |       |          | 3,275    |   |  |          |        | 
|                                          | Other assets                                                            |       |          | 1,013    |   |  |          |        | 
|                                          | Deposits                                                                |       |          | 654      |   |  |          |        | 
|                                          | Borrowings                                                              |       |          | 547      |   |  |          |        | 
|                                          | Severance and exit costs                                                |       |          | 3,510    |   |  |          |        | 
|                                          | Other liabilities                                                       |       |          | 106      |   |  |          |        | 
|                                          | Deferred taxes                                                          |       |          | 4,767    |   |  |          |        | 
|                                         
|                                          | Subtotal                                                                |       |          | 117,625  |   |  |          | 8,670   | 
|                                         
|Core deposit intangibles                  |                                                                         |       | (20,589  | )        |   |  |         |        
|Other identifiable intangible assets      |                                                                         |       | (1,565   | )        |   |  |         |        
|                                         
|                                          | Goodwill                                                                |       |          | $ 95,471 |   |  |          | $ 8,670 | 
|                                         



|               |                                             |                   |   |         |         |  |   |         |         | 
|-------------- | ------------------------------------------- | ----------------- | - | ------- | ------- |  | - | ------- | ------- | 
|              
|(In Thousands) |                                             | Wayne             |   | NCVF   
|              
|Assets         |                                             |                   |   |         |         |  |   |        
|               | Cash and cash equivalents                   |                   | $ | 27,966  |         |  | $ | 201     |        
|               | Securities                                  |                   |   | 277,757 |         |  |   |        |        
|               | Loans, net of allowance for loan
    losses |                   |   | 460,553 |         |  |   | 307,206 |        
|               | Premises and other equipment                |                   |   | 12,026  |         |  |   | 157     |        
|               | Goodwill and other intangibles              |                   |   | 117,625 |         |  |   | 8,670   |        
|               | Other assets                                |                   |   | 7,969   |         |  |   | 23      |        
|              
|               |                                             | Total Assets      |   |         | 903,896 |  |   |         | 316,257 | 
|Liabilities    |                                             |                   |   |         |         |  |   |        
|               | Deposits                                    |                   |   | 665,624 |         |  |   |        |        
|               | Borrowings                                  |                   |   | 43,070  |         |  |   |        |        
|               | Other liabilities                           |                   |   | 13,438  |         |  |   | 4,493   |        
|              
|               |                                             | Total Liabilities |   |         | 722,132 |  |   |         | 4,493   | 
|              
|               | Fair value of net assets
    acquired       |                   | $ | 181,764 |         |  | $ | 311,764 |        
|              





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##### Table of Contents

ANNUAL REPORT2005  51



________________________________________________________________________________




The following unaudited pro forma consolidated financial
information presents the combined results of operations of the
Corporation as if the Allegiant, Provident and Wayne
acquisitions had occurred as of January 1, 2004.

|                                  |                                                           |                    |            |             | 
|--------------------------------- | --------------------------------------------------------- | ------------------ | ---------- | ----------- | 
|                                 
|                                  |                                                           | For the Year Ended
|(In Thousands)                    |                                                           | December 31, 2004 
|                                 
|Net interest income               |                                                           |                    | $4,729,005 |            
|Provision for credit losses       |                                                           |                    | 414,197    |            
|                                 
|                                  | Net interest income after provision
    for credit losses |                    |            | 4,314,808   | 
|Noninterest income                |                                                           |                    | 4,764,687  |            
|Noninterest expense               |                                                           |                    | 5,065,869  |            
|                                 
|Income before income tax expense  |                                                           |                    | 4,013,626  |            
|Income tax expense                |                                                           |                    | 1,272,272  |            
|                                 
|Net Income                        |                                                           |                    | $2,741,354 |            
|                                 
|Net Income Per Common Share      
|                                  | Basic                                                     |                    |            | $4.11       | 
|                                  | Diluted                                                   |                    |            | $4.03       | 
|Average Common Shares Outstanding
|                                  | Basic                                                     |                    |            | 667,524,590 | 
|                                  | Diluted                                                   |                    |            | 680,564,323 | 
|                                 



Divestitures:








|   |                      
|-- | ---------------------
|4. | Restructuring Charges









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##### Table of Contents

52ANNUAL
REPORT2005



________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)


unallocated corporate charges within the Parent and Other
category.

|                                                 |                                             |                    |        |              |   |           |        |        |   |   |        |         |  
|------------------------------------------------ | ------------------------------------------- | ------------------ | ------ | ------------ | - | --------- | ------ | ------ | - | - | ------ | ------- | -
|                                                
|                                                 |                                             | For the Year Ended
|                                                 |                                             | December 31, 2005 
|                                                
|                                                 |                                             | Best In            |        | Acquisitions
|(In Thousands)                                   |                                             | Total              |        | Class        |   | and Other
|                                                
|Beginning balance                                |                                             | $                  | 98,486 |              |   | $         |       |        |   | $ | 98,486 |        
|Severance and other employee
    related costs:  |                                             |                    |        |              |   |           |        |        |   |   |        |        
|                                                 | Charged to expense                          |                    |        | 68,526       |   |           |        | 53,242 |   |   |        | 15,284  |  
|                                                 | Recognized in purchase price
    allocation |                    |        | (2,716       | ) |           |        |       |   |   |        | (2,716  | )
|                                                 | Payments                                    |                    |        | (69,039      | ) |           |        | (9,899 | ) |   |        | (59,140 | )
|Exit costs, contract terminations
    and other: |                                             |                    |        |              |   |           |        |        |   |   |        |        
|                                                 | Charged to expense                          |                    |        | 12,470       |   |           |        | 12,470 |   |   |        |        |  
|                                                 | Recognized in purchase price
    allocation |                    |        | (1,453       | ) |           |        |       |   |   |        | (1,453  | )
|                                                 | Payments                                    |                    |        | (18,421      | ) |           |        | (8,123 | ) |   |        | (10,298 | )
|                                                
|Ending balance                                   |                                             | $                  | 87,853 |              |   | $         | 47,690 |        |   | $ | 40,163 |        
|                                                

|                                                 |                                             |                    |        |              |   |           |   |            |  |   |        |          |   |   |       |        |  
|------------------------------------------------ | ------------------------------------------- | ------------------ | ------ | ------------ | - | --------- | - | ---------- |  | - | ------ | -------- | - | - | ----- | ------ | -
|                                                
|                                                 |                                             | For the Year Ended
|                                                 |                                             | December 31, 2004 
|                                                
|                                                 |                                             | Best In            |        | Acquisitions |   | National 
|(In Thousands)                                   |                                             | Total              |        | Class        |   | and Other |   | Processing
|                                                
|Beginning balance                                |                                             | $                  | 15,927 |              |   | $         |  |            |  | $ | 14,154 |          |   | $ | 1,773 |       
|Severance and other employee
    related costs:  |                                             |                    |        |              |   |           |   |            |  |   |        |          |   |   |       |       
|                                                 | Charged to expense                          |                    |        | 39,044       |   |           |   |           |  |   |        | 38,990   |   |   |       | 54     |  
|                                                 | Recognized in purchase price
    allocation |                    |        | 65,180       |   |           |   |           |  |   |        | 65,180   |   |   |       |       |  
|                                                 | Payments                                    |                    |        | (60,141      | ) |           |   |           |  |   |        | (59,098  | ) |   |       | (1,043 | )
|                                                 | Divestiture                                 |                    |        | (784         | ) |           |   |           |  |   |        |         |   |   |       | (784   | )
|Exit costs, contract terminations
    and other: |                                             |                    |        |              |   |           |   |            |  |   |        |          |   |   |       |       
|                                                 | Charged to expense                          |                    |        |             |   |           |   |           |  |   |        |         |   |   |       |       |  
|                                                 | Recognized in purchase price
    allocation |                    |        | 230,303      |   |           |   |           |  |   |        | 230,303  |   |   |       |       |  
|                                                 | Payments                                    |                    |        | (191,043     | ) |           |   |           |  |   |        | (191,043 | ) |   |       |       |  
|                                                
|Ending balance                                   |                                             | $                  | 98,486 |              |   | $         |  |            |  | $ | 98,486 |          |   | $ |      |       
|                                                





5. Securitization Activity




Credit Card:


2001-1


Automobile: 2005-A).




---



##### Table of Contents

ANNUAL REPORT2005  53



________________________________________________________________________________




the date of sale. Transaction costs associated with this
fixed-term securitization were included as a component of the
loss on sale.

In 2004, the Corporation securitized $890 million
of fixed-rate, closed-end indirect automobile loans
(Series 2004-A). A
pretax gain of $9 million on this transaction 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.

Home Equity:In 2004, the
Corporation acquired Provident, which had previously securitized
home equity loans and lines of credit. Retained interests in the
form of interest-only strips were recognized at their fair
values as of the acquisition date of $3 million. In 2005,
the Corporation exercised its options to call the
1998-A and
1999-A home equity
securitization. Investors in the
1999-A home equity
securitization received their final distributions in the amount
of $16 million in September 2005. Investors in the 1998-A
home equity securitization will receive their final
distribution, estimated at $5 million, in February 2006.
The Corporation also plans to exercise an early termination of
the remaining 2000-A home equity securitization in 2006.

SBA:During 2005, 2004 and
2003, the Corporation securitized pools of SBA loans totaling
$46 million, $9 million and $52 million,
respectively. Retained interests in the form of interest-only
strips were recognized with an initial carrying value of
$3 million, $660 thousand, and $4 million in 2005,
2004 and 2003, respectively. The SBA loans securitized were sold
servicing released and all transaction costs were expensed in
conjunction with the sale. During 2004, the Corporation sold the
interest-only strips associated with the 2004 SBA securitization.

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

|             |               |             |  |     |              |  |  |           |   |  |          |       |   |          |  |      |       |  |  |       |   |  |  |       |  
|------------ | ------------- | ----------- |  | --- | ------------ |  |  | --------- | - |  | -------- | ----- | - | -------- |  | ---- | ----- |  |  | ----- | - |  |  | ----- | -
|             |              
|             |               | Weighted-   |  |     | Variable     |  |  | Monthly   |   |  | Expected |       |   |         
|             |               | Average     |  |     | Annual       |  |  | Principal |   |  | Annual   |       |   | Annual   |  |      |      
|             |               | Life        |  |     | Coupon Rate  |  |  | Repayment |   |  | Credit   |       |   | Discount |  |      |      
|             |               | (in months) |  |     | To Investors |  |  | Rate      |   |  | Losses   |       |   | Rate     |  |      | Yield | 
|             |              
|Credit Card: |               |             |  |     |              |  |  |           |   |  |          |       |   |          |  |      |       |  |  |       |   |  |  |      
|             | Series 2001-1 |             |  | 5.6 |              |  |  | 6.06      | % |  |          | 17.79 | % |          |  | 4.08 | %     |  |  | 15.00 | % |  |  | 14.77 | %
|             | Series 2002-1 |             |  | 5.7 |              |  |  | 2.06      |   |  |          | 17.41 |   |          |  | 5.34 |       |  |  | 15.00 |   |  |  | 11.99 |  
|             | Series 2005-1 |             |  | 3.2 |              |  |  | 3.75      |   |  |          | 18.21 |   |          |  | 5.35 |       |  |  | 15.00 |   |  |  | 12.00 |  
|            

|            |               |                     |  |  |            |  |  |               |      |   |          |  |      |           |  |  |       |   |  |  |      |  
|----------- | ------------- | ------------------- |  |  | ---------- |  |  | ------------- | ---- | - | -------- |  | ---- | --------- |  |  | ----- | - |  |  | ---- | -
|            |              
|            |               | Weighted-           |  |  | Monthly    |  |  |              
|            |               | Average             |  |  | Prepayment |  |  | Expected      |      |   | Annual   |  |      | Weighted- | 
|            |               | Life                |  |  | Speed      |  |  | Cumulative    |      |   | Discount |  |      | Average   | 
|            |               | (in months)         |  |  | (% ABS)    |  |  | Credit Losses |      |   | Rate     |  |      | Coupon    | 
|            |              
|Automobile: |               |                     |  |  |            |  |  |               |      |   |          |  |      |           |  |  |       |   |  | 
|            | Series 2002-A |                     |  |  |            |  |  |               |      |   |          |  |      |           |  |  |       |   |  |  |     
|            |               | Interest-only strip |  |  | 22.9       |  |  |               | 1.40 | % |          |  | 2.25 | %         |  |  | 12.00 | % |  |  | 8.71 | %
|            |               | Servicing asset     |  |  | 22.9       |  |  |               | 1.40 |   |          |  | 2.25 |           |  |  | 12.00 |   |  |  | 8.71 |  
|            | Series 2004-A |                     |  |  |            |  |  |               |      |   |          |  |      |           |  |  |       |   |  |  |     
|            |               | Interest-only strip |  |  | 21.8       |  |  |               | 1.50 | % |          |  | 1.75 | %         |  |  | 12.00 | % |  |  | 6.79 | %
|            |               | Servicing asset     |  |  | 21.8       |  |  |               | 1.50 |   |          |  | 1.75 |           |  |  | 11.00 |   |  |  | 6.79 |  
|            | Series 2005-A |                     |  |  |            |  |  |               |      |   |          |  |      |           |  |  |       |   |  |  |     
|            |               | Interest-only strip |  |  | 16.6       |  |  |               | 1.50 | % |          |  | 2.18 | %         |  |  | 12.00 | % |  |  | 7.06 | %
|            |               | Servicing asset     |  |  | 12.5       |  |  |               | 1.50 |   |          |  | 2.18 |           |  |  | 10.00 |   |  |  | 7.06 |  
|           





|             |               |             |  |      |              |  |  |             |   |  |           |            |   |          |  |      |          |  |  |      |   |  |  |      |  
|------------ | ------------- | ----------- |  | ---- | ------------ |  |  | ----------- | - |  | --------- | ---------- | - | -------- |  | ---- | -------- |  |  | ---- | - |  |  | ---- | -
|             |              
|             |               | Weighted-   |  |      | Variable     |  |  | Monthly     |   |  | Expected  |            |   |         
|             |               | Average     |  |      | Annual       |  |  | Principal   |   |  | Annual    |            |   | Annual   |  |      |         
|             |               | Life        |  |      | Coupon Rate  |  |  | Repayment   |   |  | Credit    |            |   | Discount |  |      |         
|             |               | (in months) |  |      | to Investors |  |  | Rate/CPR(a) |   |  | Losses(b) |            |   | Rate     |  |      | Yield(c) | 
|             |              
|Home Equity: |               |             |  |      |              |  |  |             |   |  |           |            |   |          |  |      |          |  |  |      |   |  |  |     
|             | Series 1998-A |             |  | 14.1 |              |  |  | 1.95        | % |  |           | 4.42/33.00 | % |          |  | 1.25 | %        |  |  | 6.25 | % |  |  | 4.87 | %
|             | Series 2000-A |             |  | 16.4 |              |  |  | 1.74        |   |  |           | 5.74/33.00 |   |          |  | 2.40 |          |  |  | 6.25 |   |  |  | 5.92 |  
|            



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



---



##### Table of Contents

54ANNUAL
REPORT2005



________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)


A summary of the components of managed loans, representing both
owned and securitized loans, along with quantitative information
about delinquencies and net credit losses follows. The
automobile loans consist of the managed portfolio of indirect
prime automobile loans. The home equity loans consist of the
managed portfolio of prime home equity lines of credit and prime
home equity installment loans. The SBA loans consist of loans
purchased and then securitized and sold by the Corporation.

|              |                                            |                                    |   |          |                            |  |   |          |       |  |            |          |          |  |   |       |       | 
|------------- | ------------------------------------------ | ---------------------------------- | - | -------- | -------------------------- |  | - | -------- | ----- |  | ---------- | -------- | -------- |  | - | ----- | ----- | 
|              |                                           
|              |                                            | As of December 31, 2005            |   |          | For the Calendar Year 2005 | 
|              |                                            |                                    |   |          |                            | 
|              |                                            | Principal                          |   |          | Loans Past Due             |  |   | Average  |       |  | Net Credit |         
|(In Millions) |                                            | Balance                            |   |          | 30 Days or More            |  |   | Balances |       |  | Losses     |         
|              |                                           
|Type of loan: |                                            |                                    |   |          |                            |  |   |          |       |  |            |          |          |  |   |      
|              | Credit Card                                |                                    | $ | 2,482.9  |                            |  | $ | 98.6     |       |  | $          | 2,379.8  |          |  | $ | 155.7 |      
|              | Automobile                                 |                                    |   | 2,954.3  |                            |  |   | 67.8     |       |  |            | 3,362.9  |          |  |   | 42.3  |      
|              | Home Equity                                |                                    |   | 27,919.2 |                            |  |   | 134.1    |       |  |            | 27,177.2 |          |  |   | 58.3  |      
|              | SBA                                        |                                    |   | 43.8     |                            |  |   | 4.4      |       |  |            | 30.7     |          |  |   |      |      
|             
|              |                                            | Total loans managed or securitized |   |          | 33,400.2                   |  |   |          | 304.9 |  |            |          | 32,950.6 |  |   |       | 256.3 | 
|Less:         |                                            |                                    |   |          |                            |  |   |          |       |  |            |          |          |  |   |      
|              | Loans securitized:                         |                                    |   |          |                            |  |   |          |       |  |            |          |          |  |   |       |      
|              |                                            | Credit Card                        |   |          | 1,026.1                    |  |   |          | 37.4  |  |            |          | 1,307.0  |  |   |       | 76.0  | 
|              |                                            | Automobile                         |   |          | 2,602.2                    |  |   |          | 30.8  |  |            |          | 860.8    |  |   |       | 12.0  | 
|              |                                            | Home Equity                        |   |          | 13.2                       |  |   |          | 1.0   |  |            |          | 39.5     |  |   |       | 1.5   | 
|              |                                            | SBA                                |   |          | 43.8                       |  |   |          | 4.4   |  |            |          | 30.7     |  |   |       |      | 
|              | Loans held for sale or
    securitization: |                                    |   |          |                            |  |   |          |       |  |            |          |          |  |   |       |      
|              |                                            | Credit Card                        |   |          | 425.0                      |  |   |          |      |  |            |          | 141.8    |  |   |       |      | 
|              |                                            | Automobile                         |   |          |                           |  |   |          |      |  |            |          | 179.0    |  |   |       |      | 
|              |                                            | Home Equity                        |   |          |                           |  |   |          |      |  |            |          | 3.9      |  |   |       |      | 
|             
|              |                                            | Loans held in
    portfolio        |   | $        | 29,289.9                   |  |   | $        | 231.3 |  |            | $        | 30,387.9 |  |   | $     | 166.8 | 
|             

|              |                                            |                                    |   |          |                            |  |   |          |       |  |            |          |          |  |   |       |       | 
|------------- | ------------------------------------------ | ---------------------------------- | - | -------- | -------------------------- |  | - | -------- | ----- |  | ---------- | -------- | -------- |  | - | ----- | ----- | 
|              |                                           
|              |                                            | As of December 31, 2004            |   |          | For the Calendar Year 2004 | 
|              |                                            |                                    |   |          |                            | 
|              |                                            | Principal                          |   |          | Loans Past Due             |  |   | Average  |       |  | Net Credit |         
|(In Millions) |                                            | Balance                            |   |          | 30 Days or More            |  |   | Balances |       |  | Losses     |         
|              |                                           
|Type of loan: |                                            |                                    |   |          |                            |  |   |          |       |  |            |          |          |  |   |      
|              | Credit Card                                |                                    | $ | 2,520.2  |                            |  | $ | 91.0     |       |  | $          | 2,469.6  |          |  | $ | 147.2 |      
|              | Automobile                                 |                                    |   | 3,783.3  |                            |  |   | 68.9     |       |  |            | 3,965.2  |          |  |   | 45.5  |      
|              | Home Equity                                |                                    |   | 24,640.0 |                            |  |   | 88.8     |       |  |            | 20,051.1 |          |  |   | 35.5  |      
|              | SBA                                        |                                    |   | 8.7      |                            |  |   | .5       |       |  |            | 23.4     |          |  |   |      |      
|             
|              |                                            | Total loans managed or securitized |   |          | 30,952.2                   |  |   |          | 249.2 |  |            |          | 26,509.3 |  |   |       | 228.2 | 
|Less:         |                                            |                                    |   |          |                            |  |   |          |       |  |            |          |          |  |   |      
|              | Loans securitized:                         |                                    |   |          |                            |  |   |          |       |  |            |          |          |  |   |       |      
|              |                                            | Credit Card                        |   |          | 1,450.0                    |  |   |          | 47.2  |  |            |          | 1,450.0  |  |   |       | 76.4  | 
|              |                                            | Automobile                         |   |          | 888.3                      |  |   |          | 17.2  |  |            |          | 1,053.9  |  |   |       | 11.9  | 
|              |                                            | Home Equity                        |   |          | 60.7                       |  |   |          | 1.4   |  |            |          | 37.8     |  |   |       | .6    | 
|              |                                            | SBA                                |   |          | 8.7                        |  |   |          | .5    |  |            |          | 23.4     |  |   |       |      | 
|              | Loans held for sale or
    securitization: |                                    |   |          |                            |  |   |          |       |  |            |          |          |  |   |       |      
|              |                                            | Automobile                         |   |          |                           |  |   |          |      |  |            |          | 131.7    |  |   |       |      | 
|             
|              |                                            | Loans held in
    portfolio        |   | $        | 28,544.5                   |  |   | $        | 182.9 |  |            | $        | 23,812.5 |  |   | $     | 139.3 | 
|             



|                                                                     |  |                       |         |  |            |   |         |        |  |  |     |        |  |      |       |  |            |   |         |        |  |   |       |  |  |  |     |  |  |  |      | 
|-------------------------------------------------------------------- |  | --------------------- | ------- |  | ---------- | - | ------- | ------ |  |  | --- | ------ |  | ---- | ----- |  | ---------- | - | ------- | ------ |  | - | ----- |  |  |  | --- |  |  |  | ---- | 
|                                                                     | 
|                                                                     |  | For the Calendar Year |        
|                                                                     |  |                       |        
|                                                                     |  | 2005                  |         |  | 2004       |  
|                                                                     | 
|                                                                     |  | Credit                |         |  |            |   | Home    |        |  |  |     | Credit |  |      |       |  | Home       |   |         |       
|(In Millions)                                                        |  | Card                  |         |  | Automobile |   |         | Equity |  |  | SBA |        |  | Card |       |  | Automobile |   |         | Equity |  |   | SBA   | 
|                                                                     | 
|Proceeds from new securitizations                                    |  | $                     | 600.0   |  |            | $ | 2,103.9 |        |  |  | $  |        |  |      | $44.7 |  |            | $ |        |        |  | $ | 811.2 |  |  |  | $  |  |  |  | $8.1 | 
|Proceeds from collections
    reinvested in previous securitizations |  |                       | 2,789.3 |  |            |   |        |        |  |  | 2.7 |        |  |      |      |  |            |   | 3,094.1 |        |  |   |      |  |  |  | 4.4 |  |  |  |     | 
|Servicing fees received                                              |  |                       | 28.1    |  |            |   | 8.7     |        |  |  | .3  |        |  |      |      |  |            |   | 29.0    |        |  |   | 10.6  |  |  |  | .2  |  |  |  |     | 
|Other cash flows received on
    retained interests                  |  |                       | 70.8    |  |            |   | 15.7    |        |  |  | .9  |        |  |      | .7    |  |            |   | 90.9    |        |  |   | 18.7  |  |  |  | 1.1 |  |  |  | 3.2  | 
|Proceeds from sales of previously
    charged-off accounts           |  |                       | 1.0     |  |            |   |        |        |  |  |    |        |  |      |      |  |            |   |        |        |  |   |      |  |  |  |    |  |  |  |     | 
|Purchases of delinquent or
    foreclosed assets                     |  |                       |        |  |            |   |        |        |  |  | 1.2 |        |  |      |      |  |            |   |        |        |  |   |      |  |  |  |    |  |  |  |     | 
|                                                                    

[Additional columns below]

[Continued from above table, first column(s) repeated]
For the Calendar Year2003Credit(In Millions)
    
    Card
    
    Automobile
    
    SBAProceeds from new securitizations
    
    $
    
    
    
    $
    
    
    
    
    $48.0Proceeds from collections
    reinvested in previous securitizations
    
    
    3,089.3
    
    
    
    
    
    
    
    Servicing fees received
    
    
    29.0
    
    
    
    6.6
    
    
    
    Other cash flows received on
    retained interests
    
    
    89.6
    
    
    
    15.0
    
    
    
    .9Proceeds from sales of previously
    charged-off accounts
    
    
    1.1
    
    
    
    
    
    
    
    Purchases of delinquent or
    foreclosed assets
    
    
    
    
    
    
    
    
    
    
    



---



##### Table of Contents

ANNUAL REPORT2005  55



________________________________________________________________________________




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, 2005 fair values to immediate 10% and 20%
adverse changes in those assumptions follows. 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
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 magnify or counteract the sensitivities.
Weighted-
    
    
    
    Monthly
    
    ExpectedAverage
    
    Variable Annual
    
    Principal
    
    AnnualFair
    
    Life
    
    Coupon Rate
    
    Repayment
    
    Credit(Dollars in Millions)
    
    Value
    
    (in months)(b)
    
    to Investors(b)
    
    Rate(b)
    
    Losses(b)Credit Card
    LoansInterest-only
    strips(a)
    
    $
    2.0
    
    
    
    3.1
    
    
    
    4.52
    %
    
    
    18.68
    %
    
    
    5.44
    %As of December 31,
    2005Decline in fair value of 10%
    adverse change
    
    
    
    
    
    
    
    
    
    $
    1.1
    
    
    $
    .2
    
    
    $
    1.4Decline in fair value of 20%
    adverse change
    
    
    
    
    
    
    
    
    
    
    2.0
    
    
    
    .3
    
    
    
    2.0

[Additional columns below][Continued from above table, first column(s) repeated]
AnnualDiscount(Dollars in Millions)
    
    Rate(b)
    
    Yield(b)Credit Card
    LoansInterest-only
    strips(a)
    
    
    15.00
    %
    
    
    12.88
    %As of December 31,
    2005Decline in fair value of 10%
    adverse change
    
    $
    
    
    
    $
    2.0Decline in fair value of 20%
    adverse change
    
    
    
    
    
    
    2.0(a) Represents
interest-only strips recognized in connection with the credit
card securitization
Series 2002-1, and
2005-1.

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

|                      |                            |                             |                                                 |                |  |               |  |           |  |           |  |           |   |     |  |      |   |     |  |       |   |    |  |      |   |     | 
|--------------------- | -------------------------- | --------------------------- | ----------------------------------------------- | -------------- |  | ------------- |  | --------- |  | --------- |  | --------- | - | --- |  | ---- | - | --- |  | ----- | - | -- |  | ---- | - | --- | 
|                     
|                      |                            | Monthly                     |                                                 | Expected       |  |              
|                      |                            | Weighted-                   |                                                 | Prepayment     |  | Cumulative    |  | Annual    |  | Weighted-
|                      |                            | Fair                        |                                                 | average Life   |  | Speed         |  | Credit    |  | Discount  |  | Average  
|(Dollars in Millions) |                            | Value                       |                                                 | (in months)(b) |  | (% ABS)(b)(c) |  | Losses(b) |  | Rate(b)   |  | Coupon(b)
|                     
|Automobile
    Loans  |                            |                             |                                                 |                |  |               |  |           |  |           |  |           |   |     |  |      |   |     |  |       |   |    |  |     
|                      | Interest-only
    strip(a) |                             | $                                               | 27.7           |  |               |  | 15.7      |  |           |  | 1.50      | % |     |  | 2.19 | % |     |  | 12.00 | % |    |  | 7.08 | %
|                      |                            | As of December 31,
    2005 |                                                 |                |  |               |  |           |  |           |  |           |   |     |  |      |   |     |  |       |   |    |  |      |   |    
|                      |                            |                             | Decline in fair value of 10%
    adverse change |                |  |               |  |           |  |           |  |           | $ | 2.0 |  |      | $ | 5.6 |  |       | $ | .4 |  |      | $ | 6.1 | 
|                      |                            |                             | Decline in fair value of 20%
    adverse change |                |  |               |  |           |  |           |  |           |   | 3.4 |  |      |   | 8.8 |  |       |   | .8 |  |      |   | 9.3 | 
|                      | Servicing
    asset(d)     |                             | $                                               | 23.3           |  |               |  | 11.7      |  |           |  | 1.50      | % |     |  | 2.19 | % |     |  | 10.23 | % |    |  | 7.08 | %
|                      |                            | As of December 31,
    2005 |                                                 |                |  |               |  |           |  |           |  |           |   |     |  |      |   |     |  |       |   |    |  |      |   |    
|                      |                            |                             | Decline in fair value of 10%
    adverse change |                |  |               |  |           |  |           |  |           | $ | 1.4 |  |      | $ |    |  |       | $ | .2 |  |      | $ | .1  | 
|                      |                            |                             | Decline in fair value of 20%
    adverse change |                |  |               |  |           |  |           |  |           |   | 2.9 |  |      |   |    |  |       |   | .4 |  |      |   | .1  | 
|                     



|    |                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Represents interest-only strips and servicing assets
    associated with the automobile securitization
    series 2005-A,
    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, 2005
    was $22.5 million.                                                                      



|   |       
|-- | ------
|6. | Leases



Lease Financings:




|                                             |                                    |                                       |           |           |           |   |           |           |           | 
|-------------------------------------------- | ---------------------------------- | ------------------------------------- | --------- | --------- | --------- | - | --------- | --------- | --------- | 
|                                            
|(In Thousands)                               |                                    | 2005                                  |           | 2004     
|                                            
|Commercial                                   |                                    |                                       |           |           |           |   |           |          
|                                             | Direct financings                  |                                       | $         | 3,237,722 |           |   | $         | 2,508,415 |          
|                                             | Leveraged leases                   |                                       |           | 307,439   |           |   |           | 327,707   |          
|                                            
|                                             |                                    | Total commercial lease
    financings |           |           | 3,545,161 |   |           |           | 2,836,122 | 
|Consumer                                     |                                    |                                       |           |           |           |   |           |          
|                                             | Retail automobile lease financings |                                       |           | 411,147   |           |   |           | 530,382   |          
|                                            
|Total net investment in lease
    financings |                                    | $                                     | 3,956,308 |           |           | $ | 3,366,504 |          
|                                            



---



##### Table of Contents

56ANNUAL
REPORT2005



________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)


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

|                                                        |                                                     |      |           |           |   |   |           |           |  
|------------------------------------------------------- | --------------------------------------------------- | ---- | --------- | --------- | - | - | --------- | --------- | -
|                                                       
|(In Thousands)                                          |                                                     | 2005 |           | 2004     
|                                                       
|Commercial                                              |                                                     |      |           |           |   |   |           |          
|                                                        | Lease payments receivable                           |      | $         | 3,559,471 |   |   | $         | 2,753,551 |  
|                                                        | Estimated residual value of leased
    assets       |      |           | 482,049   |   |   |           | 541,809   |  
|                                                       
|                                                        | Gross investment in commercial
    lease financings |      |           | 4,041,520 |   |   |           | 3,295,360 |  
|                                                        | Unearned income                                     |      |           | (496,359  | ) |   |           | (459,238  | )
|                                                       
|Total net investment in
    commercial lease financings |                                                     | $    | 3,545,161 |           |   | $ | 2,836,122 |          
|                                                       
|Consumer                                                |                                                     |      |           |           |   |   |           |          
|                                                        | Lease payments receivable                           |      | $         | 221,512   |   |   | $         | 339,840   |  
|                                                        | Estimated residual value of leased
    assets       |      |           | 231,582   |   |   |           | 263,768   |  
|                                                       
|                                                        | Gross investment in consumer lease
    financings   |      |           | 453,094   |   |   |           | 603,608   |  
|                                                        | Unearned income                                     |      |           | (41,947   | ) |   |           | (73,226   | )
|                                                       
|Total net investment in consumer
    lease financings   |                                                     | $    | 411,147   |           |   | $ | 530,382   |          
|                                                       



|               |                   |                       |         |          |   |   |         |          |  
|-------------- | ----------------- | --------------------- | ------- | -------- | - | - | ------- | -------- | -
|              
|               |                   | For the Calendar Year
|               |                   |                      
|(In Thousands) |                   | 2005                  |         | 2004    
|              
|Commercial     |                   |                       |         |          |   |   |         |         
|               | Beginning balance |                       | $       | 541,809  |   |   | $       | 487,007  |  
|               | Additions         |                       |         | 82,765   |   |   |         | 43,616   |  
|               | Acquisitions(a)   |                       |         | 1,519    |   |   |         | 126,080  |  
|               | Runoff            |                       |         | (144,044 | ) |   |         | (102,324 | )
|               | Write-downs       |                       |         |         |   |   |         | (12,570  | )
|              
|Ending balance |                   | $                     | 482,049 |          |   | $ | 541,809 |         
|              
|Consumer       |                   |                       |         |          |   |   |         |         
|               | Beginning balance |                       | $       | 263,768  |   |   | $       | 121,630  |  
|               | Additions         |                       |         |         |   |   |         |         |  
|               | Acquisitions(a)   |                       |         |         |   |   |         | 250,372  |  
|               | Runoff            |                       |         | (32,186  | ) |   |         | (108,234 | )
|               | Write-downs       |                       |         |         |   |   |         |         |  
|              
|Ending balance |                   | $                     | 231,582 |          |   | $ | 263,768 |         
|              



|    |                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Associated with the acquisition of National City Vendor
    Finance and Provident. Refer to Note 3 for further details
    of these acquisitions.





|              |  |      |         |      |  |      |       |      |  |      |       |        |  |       |       |  |  |   |       |  |  |   |       |  |  |   |         | 
|------------- |  | ---- | ------- | ---- |  | ---- | ----- | ---- |  | ---- | ----- | ------ |  | ----- | ----- |  |  | - | ----- |  |  | - | ----- |  |  | - | ------- | 
|             
|              |  | 2011 |         |     
|              |  | and  |         |     
|(In Millions) |  | 2006 |         | 2007 |  | 2008 |       | 2009 |  | 2010 |       | Beyond |  | Total
|             
|Commercial    |  | $    | 1,251.3 |      |  | $    | 818.0 |      |  | $    | 557.8 |        |  | $     | 355.7 |  |  | $ | 200.8 |  |  | $ | 375.9 |  |  | $ | 3,559.5 | 
|Consumer      |  |      | 90.5    |      |  |      | 78.3  |      |  |      | 43.5  |        |  |       | 8.9   |  |  |   | .3    |  |  |   |      |  |  |   | 221.5   | 
|             
|Total         |  | $    | 1,341.8 |      |  | $    | 896.3 |      |  | $    | 601.3 |        |  | $     | 364.6 |  |  | $ | 201.1 |  |  | $ | 375.9 |  |  | $ | 3,781.0 | 
|             

Equipment Leased to Others:




|                                                           |                          |      |         |          |   |   |           |         |  
|---------------------------------------------------------- | ------------------------ | ---- | ------- | -------- | - | - | --------- | ------- | -
|                                                          
|(In Thousands)                                             |                          | 2005 |         | 2004    
|                                                          
|Commercial                                                 |                          |      |         |          |   |   |           |        
|                                                           | Cost                     |      | $       | 455,462  |   |   | $         | 341,164 |  
|                                                           | Accumulated depreciation |      |         | (104,373 | ) |   |           | (52,541 | )
|                                                          
|Net carrying value of commercial
    leased equipment      |                          |      | 351,089 |          |   |   | 288,623   |        
|                                                          
|Consumer                                                   |                          |      |         |          |   |   |           |        
|                                                           | Cost                     |      |         | 457,332  |   |   |           | 849,578 |  
|                                                           | Accumulated depreciation |      |         | (112,094 | ) |   |           | (87,414 | )
|                                                          
|Net carrying value of consumer
    leased equipment        |                          |      | 345,238 |          |   |   | 762,164   |        
|                                                          
|Total net carrying value of
    equipment leased to others |                          | $    | 696,327 |          |   | $ | 1,050,787 |        
|                                                          





|              |  |      |       |      |  |      |       |      |  |      |      |        |  |       |      |  |  |   |     |  |  |   |      |  |  |   |       | 
|------------- |  | ---- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ---- | ------ |  | ----- | ---- |  |  | - | --- |  |  | - | ---- |  |  | - | ----- | 
|             
|              |  | 2011 |       |     
|              |  | and  |       |     
|(In Millions) |  | 2006 |       | 2007 |  | 2008 |       | 2009 |  | 2010 |      | Beyond |  | Total
|             
|Commercial    |  | $    | 98.8  |      |  | $    | 73.4  |      |  | $    | 48.1 |        |  | $     | 26.2 |  |  | $ | 9.1 |  |  | $ | 13.2 |  |  | $ | 268.8 | 
|Consumer      |  |      | 81.5  |      |  |      | 31.2  |      |  |      | 4.2  |        |  |       | .2   |  |  |   |    |  |  |   |     |  |  |   | 117.1 | 
|             
|Total         |  | $    | 180.3 |      |  | $    | 104.6 |      |  | $    | 52.3 |        |  | $     | 26.4 |  |  | $ | 9.1 |  |  | $ | 13.2 |  |  | $ | 385.9 | 
|             



---



##### Table of Contents

ANNUAL REPORT2005  57



________________________________________________________________________________






7.
    Loans, Allowance for Loan Losses and
    Allowance for Losses on Lending-Related CommitmentsTotal 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 $174 million and $195 million, at
December 31, 2005 and 2004, 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.

Activity in the allowance for loan losses follows:

|                                                             |  |                       |           |   |      |   |           |      |  |   |           |  
|------------------------------------------------------------ |  | --------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                             | 
|                                                             |  | For the Calendar Year |          
|                                                             |  |                       |          
|(In Thousands)                                               |  | 2005                  |           |   | 2004 |   |           | 2003 | 
|                                                             | 
|Balance at beginning of
    period                           |  | $                     | 1,188,462 |   |      | $ | 1,022,720 |      |  | $ | 1,006,451 |  
|Provision for loan losses                                    |  |                       | 300,531   |   |      |   | 339,441   |      |  |   | 627,946   |  
|Allowance related to loans
    acquired, sold or securitized |  |                       | (14,086   | ) |      |   | 171,973   |      |  |   | (2,253    | )
|Charge-offs                                                  |  |                       | (602,902  | ) |      |   | (570,999  | )    |  |   | (757,176  | )
|Recoveries                                                   |  |                       | 222,042   |   |      |   | 225,327   |      |  |   | 147,752   |  
|                                                            
|Net charge-offs                                              |  |                       | (380,860  | ) |      |   | (345,672  | )    |  |   | (609,424  | )
|                                                            
|Balance at end of
    period                                 |  | $                     | 1,094,047 |   |      | $ | 1,188,462 |      |  | $ | 1,022,720 |  
|                                                            







|                                                                      |  |                       |         |   |      |   |         |      |  |   |         | 
|--------------------------------------------------------------------- |  | --------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | 
|                                                                      | 
|                                                                      |  | For the Calendar Year |        
|                                                                      |  |                       |        
|(In Thousands)                                                        |  | 2005                  |         |   | 2004 |   |         | 2003 | 
|                                                                      | 
|Balance at beginning of
    period                                    |  | $                     | 100,538 |   |      | $ | 102,609 |      |  | $ | 92,137  | 
|Net provision for losses on
    lending-related commitments           |  |                       | (16,937 | ) |      |   | (16,169 | )    |  |   | 10,472  | 
|Allowance related to
    lending-related commitments acquired
    (a) |  |                       |        |   |      |   | 14,098  |      |  |   |        | 
|                                                                     
|Balance at end of
    period                                          |  | $                     | 83,601  |   |      | $ | 100,538 |      |  | $ | 102,609 | 
|                                                                     



|    |                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The allowance related to lending-related commitments acquired
    was associated with the acquisitions of Allegiant, Provident,
    and Wayne.



8. Securities




|                                                |  |                   |           |  |            |   |        |            |  |   |        |  |  |   |           | 
|----------------------------------------------- |  | ----------------- | --------- |  | ---------- | - | ------ | ---------- |  | - | ------ |  |  | - | --------- | 
|                                                | 
|                                                |  | December 31, 2005 |          
|                                                |  |                   |          
|                                                |  | Amortized         |           |  | Unrealized |   |        | Unrealized |  |   | Fair   | 
|                                                |  | Cost              |           |  | Gains      |   |        | Losses     |  |   | Value  | 
|(In Thousands)                                  |  |                   |           |  |            |   |        |           
|                                                | 
|U.S. Treasury and Federal agency
    debentures |  | $                 | 1,174,149 |  |            | $ | 19,414 |            |  | $ | 9,397  |  |  | $ | 1,184,166 | 
|Mortgage-backed securities                      |  |                   | 5,437,449 |  |            |   | 27,849 |            |  |   | 69,929 |  |  |   | 5,395,369 | 
|Asset-backed and corporate debt
    securities  |  |                   | 245,758   |  |            |   | 2,385  |            |  |   | 424    |  |  |   | 247,719   | 
|States and political subdivisions               |  |                   | 607,499   |  |            |   | 14,537 |            |  |   | 1,211  |  |  |   | 620,825   | 
|Other                                           |  |                   | 415,954   |  |            |   | 11,283 |            |  |   | 688    |  |  |   | 426,549   | 
|                                               
|Total securities                                |  | $                 | 7,880,809 |  |            | $ | 75,468 |            |  | $ | 81,649 |  |  | $ | 7,874,628 | 
|                                               

|                                                |  |                   |           |  |            |   |         |            |  |   |        |  |  |   |           | 
|----------------------------------------------- |  | ----------------- | --------- |  | ---------- | - | ------- | ---------- |  | - | ------ |  |  | - | --------- | 
|                                                | 
|                                                |  | December 31, 2004 |          
|                                                |  |                   |          
|                                                |  | Amortized         |           |  | Unrealized |   |         | Unrealized |  |   | Fair   | 
|(In Thousands)                                  |  | Cost              |           |  | Gains      |   |         | Losses     |  |   | Value  | 
|                                                | 
|U.S. Treasury and Federal agency
    debentures |  | $                 | 652,521   |  |            | $ | 32,621  |            |  | $ | 2,131  |  |  | $ | 683,011   | 
|Mortgage-backed securities                      |  |                   | 6,309,061 |  |            |   | 89,150  |            |  |   | 21,274 |  |  |   | 6,376,937 | 
|Asset-backed and corporate debt
    securities  |  |                   | 510,358   |  |            |   | 3,437   |            |  |   | 626    |  |  |   | 513,169   | 
|States and political subdivisions               |  |                   | 705,367   |  |            |   | 32,010  |            |  |   | 288    |  |  |   | 737,089   | 
|Other                                           |  |                   | 422,737   |  |            |   | 32,971  |            |  |   | 958    |  |  |   | 454,750   | 
|                                               
|Total securities                                |  | $                 | 8,600,044 |  |            | $ | 190,189 |            |  | $ | 25,277 |  |  | $ | 8,764,956 | 
|                                               





---



##### Table of Contents

58ANNUAL
REPORT2005



________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)


$139 million, respectively, at December 31, 2005,
compared to an amortized cost and fair value of
$208 million and $236 million, respectively, at
December 31, 2004.

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

|                                                          |  |                     |           |                   |  |       |        |            |  |       |           |            |  |   |        |  |  |   |           |  |  |   |        | 
|--------------------------------------------------------- |  | ------------------- | --------- | ----------------- |  | ----- | ------ | ---------- |  | ----- | --------- | ---------- |  | - | ------ |  |  | - | --------- |  |  | - | ------ | 
|                                                         
|                                                          |  | December 31, 2005  
|                                                          |  |                    
|                                                          |  | Less Than 12 Months |           |                   |  | Total
|                                                          |  |                     |           | 12 Months or More |  |      
|                                                          |  |                    
|                                                          |  | Fair                |           | Unrealized        |  | Fair  |        | Unrealized |  | Fair  |           | Unrealized
|(In Thousands)                                            |  | Value               |           | Losses            |  | Value |        | Losses     |  | Value |           | Losses    
|                                                         
|U.S. Treasury and Federal agency
    debentures           |  | $                   | 433,538   |                   |  | $     | 6,765  |            |  | $     | 138,140   |            |  | $ | 2,632  |  |  | $ | 571,678   |  |  | $ | 9,397  | 
|Mortgage-backed securities                                |  |                     | 2,949,622 |                   |  |       | 38,420 |            |  |       | 1,000,332 |            |  |   | 31,509 |  |  |   | 3,949,954 |  |  |   | 69,929 | 
|Asset-backed securities and
    corporate debt securities |  |                     | 60,988    |                   |  |       | 384    |            |  |       | 12,894    |            |  |   | 40     |  |  |   | 73,882    |  |  |   | 424    | 
|States and political subdivisions                         |  |                     | 62,233    |                   |  |       | 528    |            |  |       | 38,416    |            |  |   | 683    |  |  |   | 100,649   |  |  |   | 1,211  | 
|Other                                                     |  |                     | 27,555    |                   |  |       | 370    |            |  |       | 4,677     |            |  |   | 318    |  |  |   | 32,232    |  |  |   | 688    | 
|                                                         
|Total                                                     |  | $                   | 3,533,936 |                   |  | $     | 46,467 |            |  | $     | 1,194,459 |            |  | $ | 35,182 |  |  | $ | 4,728,395 |  |  | $ | 81,649 | 
|                                                         

|                                                          |  |                     |           |                   |  |       |        |            |  |       |         |            |  |   |       |  |  |   |           |  |  |   |        | 
|--------------------------------------------------------- |  | ------------------- | --------- | ----------------- |  | ----- | ------ | ---------- |  | ----- | ------- | ---------- |  | - | ----- |  |  | - | --------- |  |  | - | ------ | 
|                                                          |  | December 31, 2004  
|                                                          |  |                    
|                                                          |  | Less Than 12 Months |           | 12 Months or More |  | Total
|                                                          |  |                    
|                                                          |  | Fair                |           | Unrealized        |  | Fair  |        | Unrealized |  | Fair  |         | Unrealized
|(In Thousands)                                            |  | Value               |           | Losses            |  | Value |        | Losses     |  | Value |         | Losses    
|                                                         
|U.S. Treasury and Federal agency
    debentures           |  | $                   | 255,109   |                   |  | $     | 2,131  |            |  | $     |        |            |  | $ |      |  |  | $ | 255,109   |  |  | $ | 2,131  | 
|Mortgage-backed securities                                |  |                     | 1,623,589 |                   |  |       | 12,970 |            |  |       | 359,877 |            |  |   | 8,304 |  |  |   | 1,983,466 |  |  |   | 21,274 | 
|Asset-backed securities and
    corporate debt securities |  |                     | 16,976    |                   |  |       | 170    |            |  |       | 131,127 |            |  |   | 456   |  |  |   | 148,103   |  |  |   | 626    | 
|States and political subdivisions                         |  |                     | 64,929    |                   |  |       | 282    |            |  |       | 189     |            |  |   | 6     |  |  |   | 65,118    |  |  |   | 288    | 
|Other                                                     |  |                     | 29,130    |                   |  |       | 956    |            |  |       | 6       |            |  |   | 2     |  |  |   | 29,136    |  |  |   | 958    | 
|                                                         
|Total                                                     |  | $                   | 1,989,733 |                   |  | $     | 16,509 |            |  | $     | 491,199 |            |  | $ | 8,768 |  |  | $ | 2,480,932 |  |  | $ | 25,277 | 
|                                                         





|                                                          |  |           |         |        |  |         |           |          |  |       |           |          |  |   |         |   |  |   |           |   |  |  |      | 
|--------------------------------------------------------- |  | --------- | ------- | ------ |  | ------- | --------- | -------- |  | ----- | --------- | -------- |  | - | ------- | - |  | - | --------- | - |  |  | ---- | 
|                                                         
|                                                          |  | Weighted-
|                                                          |  | Within    |         | 1 to 5 |  | 5 to 10 |           | After 10 |  |       |           | Average 
|(Dollars in  Thousands)                                   |  | 1 Year    |         | Years  |  | Years   |           | Years    |  | Total |           | Yield(a)
|                                                         
|U.S. Treasury and Federal agency
    debentures           |  | $         | 97,044  |        |  | $       | 751,806   |          |  | $     | 309,786   |          |  | $ | 15,513  |   |  | $ | 1,174,149 |   |  |  | 4.40 | 
|Mortgage-backed securities                                |  |           | 24,244  |        |  |         | 3,478,789 |          |  |       | 1,475,729 |          |  |   | 458,687 |   |  |   | 5,437,449 |   |  |  | 4.99 | 
|Asset-backed securities and
    corporate debt securities |  |           | 66,822  |        |  |         | 64,206    |          |  |       | 36,901    |          |  |   | 77,829  |   |  |   | 245,758   |   |  |  | 5.15 | 
|States and political subdivisions                         |  |           | 62,093  |        |  |         | 348,706   |          |  |       | 173,437   |          |  |   | 23,263  |   |  |   | 607,499   |   |  |  | 5.07 | 
|Other                                                     |  |           | 23,967  |        |  |         | 183,633   |          |  |       |          |          |  |   | 208,354 |   |  |   | 415,954   |   |  |  | 7.43 | 
|                                                         
|Amortized cost                                            |  | $         | 274,170 |        |  | $       | 4,827,140 |          |  | $     | 1,995,853 |          |  | $ | 783,646 |   |  | $ | 7,880,809 |   |  |  |      | 
|                                                         
|Fair value                                                |  | $         | 273,941 |        |  | $       | 4,784,860 |          |  | $     | 2,019,384 |          |  | $ | 796,443 |   |  | $ | 7,874,628 |   |  |  |      | 
|                                                         
|Weighted-
    average
    yield(a)                        |  |           | 4.16    | %      |  |         | 4.73      | %        |  |       | 5.69      | %        |  |   | 5.10    | % |  |   | 4.99      | % |  |  |      | 
|                                                         

|    |                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------
|(a) | Yield on debt securities only; equity securities and retained
    interests in securitizations are excluded.











---



##### Table of Contents

ANNUAL REPORT2005  59



________________________________________________________________________________






9.
    Principal InvestmentsThe 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, health care, and
building products industries with the largest industry
constituting approximately 17% of the total principal investment
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:

|                                 |                                           |                       |   |          |   |  |   |          |  
|-------------------------------- | ----------------------------------------- | --------------------- | - | -------- | - |  | - | -------- | -
|                                
|                                 |                                           | For the Calendar Year
|                                
|(In Thousands)                   |                                           | 2005                  |   | 2004    
|                                
|Direct Investments:              |                                           |                       |   |          |   |  |   |         
|                                 | Carrying value at beginning of
    period |                       | $ | 323,028  |   |  | $ | 300,077  |  
|                                 | Acquisitions(a)                           |                       |   |         |   |  |   | 1,847    |  
|                                 | Investments  new fundings                |                       |   | 99,199   |   |  |   | 128,125  |  
|                                 | Returns of capital and write-offs         |                       |   | (97,142  | ) |  |   | (101,283 | )
|                                 | Fair value adjustments                    |                       |   | (8,111   | ) |  |   | (5,738   | )
|                                
|                                 | Carrying value at end of period           |                       | $ | 316,974  |   |  | $ | 323,028  |  
|                                
|Indirect Investments:            |                                           |                       |   |          |   |  |   |         
|                                 | Carrying value at beginning of
    period |                       | $ | 342,517  |   |  | $ | 294,939  |  
|                                 | Acquisitions(a)                           |                       |   |         |   |  |   | 27,436   |  
|                                 | Investments  new fundings                |                       |   | 78,912   |   |  |   | 89,110   |  
|                                 | Returns of capital and write-offs         |                       |   | (74,596  | ) |  |   | (65,744  | )
|                                 | Fair value adjustments                    |                       |   | (2,969   | ) |  |   | (3,224   | )
|                                
|                                 | Carrying value at end of period           |                       | $ | 343,864  |   |  | $ | 342,517  |  
|                                
|Total Principal
    Investments: |                                           |                       |   |          |   |  |   |         
|                                 | Carrying value at beginning of
    period |                       | $ | 665,545  |   |  | $ | 595,016  |  
|                                 | Acquisitions(a)                           |                       |   |         |   |  |   | 29,283   |  
|                                 | Investments  new fundings                |                       |   | 178,111  |   |  |   | 217,235  |  
|                                 | Returns of capital and write-offs         |                       |   | (171,738 | ) |  |   | (167,027 | )
|                                 | Fair value adjustments                    |                       |   | (11,080  | ) |  |   | (8,962   | )
|                                
|                                 | Carrying value at end of
    period       |                       | $ | 660,838  |   |  | $ | 665,545  |  
|                                

|                                               |  |                       |        |      |  |      |        |  |  |   |        | 
|---------------------------------------------- |  | --------------------- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | 
|                                              
|                                               |  | For the Calendar Year
|                                              
|(In Thousands)                                 |  | 2005                  |        | 2004 |  | 2003
|                                              
|Principal investment
    revenue(b)            |  | $                     | 28,273 |      |  | $    | 47,934 |  |  | $ | 29,384 | 
|                                              
|Net principal investment gains
    (losses)(c) |  | $                     | 57,156 |      |  | $    | 68,964 |  |  | $ | 7,025  | 
|                                              



|    |                                                         
|--- | --------------------------------------------------------
|(a) | Represents principal investments acquired with Provident



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



|    |                                                                                              
|--- | ---------------------------------------------------------------------------------------------
|(c) | Consists primarily of fair value adjustments and realized
    gains and losses on investments





|    |                                     
|--- | ------------------------------------
|10. | Goodwill and Other Intangible Assets



|                                                   |  |            |           |                |  |            |        |              |  |   |   |  |  |   |           | 
|-------------------------------------------------- |  | ---------- | --------- | -------------- |  | ---------- | ------ | ------------ |  | - | - |  |  | - | --------- | 
|                                                  
|                                                   |  | January 1, |           | Goodwill       |  | Impairment |        | December 31,
|(In Thousands)                                     |  | 2005       |           | Adjustments(a) |  | Losses     |        | 2005        
|                                                  
|Consumer and Small Business
    Financial Services |  | $          | 1,027,598 |                |  | $          | (2,258 | )            |  | $ |  |  |  | $ | 1,025,340 | 
|Wholesale Banking                                  |  |            | 1,633,441 |                |  |            | 13,477 |              |  |   |  |  |  |   | 1,646,918 | 
|National City Mortgage                             |  |            | 62,432    |                |  |            | (38    | )            |  |   |  |  |  |   | 62,394    | 
|National Consumer Finance                          |  |            | 348,019   |                |  |            | (263   | )            |  |   |  |  |  |   | 347,756   | 
|Asset Management                                   |  |            | 230,923   |                |  |            | (222   | )            |  |   |  |  |  |   | 230,701   | 
|Parent and Other                                   |  |            |          |                |  |            |       |              |  |   |  |  |  |   |          | 
|                                                  
|Total                                              |  | $          | 3,302,413 |                |  | $          | 10,696 |              |  | $ |  |  |  | $ | 3,313,109 | 
|                                                  

|                                                   |  |            |           |                |  |            |           |              |  |   |   |  |  |   |           | 
|-------------------------------------------------- |  | ---------- | --------- | -------------- |  | ---------- | --------- | ------------ |  | - | - |  |  | - | --------- | 
|                                                  
|                                                   |  | January 1, |           | Goodwill       |  | Impairment |           | December 31,
|(In Thousands)                                     |  | 2004       |           | Adjustments(a) |  | Losses     |           | 2004        
|                                                  
|Consumer and Small Business
    Financial Services |  | $          | 513,281   |                |  | $          | 514,317   |              |  | $ |  |  |  | $ | 1,027,598 | 
|Wholesale Banking                                  |  |            | 86,729    |                |  |            | 1,546,712 |              |  |   |  |  |  |   | 1,633,441 | 
|National City Mortgage                             |  |            | 55,785    |                |  |            | 6,647     |              |  |   |  |  |  |   | 62,432    | 
|National Consumer Finance                          |  |            | 206,032   |                |  |            | 141,987   |              |  |   |  |  |  |   | 348,019   | 
|Asset Management                                   |  |            | 126,207   |                |  |            | 104,716   |              |  |   |  |  |  |   | 230,923   | 
|National Processing                                |  |            | 115,306   |                |  |            | (115,306  | )            |  |   |  |  |  |   |          | 
|Parent and Other                                   |  |            |          |                |  |            |          |              |  |   |  |  |  |   |          | 
|                                                  
|Total                                              |  | $          | 1,103,340 |                |  | $          | 2,199,073 |              |  | $ |  |  |  | $ | 3,302,413 | 
|                                                  



|    |                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------
|(a) | Represents goodwill associated with acquired businesses, sold
    businesses, and purchase accounting adjustments.







---



##### Table of Contents

60ANNUAL
REPORT2005



________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)


summary of these intangible assets at December 31 follows:

|                                   |                                |      |   |         |  |  |   |         | 
|---------------------------------- | ------------------------------ | ---- | - | ------- |  |  | - | ------- | 
|                                  
|(In Thousands)                     |                                | 2005 |   | 2004   
|                                  
|Core deposit
    intangibles       |                                |      |   |         |  |  |   |        
|                                   | Gross carrying amount          |      | $ | 253,942 |  |  | $ | 279,413 | 
|                                   | Less: accumulated amortization |      |   | 119,607 |  |  |   | 109,167 | 
|                                  
|                                   | Net carrying amount            |      |   | 134,335 |  |  |   | 170,246 | 
|                                  
|Credit card
    intangibles        |                                |      |   |         |  |  |   |        
|                                   | Gross carrying amount          |      |   | 7,699   |  |  |   | 17,323  | 
|                                   | Less: accumulated amortization |      |   | 1,626   |  |  |   | 15,392  | 
|                                  
|                                   | Net carrying amount            |      |   | 6,073   |  |  |   | 1,931   | 
|                                  
|Operating lease                    |                                |      |   |         |  |  |   |        
|                                   | Gross carrying amount          |      |   | 47,205  |  |  |   | 47,205  | 
|                                   | Less: accumulated amortization |      |   | 43,901  |  |  |   | 20,298  | 
|                                  
|                                   | Net carrying amount            |      |   | 3,304   |  |  |   | 26,907  | 
|                                  
|Other intangibles                  |                                |      |   |         |  |  |   |        
|                                   | Gross carrying amount          |      |   | 47,690  |  |  |   | 21,644  | 
|                                   | Less: accumulated amortization |      |   | 23,049  |  |  |   | 7,267   | 
|                                  
|                                   | Net carrying amount            |      |   | 24,641  |  |  |   | 14,377  | 
|                                  
|Total finite-lived
    intangibles |                                |      |   |         |  |  |   |        
|                                   | Gross carrying amount          |      |   | 356,536 |  |  |   | 365,585 | 
|                                   | Less: accumulated amortization |      |   | 188,183 |  |  |   | 152,124 | 
|                                  
|                                   | Net carrying amount            |      | $ | 168,353 |  |  | $ | 213,461 | 
|                                  





|    |                 
|--- | ----------------
|11. | Servicing Assets

Mortgage Servicing Rights
(MSRs):


|                                                                        |                              |                                      |                                 |               |           |        |         |            |         |               |           |         |           |        |           |          |           |          |        |   |         |   |           |          |           |          |  
|----------------------------------------------------------------------- | ---------------------------- | ------------------------------------ | ------------------------------- | ------------- | --------- | ------ | ------- | ---------- | ------- | ------------- | --------- | ------- | --------- | ------ | --------- | -------- | --------- | -------- | ------ | - | ------- | - | --------- | -------- | --------- | -------- | -
|                                                                       
|                                                                        |                              | For the Calendar Year               
|                                                                        |                              |                                     
|                                                                        |                              | 2005                                 |                                 | 2004         
|                                                                       
|                                                                        |                              | Conforming                           |                                 | Nonconforming |           |        |         | Conforming |         | Nonconforming |           |        
|(In Thousands)                                                          |                              | Mortgages                            |                                 | Mortgages     |           | Total  |         | Mortgages  |         | Mortgages     |           | Total  
|                                                                       
|Mortgage servicing
    rights                                           |                              |                                      |                                 |               |           |        |         |            |         |               |           |         |           |        |           |          |           |          |        |   |         |   |           |         
|                                                                        |                              | Balance at beginning of period       |                                 | $             | 1,596,908 |        |         | $          | 15,188  |               |           | $       | 1,612,096 |        |           | $        | 1,300,612 |          |        | $ |        |   |           | $        | 1,300,612 |         
|                                                                        |                              | Acquisition(a)                       |                                 |               |          |        |         |            |        |               |           |         |          |        |           |          |          |          |        |   | 45,000  |   |           |          | 45,000    |         
|                                                                        |                              | Additions                            |                                 |               | 529,430   |        |         |            | 121,783 |               |           |         | 651,213   |        |           |          | 608,316   |          |        |   | 15,119  |   |           |          | 623,435   |         
|                                                                        |                              | Amortization                         |                                 |               | (492,130  | )      |         |            | (13,672 | )             |           |         | (505,802  | )      |           |          | (493,372  | )        |        |   | (14,416 | ) |           |          | (507,788  | )       
|                                                                        |                              | SFAS 133 hedge basis
    adjustments |                                 |               | 393,595   |        |         |            |        |               |           |         | 393,595   |        |           |          | 189,171   |          |        |   |        |   |           |          | 189,171   |         
|                                                                        |                              | Sales                                |                                 |               | (1,851    | )      |         |            |        |               |           |         | (1,851    | )      |           |          | (7,819    | )        |        |   | (30,515 | ) |           |          | (38,334   | )       
|                                                                       
|Carrying value before valuation
    allowance at end of period          |                              |                                      | 2,025,952                       |               |           |        | 123,299 |            |         |               | 2,149,251 |         |           |        | 1,596,908 |          |           |          | 15,188 |   |         |   | 1,612,096 |         
|                                                                       
|Valuation allowance                                                     |                              |                                      |                                 |               |           |        |         |            |         |               |           |         |           |        |           |          |           |          |        |   |         |   |           |         
|                                                                        |                              | Balance at beginning of period       |                                 |               | (107,230  | )      |         |            |        |               |           |         | (107,230  | )      |           |          | (2,195    | )        |        |   |        |   |           |          | (2,195    | )       
|                                                                        |                              |                                      | Impairment recoveries (charges) |               |           | 89,054 |         |            |         | (15,360       | )         |         |           | 73,694 |           |          |           | (105,035 | )      |   |         |  |           |          |           | (105,035 | )
|                                                                       
|                                                                        | Balance at end of
    period |                                      |                                 | (18,176       | )         |        |         | (15,360    | )       |               |           | (33,536 | )         |        |           | (107,230 | )         |          |        |  |         |   |           | (107,230 | )        
|                                                                       
|Net carrying value of MSRs at
    end of period                         |                              | $                                    | 2,007,776                       |               |           | $      | 107,939 |            |         | $             | 2,115,715 |         |           | $      | 1,489,678 |          |           | $        | 15,188 |   |         | $ | 1,504,866 |         
|                                                                       
|Fair value of MSRs at end of
    period                                 |                              | $                                    | 2,034,168                       |               |           | $      | 107,939 |            |         | $             | 2,142,107 |         |           | $      | 1,501,947 |          |           | $        | 15,257 |   |         | $ | 1,517,204 |         
|                                                                       
|Unpaid principal balance of
    loans serviced for others (in millions) |                              | $                                    | 159,580                         |               |           | $      | 16,909  |            |         | $             | 176,489   |         |           | $      | 152,367   |          |           | $        | 1,913  |   |         | $ | 154,280   |         
|                                                                       



|    |                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Relates to MSRs associated with nonconforming residential
    real estate loans that were acquired as part of the acquisition
    of Provident in 2004. These MSRs were sold later in 2004 as part
    of the sale of Provident PCFS.







---



##### Table of Contents

ANNUAL REPORT2005  61



________________________________________________________________________________




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,
2005, the fair value of MSRs exceeded the carrying value
reported in the consolidated balance sheet by $26 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.

The key economic assumptions used to estimate the value of the
MSRs at December 31, 2005 and 2004 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, 2005 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.

|                                                    |                                                   |             |         |               |  |            |       |               |  |   |         |   |  |   |       |   | 
|--------------------------------------------------- | ------------------------------------------------- | ----------- | ------- | ------------- |  | ---------- | ----- | ------------- |  | - | ------- | - |  | - | ----- | - | 
|                                                   
|                                                    |                                                   | December 31
|                                                    |                                                   |            
|                                                    |                                                   | 2005        |         | 2004         
|                                                   
|                                                    |                                                   | Conforming  |         | Nonconforming |  | Conforming |       | Nonconforming
|(Dollars in Millions)                               |                                                   | Mortgages   |         | Mortgages     |  | Mortgages  |       | Mortgages    
|                                                   
|Fair value                                          |                                                   | $           | 2,034.2 |               |  | $          | 107.9 |               |  | $ | 1,501.9 |   |  | $ | 15.3  |  
|Weighted-average life (in years)                    |                                                   |             | 5.0     |               |  |            | 2.1   |               |  |   | 3.9     |   |  |   | 2.5   |  
|Weighted-average constant
    prepayment rate (CPR) |                                                   |             | 17.50   | %             |  |            | 39.21 | %             |  |   | 23.07   | % |  |   | 33.59 | %
|Weighted-average discount rate                      |                                                   |             | 9.74    |               |  |            | 13.56 |               |  |   | 9.52    |   |  |   | 12.75 |  
|Prepayment rate:                                    |                                                   |             |         |               |  |            |       |               |  |   |         |   |  |   |       |  
|                                                    | Decline in fair value from 10%
    adverse change |             | $       | 102.5         |  |            | $     | 19.4          |  |   |         |   |  |   |       |   | 
|                                                    | Decline in fair value from 20%
    adverse change |             |         | 195.0         |  |            |       | 22.4          |  |   |         |   |  |   |       |   | 
|Discount rate:                                      |                                                   |             |         |               |  |            |       |               |  |   |         |   |  |   |       |  
|                                                    | Decline in fair value from 10%
    adverse change |             |         | 67.3          |  |            |       | 2.7           |  |   |         |   |  |   |       |   | 
|                                                    | Decline in fair value from 20%
    adverse change |             |         | 130.3         |  |            |       | 4.7           |  |   |         |   |  |   |       |   | 
|                                                   



|                                 |  |            |       |               |  |            |       |               |  |  |       |   |  |  |       |  
|-------------------------------- |  | ---------- | ----- | ------------- |  | ---------- | ----- | ------------- |  |  | ----- | - |  |  | ----- | -
|                                 |  |           
|                                 |  | 2005       |       | 2004         
|                                
|                                 |  | Conforming |       | Nonconforming |  | Conforming |       | Nonconforming
|                                 |  | Mortgages  |       | Mortgages     |  | Mortgages  |       | Mortgages    
|                                
|Weighted-average life (in years) |  |            | 4.5   |               |  |            | 2.5   |               |  |  | 4.3   |   |  |  | 2.6   |  
|Weighted-average CPR             |  |            | 21.55 | %             |  |            | 34.15 | %             |  |  | 22.29 | % |  |  | 33.30 | %
|Weighted-average discount rate   |  |            | 9.75  |               |  |            | 13.24 |               |  |  | 9.70  |   |  |  | 12.75 |  
|                                





---



##### Table of Contents

62ANNUAL
REPORT2005



________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)


Other Servicing
Rights: The Corporation also recognizes
servicing assets on commercial real estate loans sold servicing
retained through its Red Mortgage Capital and Capstone Realty
business units. These businesses and their commercial real
estate servicing rights were acquired with Provident in July
2004. 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:

|                                            |                                                                         |                       |   |         |   |  |   |         |  
|------------------------------------------- | ----------------------------------------------------------------------- | --------------------- | - | ------- | - |  | - | ------- | -
|                                           
|                                            |                                                                         | For the Calendar Year
|                                            |                                                                         |                      
|(In Thousands)                              |                                                                         | 2005                  |   | 2004   
|                                           
|Commercial real estate servicing
    assets |                                                                         |                       |   |         |   |  |   |        
|                                            | Balance at beginning of period                                          |                       | $ | 125,778 |   |  | $ |        |  
|                                            | Acquisitions                                                            |                       |   |        |   |  |   | 122,694 |  
|                                            | Additions                                                               |                       |   | 31,076  |   |  |   | 12,111  |  
|                                            | Amortization                                                            |                       |   | (17,849 | ) |  |   | (9,302  | )
|                                            | Sales                                                                   |                       |   | (597    | ) |  |   | (272    | )
|                                            | Other                                                                   |                       |   |        |   |  |   | 547     |  
|                                           
|                                            | Carrying value before valuation
    allowance at end of period          |                       |   | 138,408 |   |  |   | 125,778 |  
|                                           
|                                            | Valuation allowance                                                     |                       |   |         |   |  |   |         |  
|                                            | Balance at beginning of period                                          |                       |   | (1,032  | ) |  |   |        |  
|                                            | Acquisitions                                                            |                       |   |        |   |  |   | (1,030  | )
|                                            | Impairment charges                                                      |                       |   | (43     | ) |  |   | (2      | )
|                                           
|                                            | Balance at end of
    period                                            |                       |   | (1,075  | ) |  |   | (1,032  | )
|                                           
|                                            | Net carrying value of servicing
    assets at end of period             |                       | $ | 137,333 |   |  | $ | 124,746 |  
|                                           
|                                            | Unpaid principal balance of
    loans serviced for others (in millions) |                       | $ | 14,638  |   |  | $ | 11,356  |  
|                                           



|    |                         
|--- | ------------------------
|12. | Properties and Equipment



|                                                   |  |             |           |      |  |   |           | 
|-------------------------------------------------- |  | ----------- | --------- | ---- |  | - | --------- | 
|                                                  
|                                                   |  | December 31
|                                                  
|(In Thousands)                                     |  | 2005        |           | 2004
|                                                  
|Land                                               |  | $           | 200,609   |      |  | $ | 198,420   | 
|Buildings and leasehold improvements               |  |             | 1,194,934 |      |  |   | 1,112,513 | 
|Equipment                                          |  |             | 1,214,677 |      |  |   | 1,332,787 | 
|                                                  
|                                                   |  |             | 2,610,220 |      |  |   | 2,643,720 | 
|Less accumulated depreciation and
    amortization |  |             | 1,281,317 |      |  |   | 1,375,032 | 
|                                                  
|Net properties and
    equipment                   |  | $           | 1,328,903 |      |  | $ | 1,268,688 | 
|                                                  







|    |                                                              
|--- | -------------------------------------------------------------
|13. | Federal Funds Borrowed and Security
    Repurchase Agreements



|                                                                         |                                |      |   |           |   |      |   |           |   |  |   |           |  
|------------------------------------------------------------------------ | ------------------------------ | ---- | - | --------- | - | ---- | - | --------- | - |  | - | --------- | -
|                                                                        
|(Dollars in Thousands)                                                   |                                | 2005 |   | 2004      |   | 2003
|                                                                        
|Balance at December 31:                                                  |                                |      |   |           |   |      |   |           |   |  |   |          
|                                                                         | Federal funds borrowed         |      | $ | 3,101,648 |   |      | $ | 2,669,386 |   |  | $ | 3,915,870 |  
|                                                                         | Security repurchase agreements |      |   | 3,397,606 |   |      |   | 3,223,042 |   |  |   | 2,778,046 |  
|Maximum outstanding at any month
    end:                                |                                |      |   |           |   |      |   |           |   |  |   |          
|                                                                         | Federal funds borrowed         |      |   | 6,887,983 |   |      |   | 6,314,532 |   |  |   | 9,801,158 |  
|                                                                         | Security Repurchase Agreements |      |   | 3,697,789 |   |      |   | 3,332,276 |   |  |   | 3,200,560 |  
|Daily average amount outstanding:                                        |                                |      |   |           |   |      |   |           |   |  |   |          
|                                                                         | Federal funds borrowed         |      |   | 4,021,248 |   |      |   | 4,925,738 |   |  |   | 7,895,213 |  
|                                                                         | Security Repurchase Agreements |      |   | 3,316,941 |   |      |   | 2,917,759 |   |  |   | 3,012,672 |  
|Weighted daily average interest
    rate:                                |                                |      |   |           |   |      |   |           |   |  |   |          
|                                                                         | Federal funds borrowed         |      |   | 3.34      | % |      |   | 1.45      | % |  |   | 1.44      | %
|                                                                         | Security Repurchase Agreements |      |   | 2.28      |   |      |   | .78       |   |  |   | .63       |  
|Weighted daily interest rate for
    amounts outstanding at December 31: |                                |      |   |           |   |      |   |           |   |  |   |          
|                                                                         | Federal funds borrowed         |      |   | 4.06      | % |      |   | 2.01      | % |  |   | .85       | %
|                                                                         | Security Repurchase Agreements |      |   | 3.05      |   |      |   | 1.40      |   |  |   | .50       |  
|                                                                        



14. Borrowed Funds




|                                      |  |             |           |      |  |   |           |  
|------------------------------------- |  | ----------- | --------- | ---- |  | - | --------- | -
|                                     
|                                      |  | December 31
|                                     
|(In Thousands)                        |  | 2005        |           | 2004
|                                     
|U.S. Treasury notes                   |  | $           | 1,753,807 |      |  | $ | 1,024,477 |  
|Commercial paper                      |  |             | 1,051,421 |      |  |   | 415,490   |  
|Federal Home Loan Bank advances       |  |             | 150,000   |      |  |   |          |  
|Senior bank notes                     |  |             | 137,000   |      |  |   | 195,000   |  
|Other                                 |  |             | 425,309   |      |  |   | 400,933   |  
|                                     
|Total borrowed funds                  |  | $           | 3,517,537 |      |  | $ | 2,035,900 |  
|                                     
|Weighted-average contractual
    rate |  |             | 4.06      | %    |  |   | 1.93      | %
|                                     







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##### Table of Contents

ANNUAL REPORT2005  63



________________________________________________________________________________




months or less. The FHLB Advances represent short-term
borrowings with maturities of two months or less at
December 31, 2005.

The senior bank notes are issued by National Citys bank
subsidiaries and have maturities of six months or less.

The other category at December 31, 2005 and 2004 included
liabilities totaling $311 million and $233 million,
respectively, related to mortgage loans available for repurchase
under GNMA optional repurchase programs. See further discussion
in Note 1.

15. Long-Term Debt

The composition of long-term debt follows. This note excludes
the discussion and amounts associated with the junior
subordinated notes owed to the unconsolidated subsidiary trusts.
See Note 16 for further discussion on these obligations.

|                                                     |  |             |            |      |  |   |            | 
|---------------------------------------------------- |  | ----------- | ---------- | ---- |  | - | ---------- | 
|                                                    
|                                                     |  | December 31
|                                                    
|(In Thousands)                                       |  | 2005        |            | 2004
|                                                    
|7.20% fixed-rate subordinated note
    redeemed 2005 |  | $           |           |      |  | $ | 251,559    | 
|3.20% fixed-rate senior note due
    2008            |  |             | 288,374    |      |  |   | 292,800    | 
|3.125% fixed-rate senior note due
    2009           |  |             | 189,023    |      |  |   | 192,335    | 
|5.75% fixed-rate subordinated note
    due 2009      |  |             | 306,487    |      |  |   | 318,533    | 
|4.661% variable-rate senior note
    due 2010        |  |             | 299,880    |      |  |   |           | 
|4.90% fixed-rate senior note due
    2015            |  |             | 390,848    |      |  |   |           | 
|6.875% fixed-rate subordinated note
    due 2019     |  |             | 782,748    |      |  |   | 783,528    | 
|8.375% fixed-rate senior note due
    2032           |  |             | 73,059     |      |  |   | 74,312     | 
|Other                                                |  |             |           |      |  |   | 880        | 
|                                                    
|Total holding company                                |  |             | 2,330,419  |      |  |   | 1,913,947  | 
|Senior bank notes                                    |  |             | 22,087,766 |      |  |   | 18,549,507 | 
|7.25% fixed-rate subordinated note
    due 2010      |  |             | 244,601    |      |  |   | 256,219    | 
|6.30% fixed-rate subordinated note
    due 2011      |  |             | 211,699    |      |  |   | 220,220    | 
|7.25% fixed-rate subordinated note
    due 2011      |  |             | 199,501    |      |  |   | 198,658    | 
|6.25% fixed-rate subordinated note
    due 2011      |  |             | 315,074    |      |  |   | 327,249    | 
|6.20% fixed-rate subordinated note
    due 2011      |  |             | 514,262    |      |  |   | 530,820    | 
|4.63% fixed-rate subordinated note
    due 2013      |  |             | 298,401    |      |  |   | 299,318    | 
|4.25% fixed-rate subordinated note
    due 2018      |  |             | 227,077    |      |  |   | 224,424    | 
|Federal Home Loan Bank advances                      |  |             | 3,920,391  |      |  |   | 4,904,387  | 
|Secured debt financings                              |  |             | 130,970    |      |  |   | 666,614    | 
|Other                                                |  |             | 15,932     |      |  |   |           | 
|                                                    
|Total bank
    subsidiaries                          |  |             | 28,165,674 |      |  |   | 26,177,416 | 
|                                                    
|Total long-term debt                                 |  | $           | 30,496,093 |      |  | $ | 28,091,363 | 
|                                                    







|                        |  |             |            |           |  |      |      |   |  |  |      |  
|----------------------- |  | ----------- | ---------- | --------- |  | ---- | ---- | - |  |  | ---- | -
|                       
|                        |  | Weighted-   |            | Weighted-
|                        |  | Average     |            | Average  
|                        |  | Contractual |            | Effective
|(Dollars in Thousands)  |  | Par Value   |            | Rate      |  | Rate
|                       
|Senior bank notes       |  | $           | 22,146,455 |           |  |      | 4.25 | % |  |  | 4.24 | %
|Subordinated notes      |  |             | 2,975,000  |           |  |      | 6.15 |   |  |  | 4.82 |  
|Senior notes            |  |             | 1,275,000  |           |  |      | 4.37 |   |  |  | 4.57 |  
|FHLB advances           |  |             | 3,880,752  |           |  |      | 4.50 |   |  |  | 3.96 |  
|Secured debt financings |  |             | 130,776    |           |  |      | 7.10 |   |  |  | 6.04 |  
|Other                   |  |             | 15,932     |           |  |      | 5.93 |   |  |  | 5.93 |  
|                       
|Total long-term debt    |  | $           | 30,423,915 |           |  |      | 4.48 | % |  |  | 4.27 | %
|                       











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##### Table of Contents

64ANNUAL
REPORT2005



________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)


to maturity, and were collateralized by $237 million in
automobile leases and $90 million in cash at
December 31, 2005. The equipment lease secured debt
financings outstanding at December 31, 2005 pay interest
quarterly, may not be redeemed prior to maturity, and were
collateralized by $1 million in equipment leases. Secured
debt financings have contractual maturities ranging from 2006 to
2008. During 2005, the Corporation called obligations secured by
automobile leases totaling $368 million.

At December 31, 2005, long-term debt maturities were as
follows: $11.6 billion in 2006, $6.6 billion in 2007,
$3.5 billion in 2008, $3.0 billion in 2009,
$2.4 billion in 2010, and $3.3 billion thereafter.
These amounts are based upon the par values of long-term debt.



16.
    Junior Subordinated Debentures Owed to
    Unconsolidated Subsidiary Trusts and Corporation-Obligated
    Mandatorily Redeemable Capital Securities of Subsidiary Trusts
    Holding Solely Debentures of the CorporationAs of December 31, 2005, National City sponsored six
trusts, of which 100% of the common equity is owned by the
Corporation, 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, 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 7.97% at
December 31, 2005.

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:

|                                          |  |                 |                    | 
|----------------------------------------- |  | --------------- | ------------------ | 
|                                         
|                                          |  | First Call Date
|                                         
|Provident Capital Trust IV                |  |                 | March 30, 2006     | 
|Allegiant Capital Trust II                |  |                 | September 30, 2006 | 
|Provident Capital Trust I                 |  |                 | December 1, 2006   | 
|First of America Capital
    Trust I      |  |                 | January 31, 2007   | 
|Fort Wayne Capital Trust I                |  |                 | April 15, 2007     | 
|Banc Services Corp. Statutory
    Trust I |  |                 | June 26, 2007      | 
|                                         







|                                                                                                                     |  |             |         |      |  |   |         | 
|-------------------------------------------------------------------------------------------------------------------- |  | ----------- | ------- | ---- |  | - | ------- | 
|                                                                                                                    
|                                                                                                                     |  | December 31
|                                                                                                                     |  |            
|(In Thousands)                                                                                                       |  | 2005        |         | 2004
|                                                                                                                    
|8.12% junior subordinated
    debentures owed to First of America Capital Trust I due
    January 31, 2027           |  | $           | 154,640 |      |  | $ | 154,640 | 
|9.85% junior subordinated
    debentures owed to Fort Wayne Capital Trust I due
    April 15, 2027                   |  |             | 30,928  |      |  |   | 30,928  | 
|9.00% junior subordinated
    debentures owed to Allegiant Capital Trust II due
    September 30, 2031               |  |             | 42,725  |      |  |   | 44,626  | 
|8.60% junior subordinated
    debentures owed to Provident Capital Trust I due
    December 1, 2026                  |  |             | 109,373 |      |  |   | 115,988 | 
|10.25% junior subordinated
    debentures owed to Provident Capital Trust III redeemed
    December 30, 2005         |  |             |        |      |  |   | 120,477 | 
|9.45% junior subordinated
    debentures owed to Provident Capital Trust IV due
    March 30, 2031                   |  |             | 128,339 |      |  |   | 130,251 | 
|Variable-rate junior subordinated
    debentures owed to Banc Services Corp. Statutory Trust I
    due June 26, 2032 |  |             | 7,518   |      |  |   | 7,719   | 
|                                                                                                                    
|Total junior subordinated
    debentures owed to unconsolidated subsidiary trusts                                    |  | $           | 473,523 |      |  | $ | 604,629 | 
|                                                                                                                    



|    |                                           
|--- | ------------------------------------------
|17. | Regulatory Restrictions and Capital Ratios





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##### Table of Contents

ANNUAL REPORT2005  65



________________________________________________________________________________




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

Regulatory and other capital measures at December 31 follow:

|                                           |  |        |            |       |  |        |       |       |  |   |            |  |  |  |       |  
|------------------------------------------ |  | ------ | ---------- | ----- |  | ------ | ----- | ----- |  | - | ---------- |  |  |  | ----- | -
|                                          
|                                           |  | 2005   |            | 2004 
|                                           |  |       
|(Dollars in Thousands)                     |  | Amount |            | Ratio |  | Amount |       | Ratio
|                                          
|Total equity/assets                        |  | $      | 12,612,871 |       |  |        | 8.86  | %     |  | $ | 12,803,529 |  |  |  | 9.18  | %
|Total common equity/assets                 |  |        | 12,612,871 |       |  |        | 8.86  |       |  |   | 12,803,529 |  |  |  | 9.18  |  
|Tangible common equity/tangible
    assets |  |        | 9,131,409  |       |  |        | 6.57  |       |  |   | 9,287,655  |  |  |  | 6.83  |  
|Tier 1 capital                             |  |        | 9,517,347  |       |  |        | 7.43  |       |  |   | 9,815,314  |  |  |  | 8.25  |  
|Total risk-based capital                   |  |        | 13,499,489 |       |  |        | 10.53 |       |  |   | 14,023,018 |  |  |  | 11.79 |  
|Leverage                                   |  |        | 9,517,347  |       |  |        | 6.83  |       |  |   | 9,815,314  |  |  |  | 7.31  |  
|                                          























18. Stockholders Equity


Stock Repurchases:




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##### Table of Contents

66ANNUAL
REPORT2005



________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)


2005, 2004, and 2003, the Corporation repurchased
43.5 million, 40.1 million, and 11.5 million
shares of its common stock, respectively. As of
December 31, 2005, 33.6 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 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 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.

Preferred Securities of
Subsidiaries: As part of the acquisition of
Provident, PFGI Capital Corporation (PFGI Capital) became a
consolidated subsidiary of the Corporation. The purpose 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.
PFGI Capital issued 6.6 million equity units
(PRIDES) to outside investors. Each PRIDES was comprised of
two components  a three-year forward purchase
contract (which expired August 17, 2005) and PFGI Capital
Series A Preferred Stock. During 2005, all PRIDES holders
exercised their Forward Purchase Contracts which entitled them
to purchase 6,444,223 newly issued shares of National City
common stock for $165 million. Additionally, in 2005, PFGI
Capital repurchased 2.6 million shares of the Series A
Preferred Stock in privately negotiated transactions with
individual investors. The remaining ownership by outside
investors is accounted for as a minority interest in the
consolidated financial statements.

Other Comprehensive
Income: A summary of activity in accumulated
other comprehensive income follows.

|                                                                                                                                                                            |  |                       |          |      |  |      |         |   |  |   |          |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------- | -------- | ---- |  | ---- | ------- | - |  | - | -------- | -
|                                                                                                                                                                           
|                                                                                                                                                                            |  | For the Calendar Year
|                                                                                                                                                                            |  |                      
|(In Thousands)                                                                                                                                                              |  | 2005                  |          | 2004 |  | 2003
|                                                                                                                                                                           
|Accumulated unrealized gains on
    securities available for sale at January 1, net of tax                                                                                  |  | $                     | 107,193  |      |  | $    | 132,318 |   |  | $ | 223,073  |  
|Net unrealized losses for the
    period, net of tax benefit of $49,316 in 2005, $6,888 in 2004
    and $29,523 in 2003                                                     |  |                       | (91,586  | )    |  |      | (12,792 | ) |  |   | (54,828  | )
|Reclassification adjustment for
    gains included in net income, net of tax expense of $7,463 in
    2005, $6,641 in 2004, and $11,225 in 2003                             |  |                       | (19,625  | )    |  |      | (12,333 | ) |  |   | (35,927  | )
|                                                                                                                                                                           
|Effect on other comprehensive
    income for the period                                                                                                                     |  |                       | (111,211 | )    |  |      | (25,125 | ) |  |   | (90,755  | )
|                                                                                                                                                                           
|Accumulated unrealized
    (losses) gains on securities available for sale at
    December 31, net of tax                                                                   |  | $                     | (4,018   | )    |  | $    | 107,193 |   |  | $ | 132,318  |  
|                                                                                                                                                                           
|Accumulated unrealized losses on
    derivatives used in cash flow hedging relationships at
    January 1, net of tax                                                       |  | $                     | (6,605   | )    |  | $    | (67,631 | ) |  | $ | (155,893 | )
|Net unrealized gains
    (losses) for the period, net of tax expense
    (benefit) of $16,849 in 2005, $(13,295) in 2004, and
    $(18,633) in 2003                         |  |                       | 31,291   |      |  |      | (24,691 | ) |  |   | (34,605  | )
|Reclassification adjustment for
    (gains) losses included in net income, net of tax expense
    (benefit) of $4,740 in 2005, $(46,156) in 2004, and
    $(66,159) in 2003 |  |                       | (8,803   | )    |  |      | 85,717  |   |  |   | 122,867  |  
|                                                                                                                                                                           
|Effect on other comprehensive
    income for the period                                                                                                                     |  |                       | 22,488   |      |  |      | 61,026  |   |  |   | 88,262   |  
|                                                                                                                                                                           
|Accumulated unrealized gains
    (losses) on derivatives used in cash flow hedging
    relationships at December 31, net of tax                                             |  | $                     | 15,883   |      |  | $    | (6,605  | ) |  | $ | (67,631  | )
|                                                                                                                                                                           
|Accumulated other comprehensive
    income at January 1, net of tax                                                                                                         |  | $                     | 100,588  |      |  | $    | 64,687  |   |  | $ | 67,180   |  
|Other comprehensive
    (loss) income, net of tax                                                                                                                           |  |                       | (88,723  | )    |  |      | 35,901  |   |  |   | (2,493   | )
|                                                                                                                                                                           
|Accumulated other comprehensive
    income at December 31, net of tax                                                                                                       |  | $                     | 11,865   |      |  | $    | 100,588 |   |  | $ | 64,687   |  
|                                                                                                                                                                           



|    |                            
|--- | ---------------------------
|19. | Net Income per Common Share



|                                                 |                                                 |                       |  |             |  |      |  |             |  |  |  |             | 
|------------------------------------------------ | ----------------------------------------------- | --------------------- |  | ----------- |  | ---- |  | ----------- |  |  |  | ----------- | 
|                                                
|                                                 |                                                 | For the Calendar Year
|                                                 |                                                 |                      
|(Dollars in Thousands, Except Per Share Amounts) |                                                 | 2005                  |  | 2004        |  | 2003
|                                                
|Basic                                            |                                                 |                       |  |             |  |      |  |             |  |  |  |            
|                                                 | Net income                                      |                       |  | $1,985,229  |  |      |  | $2,779,934  |  |  |  | $2,117,064  | 
|                                                 | Less preferred dividends                        |                       |  | 1,616       |  |      |  | 785         |  |  |  |            | 
|                                                
|                                                 | Net income applicable to common
    stock       |                       |  | $1,983,613  |  |      |  | $2,779,149  |  |  |  | $2,117,064  | 
|                                                
|                                                 | Average common shares outstanding               |                       |  | 633,431,660 |  |      |  | 635,450,188 |  |  |  | 611,205,682 | 
|                                                
|                                                 | Net income per common
    share  basic         |                       |  | $3.13       |  |      |  | $4.37       |  |  |  | $3.46       | 
|                                                
|Diluted                                          |                                                 |                       |  |             |  |      |  |             |  |  |  |            
|                                                 | Net income                                      |                       |  | $1,985,229  |  |      |  | $2,779,934  |  |  |  | $2,117,064  | 
|                                                
|                                                 | Average common shares outstanding               |                       |  | 633,431,660 |  |      |  | 635,450,188 |  |  |  | 611,205,682 | 
|                                                 | Stock awards                                    |                       |  | 6,679,651   |  |      |  | 8,477,996   |  |  |  | 5,204,361   | 
|                                                 | Convertible preferred stock                     |                       |  | 1,121,541   |  |      |  | 563,836     |  |  |  |            | 
|                                                 | Forward contracts                               |                       |  | 368,117     |  |      |  | 1,018,494   |  |  |  |            | 
|                                                
|                                                 | Average common shares
    outstanding  diluted |                       |  | 641,600,969 |  |      |  | 645,510,514 |  |  |  | 616,410,043 | 
|                                                
|                                                 | Net income per common
    share  diluted       |                       |  | $3.09       |  |      |  | $4.31       |  |  |  | $3.43       | 
|                                                





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##### Table of Contents

ANNUAL REPORT2005  67



________________________________________________________________________________




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. For the years ended December 31, 2005,
2004, and 2003, options to purchase 10.4 million,
2.3 million and 18.1 million 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.



20.
    Income Tax Expense

The composition of income tax expense follows:

|                                                             |                |                       |         |         |  |      |           |           |   |   |           |           |  
|------------------------------------------------------------ | -------------- | --------------------- | ------- | ------- |  | ---- | --------- | --------- | - | - | --------- | --------- | -
|                                                            
|                                                             |                | For the Calendar Year
|                                                             |                |                      
|(In Thousands)                                               |                | 2005                  |         | 2004    |  | 2003
|                                                            
|Current:                                                     |                |                       |         |         |  |      |           |           |   |   |           |          
|                                                             | Federal        |                       | $       | 610,623 |  |      | $         | 1,229,653 |   |   | $         | 1,099,832 |  
|                                                             | State          |                       |         | 16,900  |  |      |           | 128,742   |   |   |           | 128,450   |  
|                                                            
|                                                             | Total current  |                       |         | 627,523 |  |      |           | 1,358,395 |   |   |           | 1,228,282 |  
|Deferred:                                                    |                |                       |         |         |  |      |           |           |   |   |           |          
|                                                             | Federal        |                       |         | 341,551 |  |      |           | (54,477   | ) |   |           | (116,239  | )
|                                                             | State          |                       |         | 6,860   |  |      |           | (5,912    | ) |   |           | 8,359     |  
|                                                            
|                                                             | Total deferred |                       |         | 348,411 |  |      |           | (60,389   | ) |   |           | (107,880  | )
|                                                            
|Income tax expense                                           |                | $                     | 975,934 |         |  | $    | 1,298,006 |           |   | $ | 1,120,402 |          
|                                                            
|Income tax expense applicable to
    securities transactions |                | $                     | 7,463   |         |  | $    | 2,492     |           |   | $ | 11,225    |          
|                                                            



|                            |  |                       |      |      |  |      |      |   |  |  |      |  
|--------------------------- |  | --------------------- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                           
|                            |  | For the Calendar Year
|                            |  |                      
|                            |  | 2005                  |      | 2004 |  | 2003
|                           
|Statutory Federal tax rate  |  |                       | 35.0 | %    |  |      | 35.0 | % |  |  | 35.0 | %
|Life insurance              |  |                       | (0.9 | )    |  |      | (0.7 | ) |  |  | (0.8 | )
|Tax-exempt income           |  |                       | (0.7 | )    |  |      | (0.5 | ) |  |  | (0.6 | )
|State taxes                 |  |                       | 0.5  |      |  |      | 1.8  |   |  |  | 2.7  |  
|Tax credits                 |  |                       | (1.7 | )    |  |      | (1.4 | ) |  |  | (1.1 | )
|Sale of National Processing |  |                       |     |      |  |      | (0.7 | ) |  |  |     |  
|Other                       |  |                       | 0.8  |      |  |      | (1.7 | ) |  |  | (0.6 | )
|                           
|Effective tax rate          |  |                       | 33.0 | %    |  |      | 31.8 | % |  |  | 34.6 | %
|                           



|                               |                                                             |                           |         |           |         |   |         |           |           | 
|------------------------------ | ----------------------------------------------------------- | ------------------------- | ------- | --------- | ------- | - | ------- | --------- | --------- | 
|                              
|(In Thousands)                 |                                                             | 2005                      |         | 2004     
|                              
|Deferred tax liabilities:      |                                                             |                           |         |           |         |   |         |          
|                               | Mortgage servicing rights, net                              |                           | $       | 566,118   |         |   | $       | 334,048   |          
|                               | Leases and equipment leased to
    others                   |                           |         | 502,950   |         |   |         | 686,382   |          
|                               | Properties and equipment                                    |                           |         | 65,956    |         |   |         | 49,638    |          
|                               | Deferred loan fees                                          |                           |         | 39,792    |         |   |         | 42,562    |          
|                               | State income taxes                                          |                           |         | 55,606    |         |   |         | 36,640    |          
|                               | Retained interests                                          |                           |         |          |         |   |         | 35,005    |          
|                               | Intangibles                                                 |                           |         | 82,453    |         |   |         | 79,662    |          
|                               | Other, net                                                  |                           |         | 99,052    |         |   |         | 143,146   |          
|                              
|                               | Total deferred tax liabilities                              |                           |         | 1,411,927 |         |   |         | 1,407,083 |          
|Deferred tax assets:           |                                                             |                           |         |           |         |   |         |          
|                               | Allowance for loan losses                                   |                           |         | 448,199   |         |   |         | 528,637   |          
|                               | Deferred compensation accrual                               |                           |         | 110,185   |         |   |         | 112,794   |          
|                               | Repurchase and indemnification
    reserve                  |                           |         | 96,093    |         |   |         | 88,399    |          
|                               | Federal benefit of state taxes                              |                           |         | 38,044    |         |   |         | 52,144    |          
|                               | Employee benefit accrual                                    |                           |         | 41,948    |         |   |         | 42,446    |          
|                               | Unrealized losses on securities and
    loans held for sale |                           |         | 8,593     |         |   |         | 19,286    |          
|                               | Retained interests                                          |                           |         | 11,243    |         |   |         |          |          
|                               | Net operating loss carryforward                             |                           |         |          |         |   |         | 28,417    |          
|                               | Other, net                                                  |                           |         | 136,356   |         |   |         | 272,265   |          
|                              
|                               |                                                             | Total deferred tax assets |         |           | 890,661 |   |         |           | 1,144,388 | 
|                              
|Net deferred tax
    liability |                                                             | $                         | 521,266 |           |         | $ | 262,695 |          
|                              





|    |                                                                                    
|--- | -----------------------------------------------------------------------------------
|21. | Commitments, Contingent Liabilities,
    Guarantees, and Related Party Transactions

Commitments:


|                                                                                 |                                                 |             |           |            |  |  |           |            | 
|-------------------------------------------------------------------------------- | ----------------------------------------------- | ----------- | --------- | ---------- |  |  | --------- | ---------- | 
|                                                                                
|                                                                                 |                                                 | December 31
|                                                                                 |                                                 |            
|(In Thousands)                                                                   |                                                 | 2005        |           | 2004      
|                                                                                
|Commitments to extend credit:                                                    |                                                 |             |           |            |  |  |           |           
|                                                                                 | Commercial                                      |             | $         | 22,987,569 |  |  | $         | 19,891,479 | 
|                                                                                 | Residential real estate                         |             |           | 9,052,485  |  |  |           | 14,126,791 | 
|                                                                                 | Revolving home equity and credit
    card lines |             |           | 34,080,110 |  |  |           | 32,095,788 | 
|                                                                                 | Other                                           |             |           | 646,576    |  |  |           | 416,751    | 
|Standby letters of credit                                                        |                                                 |             | 4,745,848 |            |  |  | 4,227,310 |           
|Commercial letters of credit                                                     |                                                 |             | 361,678   |            |  |  | 260,081   |           
|Net commitments to sell mortgage
    loans and mortgage-backed securities        |                                                 |             | 1,495,089 |            |  |  | 6,314,013 |           
|Net commitments to sell commercial
    real estate loans                         |                                                 |             | 284,724   |            |  |  | 241,737   |           
|Commitments to fund principal
    investments                                    |                                                 |             | 295,165   |            |  |  | 263,878   |           
|Commitments to fund civic and
    community investments                          |                                                 |             | 351,282   |            |  |  | 313,257   |           
|Commitments to purchase beneficial
    interests in securitized automobile loans |                                                 |             | 994,632   |            |  |  |          |           
|                                                                                





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##### Table of Contents

68ANNUAL
REPORT2005



________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)


value of these commitments due to changes in interest rates are
recorded on the balance sheet as either derivative assets or
derivative liabilities. The commitments related to residential
mortgage loans and commercial real estate loans are included in
residential real estate and commercial loans, respectively, in
the above table. Further discussion on derivative instruments is
included in Notes 1 and 24.

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

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

The Corporation enters into forward contracts for the future
delivery or purchase of fixed-rate residential mortgage loans,
mortgage-backed securities, and 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 24.

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, 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.

National City Bank, a subsidiary of the Corporation, along with
other financial institutions, has agreed to provide backup
liquidity to an unrelated commercial paper conduit. The conduit
holds various third-party assets including beneficial interests
in the cash flows of trade receivables, credit cards and other
financial assets, as well as the automobile loans securitized in
2005. In the event of a disruption in the commercial paper
markets, the conduit could experience a liquidity event. At such
time, the conduit may require National City Bank, as well as
another financial institution, to purchase an undivided interest
in its note representing a beneficial interest in the
securitized automobile loans. This commitment expires in
December 2006 but may be renewed annually for an additional
twelve months by mutual agreement of the parties.

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 $146 million in 2006,
$135 million in 2007, $116 million in 2008,
$99 million in 2009, $79 million in 2010, and
$449 million thereafter. The Corporation also subleases and
receives rental income on certain leased properties. As of
December 31, 2005, aggregate future minimum rentals to be
received under noncancelable subleases totaled $32 million.
Total operating lease expense, net of sublease income, recorded
under all operating leases was $179 million,
$137 million, and $131 million in 2005, 2004, and
2003, 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 indemnification 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 $72.1 billion, $79.8 billion, and
$117.5 billion for 2005, 2004, and 2003, respectively.
Total loans repurchased or indemnified during 2005, 2004, and
2003 were $331 million, $454 million and
$265 million, respectively. Loans indemnified that remained
outstanding as of December 31, 2005 and 2004, totaled
$341 million and $228 million, respectively. In
addition, total loans sold of $118 million and
$292 million remained uninsured as of December 31,
2005 and 2004, respectively. 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, 2005 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



---



##### Table of Contents

ANNUAL REPORT2005  69



________________________________________________________________________________




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
$90 million, $118 million, and $65 million for
2005, 2004, and 2003, respectively. At December 31, 2005
and 2004, the liability for estimated losses on repurchase and
indemnification was $233 million and $209 million,
respectively, and was included in other liabilities on the
balance sheet.

In connection with the acquisition of Provident in July 2004,
the Corporation assumed a guarantee made to Fannie Mae on behalf
of its acquired 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. As of December 31, 2005 and 2004, Red
Mortgage Capital serviced loans, with risk sharing under the DUS
program, had outstanding principal balances aggregating
$4.4 billion and $4.1 billion. 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 $7 million and $10 million
at December 31, 2005 and 2004, respectively.

The guarantee liability for standby letters of credit was
$50 million and $49 million at December 31, 2005
and 2004, respectively. This liability was recorded in 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®
and MasterCard
®
, 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 the exposure to United Airlines as
described in the following paragraph.

Under the terms of the National Processing sale agreement, the
Corporation retained the contractual obligation to process card
transactions for United Airlines, Inc., which had been 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 is
included in accrued expenses and other liabilities. In the event
of liquidation of United Airlines, the Corporation could become
financially responsible for refunding tickets purchased through
Visa®
and MasterCard
®
under the chargeback rules of those associations. At
December 31, 2005, the estimated dollar value of tickets
purchased, but as yet unflown, under the United Airlines
merchant processing contract, was approximately
$648 million. Based upon available information, this amount
represents managements best estimate of its maximum
potential chargeback exposure related to United Airlines, Inc.
As of December 31, 2005, the Corporation held no
significant collateral under this contract. On October 21,
2005, the bankruptcy court entered an order permitting United
Airlines to enter into a card processing agreement with a
successor processor, and on January 11, 2006, the successor
processor began processing Uniteds card transactions. As a
consequence, the Corporations exposure to potential
chargebacks will diminish over the remainder of 2006 as
previously unflown tickets are utilized. 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 legal proceedings include claims brought
against the Corporation and its subsidiaries where National City
acted as depository bank, lender, underwriter, fiduciary,
financial advisor, broker or other business activities. Reserves
are established for legal claims when losses associated with the
claims are judged to be probable and the loss can be reasonably
estimated.

On or about November 22, 2002, a claim was asserted in the
Marion County Probate Court (Indiana) against National City Bank
of Indiana, a subsidiary of the Corporation, concerning
management of investments held in a trust for the benefit of the
Americans for the Arts and The Poetry Foundation. The claim
alleges failure to adequately and timely diversify investments
held in this trust, which resulted in investment losses. The
beneficiaries are seeking damages of as much as
$100 million. In December 2005, the court entered an order
granting National City Bank of Indianas motion for summary
judgment, and the beneficiaries have filed an appeal. Management
continues to believe that this claim does not have merit and
that the risk of material loss is unlikely.



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##### Table of Contents

70ANNUAL
REPORT2005



________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)


Beginning on June 22, 2005, a series of antitrust class
action lawsuits were filed against
Visa®,
MasterCard
®
, and several major financial institutions, including seven
cases naming the Corporation and its subsidiary, National City
Bank of Kentucky. The plaintiffs, merchants operating commercial
businesses throughout the U.S. and trade associations, claim
that the interchange fees charged by card-issuing banks are
unreasonable and seek injunctive relief and unspecified damages.
The cases have been consolidated for pretrial proceedings in the
United States District Court for the Eastern District of New
York. Given the preliminary stage of these suits, it is not
possible for management to assess the probability of a material
adverse outcome, or the range of possible damages, if any.

Based on information currently available, advice of counsel,
available insurance coverage and established reserves,
management 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 consolidated financial position or results of operations.
However, it is possible that the ultimate resolution of these
matters, if unfavorable, may be material to the 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.



22.
    Stock Options and AwardsUnder the National City Corporation Long-Term Cash and Equity
Incentive Plan (the Long-Term Incentive Plan) no more than
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, no more than
13 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 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. During 2005, 2004, and 2003,
compensation expense recognized related to stock options totaled
$20 million, $25 million, and $12 million,
respectively.

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 2005, 2004, and 2003 were $34.79,
$35.39, and $32.28, respectively. Compensation expense
recognized for restricted share plans during 2005, 2004, and
2003 totaled $38 million, $30 million, and
$18 million, respectively.

Option and Restricted Stock Award
Activity: Stock option and restricted stock
award activity follows:

|                  |              |                    |           |           |           |  |            |             |   |   |       |       | 
|----------------- | ------------ | ------------------ | --------- | --------- | --------- |  | ---------- | ----------- | - | - | ----- | ----- | 
|                  |             
|                  |              | Weighted-          |          
|                  |              |                    |           | Average   |          
|                  |              | Shares Outstanding |           |           | Exercise  | 
|                  |              |                    |           |           | Price Per | 
|                  |              | Awards             |           |           | Options   |  |            | Share       |  
|                  |             
|December 31, 2002 |              |                    | 2,539,171 |           |           |  | 52,963,738 |             |   | $ | 26.89 |      
|                 
|                  | Cancelled    |                    |           | (161,773  | )         |  |            | (851,853    | ) |   |       | 30.06 | 
|                  | Exercised    |                    |           | (488,797  | )         |  |            | (8,200,758  | ) |   |       | 22.01 | 
|                  | Granted      |                    |           | 1,893,040 |           |  |            | 6,940,115   |   |   |       | 33.45 | 
|                 
|December 31, 2003 |              |                    | 3,781,641 |           |           |  | 50,851,242 |             |   |   | 28.52 |      
|                 
|                  | Acquisitions |                    |           |          |           |  |            | 9,274,981   |   |   |       | 26.12 | 
|                  | Cancelled    |                    |           | (227,026  | )         |  |            | (368,668    | ) |   |       | 30.12 | 
|                  | Exercised    |                    |           | (722,163  | )         |  |            | (12,554,038 | ) |   |       | 25.38 | 
|                  | Granted      |                    |           | 2,005,673 |           |  |            | 7,497,223   |   |   |       | 35.89 | 
|                 
|December 31, 2004 |              |                    | 4,838,125 |           |           |  | 54,700,740 |             |   |   | 29.83 |      
|                 
|                  | Cancelled    |                    |           | (329,318  | )         |  |            | (927,087    | ) |   |       | 33.48 | 
|                  | Exercised    |                    |           | (682,971  | )         |  |            | (6,553,014  | ) |   |       | 24.95 | 
|                  | Granted      |                    |           | 2,626,357 |           |  |            | 2,914,859   |   |   |       | 35.30 | 
|                 
|December 31, 2005 |              |                    | 6,452,193 |           |           |  | 50,135,498 |             |   | $ | 30.72 |      
|                 





|         |               |             |            |          |             |       |            |  |     |             |  |          |            |            |  |   |       |       | 
|-------- | ------------- | ----------- | ---------- | -------- | ----------- | ----- | ---------- |  | --- | ----------- |  | -------- | ---------- | ---------- |  | - | ----- | ----- | 
|         |              
|         |               | Weighted-   |            |          |            
|         |               | Average     |            |          |            
|         |               | Weighted-   |            |          | Remaining   |       |            |  |     | Weighted-   | 
|Range of |               | Average     |            |          | Contractual |       |            |  |     | Average     | 
|Exercise |               |             |            | Exercise |             |       | Life       |  |     |             |  | Exercise |           
|Prices   |               | Outstanding |            | Price    |             |       | (in years) |  |     | Exercisable |  |          | Price      |           
|         |              
|         | $5.46 - 12.99 |             | 9,672      |          | $           | 6.81  |            |  |     | 0.7         |  |          |            | 9,672      |  |   | $     | 6.81  | 
|         | 13.00 - 19.99 |             | 3,952,655  |          |             | 18.18 |            |  |     | 4.1         |  |          |            | 3,952,655  |  |   |       | 18.18 | 
|         | 20.00 - 26.99 |             | 3,002,773  |          |             | 24.54 |            |  |     | 4.3         |  |          |            | 3,002,773  |  |   |       | 24.54 | 
|         | 27.00 - 33.99 |             | 31,392,377 |          |             | 30.88 |            |  |     | 4.8         |  |          |            | 29,049,939 |  |   |       | 30.65 | 
|         | 34.00 - 40.99 |             | 11,469,061 |          |             | 35.88 |            |  |     | 6.7         |  |          |            | 5,338,766  |  |   |       | 36.20 | 
|         | 41.00 - 47.99 |             | 308,960    |          |             | 43.73 |            |  |     | 2.1         |  |          |            | 308,960    |  |   |       | 43.73 | 
|        
|Total    |               | 50,135,498  |            | $        | 30.72       |       |            |  | 5.1 |             |  |          | 41,662,765 |            |  | $ | 29.83 |      
|        



---



##### Table of Contents

ANNUAL REPORT2005  71



________________________________________________________________________________




At December 31, 2005, 2004, and 2003, options for
41,662,765, 44,503,822, and 40,448,964 shares of common stock,
respectively, were exercisable. As of December 31, 2005,
stock options and restricted stock awards available for grant
under the Long-Term Incentive Plan totaled 25 million and
9 million shares, respectively.

Additional stock option and restricted award information as of
December 31, 2005 follows, which includes plans assumed
through various acquisitions. As of December 31, 2005,
outstanding options related to these acquired plans totaled
5,776,295 shares with a weighted-average exercise price per
share of $27.32.

|                                          |  |           |            |          |  |            |       |  |  |  |            | 
|----------------------------------------- |  | --------- | ---------- | -------- |  | ---------- | ----- |  |  |  | ---------- | 
|                                         
|                                          |  | Weighted- |            |         
|                                          |  | Shares to |            | Average  |  | Shares    
|                                          |  | Be Issued |            | Option   |  | Available 
|                                          |  | Upon      |            | Exercise |  | for Future
|                                          |  | Exercise  |            | Price    |  | Grants    
|                                         
|Plans approved by stockholders            |  |           | 56,448,709 |          |  | $          | 30.76 |  |  |  | 33,831,004 | 
|Plans not approved by
    stockholders(a) |  |           | 238,342    |          |  |            | 25.83 |  |  |  |           | 
|                                         
|Total                                     |  |           | 56,687,051 |          |  | $          | 30.72 |  |  |  | 33,831,004 | 
|                                         



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | 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 83,366 remaining
    outstanding options at December 31, 2005 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 55,616 remaining outstanding options at
December 31, 2005 are all exercisable.


The National City Corporation 2004 Deferred Compensation Plan
provides eligible employees the opportunity to defer the receipt
of cash compensation which would have otherwise been received as
salary, as variable pay or as an incentive award. The plan
provides participants with non-elective deferred compensation,
and the deferred compensation is credited with gains or losses
based upon investment options made available from time to time,
and, as such, there is no weighted-average exercise price. The
plan does not limit the number of shares that may be issued for
the plan.




|    |                                                   
|--- | --------------------------------------------------
|23. | Pension and Other Postretirement Benefit
    Plans







|                                                  |  |                  |           |                |  |      |           |      |  |   |         |   |  |   |         |  
|------------------------------------------------- |  | ---------------- | --------- | -------------- |  | ---- | --------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                 
|                                                  |  | Other           
|                                                  |  |                  |           | Postretirement
|                                                  |  | Pension Benefits |           | Benefits      
|                                                  |  |                  |           |               
|(In Thousands)                                    |  | 2005             |           | 2004           |  | 2005 |           | 2004
|                                                 
|Change in Fair Value of Plan
    Assets           |  |                  |           |                |  |      |           |      |  |   |         |   |  |   |         |  
|Fair value at beginning of
    measurement period |  | $                | 1,675,345 |                |  | $    | 1,601,150 |      |  | $ |        |   |  | $ |        |  
|Actual return on plan assets                      |  |                  | 125,572   |                |  |      | 150,531   |      |  |   |        |   |  |   |        |  
|Employer contribution                             |  |                  |          |                |  |      |          |      |  |   | 3,329   |   |  |   | 6,056   |  
|Participant contributions                         |  |                  |          |                |  |      |          |      |  |   | 18,119  |   |  |   | 17,717  |  
|Expenses paid                                     |  |                  | (4,619    | )              |  |      | (4,302    | )    |  |   |        |   |  |   |        |  
|Benefits paid                                     |  |                  | (70,738   | )              |  |      | (72,034   | )    |  |   | (21,448 | ) |  |   | (23,773 | )
|                                                 
|Fair value at end of measurement
    period       |  | $                | 1,725,560 |                |  | $    | 1,675,345 |      |  | $ |        |   |  | $ |        |  
|                                                 



|                          |       |               |     |      |  |  |     |      | 
|------------------------- | ----- | ------------- | --- | ---- |  |  | --- | ---- | 
|                         
|                          |       | Percentage of
|                          |       | Plan Assets  
|                          |       |              
|Asset Category            |       | 2005          |     | 2004
|                         
|Equity securities         |       |               | 81% |      |  |  | 81% |     
|Debt securities           |       |               | 11  |      |  |  | 10  |     
|Cash and cash equivalents |       |               | 8   |      |  |  | 9   |     
|                         
|                          | Total |               |     | 100% |  |  |     | 100% | 
|                         







---



##### Table of Contents

72ANNUAL
REPORT2005



________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)


Equity securities include $163 million and
$197 million of National City common stock at
October 31, 2005 and 2004, respectively. The
$163 million of National City Common stock included in plan
assets at October 31, 2005 represented
5,048,833 shares of stock at a closing price of $32.23 as
of that date. During 2005, 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 follow:

|                                                          |                                                                |                  |           |                |   |      |           |         |   |    |         |          |   |   |          |          |  
|--------------------------------------------------------- | -------------------------------------------------------------- | ---------------- | --------- | -------------- | - | ---- | --------- | ------- | - | -- | ------- | -------- | - | - | -------- | -------- | -
|                                                         
|                                                          |                                                                | Other           
|                                                          |                                                                |                  |           | Postretirement
|                                                          |                                                                | Pension Benefits |           | Benefits      
|                                                          |                                                                |                  |           |               
|(In Thousands)                                            |                                                                | 2005             |           | 2004           |   | 2005 |           | 2004   
|                                                         
|Change in Benefit
    Obligation                          |                                                                |                  |           |                |   |      |           |         |   |    |         |          |   |   |          |         
|Benefit obligation at beginning of
    measurement period |                                                                | $                | 1,459,815 |                |   | $    | 1,364,768 |         |   | $  | 154,291 |          |   | $ | 155,787  |         
|Service cost                                              |                                                                |                  | 59,540    |                |   |      | 55,388    |         |   |    | 3,384   |          |   |   | 3,371    |         
|Interest cost                                             |                                                                |                  | 85,171    |                |   |      | 82,726    |         |   |    | 8,931   |          |   |   | 9,216    |         
|Participant contributions                                 |                                                                |                  |          |                |   |      |          |         |   |    | 18,119  |          |   |   | 17,717   |         
|Plan amendments                                           |                                                                |                  |          |                |   |      |          |         |   |    | 1,385   |          |   |   |         |         
|Business acquisitions                                     |                                                                |                  |          |                |   |      |          |         |   |    |        |          |   |   | 6,380    |         
|Actuarial (gains)/losses                                  |                                                                |                  | 10,356    |                |   |      | 28,967    |         |   |    | (5,430  | )        |   |   | (14,406  | )       
|Benefits paid                                             |                                                                |                  | (70,738   | )              |   |      | (72,034   | )       |   |    | (21,448 | )        |   |   | (23,774  | )       
|                                                         
|Benefit obligation at end of
    measurement period       |                                                                | $                | 1,544,144 |                |   | $    | 1,459,815 |         |   | $  | 159,232 |          |   | $ | 154,291  |         
|                                                         
|                                                          | Funded status                                                  |                  | $         | 181,416        |   |      | $         | 215,530 |   |    | $       | (159,232 | ) |   | $        | (154,291 | )
|                                                          | Unrecognized prior service cost                                |                  |           | (26,072        | ) |      |           | (30,827 | ) |    |         | 1,826    |   |   |          | 537      |  
|                                                          | Unrecognized net actuarial loss                                |                  |           | 144,222        |   |      |           | 117,567 |   |    |         | 23,267   |   |   |          | 30,396   |  
|                                                          | Unrecognized net obligation                                    |                  |           |               |   |      |           |        |   |    |         | 7,226    |   |   |          | 8,628    |  
|                                                          | Contributions/benefits paid
    subsequent to measurement date |                  |           |               |   |      |           |        |   |    |         | 1,762    |   |   |          | 1,042    |  
|                                                         
|Prepaid (accrued) benefit
    cost                        |                                                                | $                | 299,566   |                |   | $    | 302,270   |         |   | ($ | 125,151 | )        |   | $ | (113,688 | )       
|                                                         





|                              |  |                  |           |                |  |      |           |      |  |  |           |  |  |  |           | 
|----------------------------- |  | ---------------- | --------- | -------------- |  | ---- | --------- | ---- |  |  | --------- |  |  |  | --------- | 
|                             
|                              |  | Other           
|                              |  |                  |           | Postretirement
|                              |  | Pension Benefits |           | Benefits      
|                              |  |                  |           |               
|                              |  | 2005             |           | 2004           |  | 2005 |           | 2004
|                             
|Discount rate                 |  |                  | 6.00%     |                |  |      | 6.00%     |      |  |  | 6.00%     |  |  |  | 6.00%     | 
|Rate of compensation increase |  |                  | 2.75-7.50 |                |  |      | 2.75-7.50 |      |  |  | 2.75-7.50 |  |  |  | 2.75-7.50 | 
|                             





|                                  |                                    |      |        |          |   |      |        |          |   |   |         |          |  
|--------------------------------- | ---------------------------------- | ---- | ------ | -------- | - | ---- | ------ | -------- | - | - | ------- | -------- | -
|                                 
|(In Thousands)                    |                                    | 2005 |        | 2004     |   | 2003
|                                 
|Pension Benefits                  |                                    |      |        |          |   |      |        |          |   |   |         |         
|                                  | Service cost                       |      | $      | 59,540   |   |      | $      | 55,388   |   |   | $       | 51,162   |  
|                                  | Interest cost                      |      |        | 85,171   |   |      |        | 82,726   |   |   |         | 80,084   |  
|                                  | Expected return on plan assets     |      |        | (137,991 | ) |      |        | (127,301 | ) |   |         | (143,443 | )
|                                  | Amortization of prior service cost |      |        | (4,755   | ) |      |        | (4,755   | ) |   |         | (4,755   | )
|                                  | Transition benefit                 |      |        |         |   |      |        |         |   |   |         | (207     | )
|                                  | Recognized net actuarial loss      |      |        | 739      |   |      |        | 2,560    |   |   |         | 1,303    |  
|                                 
|Net periodic cost
    (benefit)   |                                    | $    | 2,704  |          |   | $    | 8,618  |          |   | $ | (15,856 | )       
|                                 
|Other Postretirement
    Benefits |                                    |      |        |          |   |      |        |          |   |   |         |         
|                                  | Service cost                       |      | $      | 3,384    |   |      | $      | 3,371    |   |   | $       | 2,946    |  
|                                  | Interest cost                      |      |        | 8,931    |   |      |        | 9,216    |   |   |         | 9,342    |  
|                                  | Amortization of prior service cost |      |        | 95       |   |      |        | 95       |   |   |         | 133      |  
|                                  | Transition obligation              |      |        | 1,402    |   |      |        | 1,402    |   |   |         | 1,402    |  
|                                  | Recognized net actuarial loss      |      |        | 979      |   |      |        | 1,677    |   |   |         | 1,588    |  
|                                 
|Net periodic cost                 |                                    | $    | 14,791 |          |   | $    | 15,761 |          |   | $ | 15,411  |         
|                                 



|                                             |  |                  |           |                |  |      |           |      |  |  |           |  |  |  |           | 
|-------------------------------------------- |  | ---------------- | --------- | -------------- |  | ---- | --------- | ---- |  |  | --------- |  |  |  | --------- | 
|                                            
|                                             |  |                  |           | Postretirement
|                                             |  | Pension Benefits |           | Benefits      
|                                             |  |                  |           |               
|                                             |  | 2005             |           | 2004           |  | 2005 |           | 2004
|                                            
|Weighted-Average
    Assumptions             |  |                  |           |                |  |      |           |      |  |  |           |  |  |  |           | 
|Discount rate                                |  |                  | 6.00%     |                |  |      | 6.25%     |      |  |  | 6.00%     |  |  |  | 6.25%     | 
|Rate of compensation increase                |  |                  | 2.75-7.50 |                |  |      | 2.75-7.50 |      |  |  | 2.75-7.50 |  |  |  | 2.75-7.50 | 
|Expected long-term return on plan
    assets |  |                  | 8.50      |                |  |      | 8.50      |      |  |  |          |  |  |  |          | 
|                                            







|                                                                                      |  |      |      |      |  |  |      | 
|------------------------------------------------------------------------------------- |  | ---- | ---- | ---- |  |  | ---- | 
|                                                                                     
|                                                                                      |  | 2005 |      | 2004
|                                                                                     
|Health care cost trend rate for
    next year (pre-65)                                |  |      | 9%   |      |  |  | 9%   | 
|Health care cost trend rate for
    next year (post-65)                               |  |      | 11%  |      |  |  | 9%   | 
|Rate to which the cost trend rate
    is assumed to decline
    (ultimate trend rate) |  |      | 5%   |      |  |  | 5%   | 
|Year the rates reach the ultimate
    trend rate                                      |  |      | 2012 |      |  |  | 2009 | 
|                                                                                     



---



##### Table of Contents

ANNUAL REPORT2005  73



________________________________________________________________________________




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 affect 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:

|                                                 |  |                |       |                |  |   |         | 
|------------------------------------------------ |  | -------------- | ----- | -------------- |  | - | ------- | 
|                                                
|                                                 |  | 1-Percentage   |       | 1-Percentage  
|(In Thousands)                                   |  | Point Increase |       | Point Decrease
|                                                
|Effect on total of service and
    interest cost |  | $              | 246   |                |  | $ | (227)   | 
|Effect on postretirement benefit
    obligation  |  |                | 4,269 |                |  |   | (3,933) | 
|                                                







|    |                                                  
|--- | -------------------------------------------------
|24. | Derivative Instruments and Hedging
    Activities













---



##### Table of Contents

74ANNUAL
REPORT2005



________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)


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 fund is derived from the
Corporations own historical empirical data. The change in
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, 2005 and 2004.

Fair Value Hedges: The
Corporation primarily uses interest rate swaps, interest rate
futures, interest rate caps and floors, interest rate options,
interest rate forwards, and forward purchase and sales
commitments to hedge the fair values of mortgage and commercial
real estate loans held for sale, mortgage servicing rights, and
certain fixed-rate commercial loans 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, senior and subordinated long-term debt, and senior
bank notes.

During 2005, 2004, and 2003, the Corporation recognized total
net ineffective fair value hedge gains (losses) of
$60 million, $(145) million, and $70 million,
respectively. Detail of net ineffective hedge gains and losses
by hedge strategy are presented in the tables on page 75.
Net 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, commercial
real estate loans held for sale, and fixed-rate funding products
are included in other noninterest income on the income
statement. There were no components of derivative instruments
that were excluded from the assessment of hedge effectiveness.

Cash Flow Hedges: The
Corporation hedges cash flow variability related to
variable-rate funding products, specifically FHLB advances,
senior bank notes, and Federal funds borrowed, 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 anticipated to be issued in the future.

During 2005, 2004, and 2003, the Corporation recognized net
ineffective cash flow hedge gains (losses) of $(300) thousand,
$300 thousand, and $100 thousand, respectively. These gains
(losses) are included in other noninterest income on the income
statement. There were no components of derivative instruments
that were excluded from the assessment of hedge effectiveness.

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, 2005 and 2004, accumulated other comprehensive
income included a deferred after-tax net gain (loss) of
$16 million and $(7) million, respectively, related to
derivatives used to hedge funding cash flows. See Note 18
for further detail of the amounts included in accumulated other
comprehensive income. The net after-tax derivative gain included
in accumulated other comprehensive income at December 31,
2005 was projected to be reclassified into interest expense in
conjunction with the recognition of interest payments on funding
products through July 2008, with $24 million of after-tax
net gain expected to be recognized in interest expense within
the next year. During 2005, 2004, and 2003, pretax losses of
$10 million, $128 million, and $189 million,
respectively, were reclassified into interest expense as
adjustments to interest payments on variable-rate funding
products. In 2005, a pretax gain of $8 million was
reclassified from other comprehensive income to other
noninterest expense as a component of the net gain on the
extinguishment of certain variable-rate secured debt financings
collateralized by automobile leases. 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 the forecasted debt
issuances originally contemplated were not probable of
occurring. There were no gains or losses reclassified into
earnings during 2003 arising from the determination that the
original forecasted transaction would not occur.



---



##### Table of Contents

ANNUAL REPORT2005  75



________________________________________________________________________________




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 31, 2005 and 2004 follows:
December 31, 2005NetDerivativeIneffectiveNotional
    
    
    
    Hedge Gains(In Millions)
    
    Amount
    
    Asset
    
    Liability
    
    (Losses)(a)Fair Value HedgesLoansReceive-fixed interest rate swaps
    
    $
    121
    
    
    $
    1.5
    
    
    $
    .1Receive-fixed interest rate
    swaptions sold
    
    
    
    
    
    
    
    
    
    
    Pay-fixed interest rate swaps
    
    
    3,864
    
    
    
    49.4
    
    
    
    38.5Pay-fixed interest rate swaptions
    sold
    
    
    50
    
    
    
    
    
    
    
    .5Interest rate caps sold
    
    
    210
    
    
    
    
    
    
    
    .1Interest rate floors sold
    
    
    260
    
    
    
    
    
    
    
    .4Interest rate futures purchased
    
    
    3,146
    
    
    
    
    
    
    
    Interest rate futures sold
    
    
    3,614
    
    
    
    
    
    
    
    Total
    
    
    11,265
    
    
    
    50.9
    
    
    
    39.6
    
    
    $
    21.9Mortgage loans held for saleForward commitments to sell
    mortgage loans and mortgage-backed securities
    
    
    2,670
    
    
    
    1.3
    
    
    
    20.5Receive-fixed interest rate swaps
    
    
    2,090
    
    
    
    20.5
    
    
    
    36.3Pay-fixed interest rate swaps
    
    
    550
    
    
    
    
    
    
    
    15.8Pay-fixed interest rate swaptions
    purchased
    
    
    500
    
    
    
    3.7
    
    
    
    Pay-fixed interest rate swaptions
    sold
    
    
    
    
    
    
    
    
    
    
    Interest rate caps purchased
    
    
    2,000
    
    
    
    7.3
    
    
    
    Interest rate futures purchased
    
    
    75
    
    
    
    
    
    
    
    Total
    
    
    7,885
    
    
    
    32.8
    
    
    
    72.6
    
    
    
    6.7Commercial real estate loans held
    for saleForward commitments to sell
    commercial real estate loans
    
    
    13
    
    
    
    
    
    
    
    .4
    
    
    
    Mortgage servicing rightsForward commitments to purchase
    mortgage loans and mortgage-backed securities
    
    
    6,965
    
    
    
    44.0
    
    
    
    Receive-fixed interest rate swaps
    
    
    11,810
    
    
    
    79.9
    
    
    
    217.4Receive-fixed interest rate
    swaptions purchased
    
    
    4,050
    
    
    
    40.2
    
    
    
    Receive-fixed interest rate
    swaptions sold
    
    
    500
    
    
    
    
    
    
    
    Pay-fixed interest rate swaps
    
    
    2,000
    
    
    
    
    
    
    
    3.6Pay-fixed interest rate swaptions
    purchased
    
    
    15,450
    
    
    
    53.4
    
    
    
    Pay-fixed interest rate swaptions
    sold
    
    
    265
    
    
    
    
    
    
    
    1.7Principal-only interest rate swaps
    
    
    864
    
    
    
    5.5
    
    
    
    Options to purchase mortgage-backed
    securities
    
    
    
    
    
    
    1.5
    
    
    
    Interest rate caps purchased
    
    
    24,450
    
    
    
    37.2
    
    
    
    Interest rate caps sold
    
    
    3,000
    
    
    
    
    
    
    
    Interest rate floors purchased
    
    
    500
    
    
    
    4.6
    
    
    
    Interest rate futures purchased
    
    
    720
    
    
    
    
    
    
    
    Total
    
    
    70,574
    
    
    
    266.3
    
    
    
    222.7
    
    
    
    30.5FundingReceive-fixed interest rate swaps
    
    
    8,069
    
    
    
    160.3
    
    
    
    118.4Callable receive-fixed interest
    rate swaps
    
    
    2,780
    
    
    
    1.2
    
    
    
    85.1Total
    
    
    10,849
    
    
    
    161.5
    
    
    
    203.5
    
    
    
    .5Total derivatives used in fair
    value hedges
    
    
    100,586
    
    
    
    511.5
    
    
    
    538.8
    
    
    
    59.6Cash Flow HedgesFundingReceive-fixed interest rate swaps
    
    
    
    
    
    
    
    
    
    
    Pay-fixed interest rate swaps
    
    
    275
    
    
    
    4.6
    
    
    
    Interest rate caps purchased
    
    
    4,800
    
    
    
    18.9
    
    
    
    Total
    
    
    5,075
    
    
    
    23.5
    
    
    
    
    
    
    
    (.3
    )Total derivatives used in cash
    flow hedges
    
    
    5,075
    
    
    
    23.5
    
    
    
    
    
    
    
    (.3
    )Total derivatives used for
    interest rate risk management and designated in SFAS 133
    relationships
    
    $
    105,661
    
    
    $
    535.0
    
    
    $
    538.8
    
    
    $
    59.3

[Additional columns below][Continued from above table, first column(s) repeated]
December 31, 2004
    
    2003Net
    
    NetIneffective
    
    IneffectiveDerivativeHedge
    
    HedgeNotional
    
    
    
    Gains
    
    Gains(In Millions)
    
    Amount
    
    Asset
    
    Liability
    
    (Losses)(a)
    
    (Losses)(a)Fair Value HedgesLoansReceive-fixed interest rate swaps
    
    $
    68
    
    
    $
    2.1
    
    
    $
    .1Receive-fixed interest rate
    swaptions sold
    
    
    25
    
    
    
    
    
    
    
    Pay-fixed interest rate swaps
    
    
    3,492
    
    
    
    13.3
    
    
    
    104.2Pay-fixed interest rate swaptions
    sold
    
    
    175
    
    
    
    
    
    
    
    3.5Interest rate caps sold
    
    
    640
    
    
    
    
    
    
    
    .3Interest rate floors sold
    
    
    260
    
    
    
    
    
    
    
    3.2Interest rate futures purchased
    
    
    2,070
    
    
    
    
    
    
    
    Interest rate futures sold
    
    
    3,306
    
    
    
    
    
    
    
    Total
    
    
    10,036
    
    
    
    15.4
    
    
    
    111.3
    
    
    $
    30.6
    
    
    $
    28.3Mortgage loans held for saleForward commitments to sell
    mortgage loans and mortgage-backed securities
    
    
    6,565
    
    
    
    7.5
    
    
    
    Receive-fixed interest rate swaps
    
    
    410
    
    
    
    16.6
    
    
    
    1.6Pay-fixed interest rate swaps
    
    
    550
    
    
    
    
    
    
    
    28.2Pay-fixed interest rate swaptions
    purchased
    
    
    500
    
    
    
    2.2
    
    
    
    Pay-fixed interest rate swaptions
    sold
    
    
    250
    
    
    
    
    
    
    
    4.6Interest rate caps purchased
    
    
    5,000
    
    
    
    19.5
    
    
    
    Interest rate futures purchased
    
    
    1,335
    
    
    
    
    
    
    
    Total
    
    
    14,610
    
    
    
    45.8
    
    
    
    34.4
    
    
    
    (50.5
    )
    
    
    Commercial real estate loans held
    for saleForward commitments to sell
    commercial real estate loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Mortgage servicing rightsForward commitments to purchase
    mortgage loans and mortgage-backed securities
    
    
    8,157
    
    
    
    
    
    
    
    18.7Receive-fixed interest rate swaps
    
    
    7,755
    
    
    
    187.0
    
    
    
    77.0Receive-fixed interest rate
    swaptions purchased
    
    
    1,492
    
    
    
    14.5
    
    
    
    Receive-fixed interest rate
    swaptions sold
    
    
    497
    
    
    
    
    
    
    
    2.3Pay-fixed interest rate swaps
    
    
    200
    
    
    
    
    
    
    
    23.3Pay-fixed interest rate swaptions
    purchased
    
    
    6,150
    
    
    
    20.0
    
    
    
    Pay-fixed interest rate swaptions
    sold
    
    
    635
    
    
    
    
    
    
    
    8.5Principal-only interest rate swaps
    
    
    903
    
    
    
    
    
    
    
    15.3Options to purchase mortgage-backed
    securities
    
    
    
    
    
    
    
    
    
    
    Interest rate caps purchased
    
    
    28,900
    
    
    
    30.7
    
    
    
    Interest rate caps sold
    
    
    2,984
    
    
    
    
    
    
    
    1.9Interest rate floors purchased
    
    
    1,492
    
    
    
    1.4
    
    
    
    Interest rate futures purchased
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    59,165
    
    
    
    253.6
    
    
    
    147.0
    
    
    
    (125.7
    )
    
    
    41.6FundingReceive-fixed interest rate swaps
    
    
    6,802
    
    
    
    265.6
    
    
    
    68.1Callable receive-fixed interest
    rate swaps
    
    
    2,893
    
    
    
    11.9
    
    
    
    52.4Total
    
    
    9,695
    
    
    
    277.5
    
    
    
    120.5
    
    
    
    .2
    
    
    
    Total derivatives used in fair
    value hedges
    
    
    93,506
    
    
    
    592.3
    
    
    
    413.2
    
    
    
    (145.4
    )
    
    
    69.9Cash Flow HedgesFundingReceive-fixed interest rate swaps
    
    
    152
    
    
    
    2.6
    
    
    
    Pay-fixed interest rate swaps
    
    
    8,102
    
    
    
    38.4
    
    
    
    17.2Interest rate caps purchased
    
    
    4,860
    
    
    
    17.6
    
    
    
    Total
    
    
    13,114
    
    
    
    58.6
    
    
    
    17.2
    
    
    
    .3
    
    
    
    .1Total derivatives used in cash
    flow hedges
    
    
    13,114
    
    
    
    58.6
    
    
    
    17.2
    
    
    
    .3
    
    
    
    .1Total derivatives used for
    interest rate risk management and designated in SFAS 133
    relationships
    
    $
    106,620
    
    
    $
    650.9
    
    
    $
    430.4
    
    
    $
    (145.1
    )
    
    $
    70.0(a)
    Represents net ineffective hedge gains (losses) on
    hedging strategy for the year.



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##### Table of Contents

76ANNUAL
REPORT2005



________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)


Other Derivative
Activities: The derivative portfolio also
includes derivative financial instruments not included in
SFAS 133 hedge relationships. Those derivatives include
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 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:

|                                 |                                        |                                                                 |       |      |                       |   |      |      |      |  |       |       |       |      |       |       |       |  |       |       |       |  
|-------------------------------- | -------------------------------------- | --------------------------------------------------------------- | ----- | ---- | --------------------- | - | ---- | ---- | ---- |  | ----- | ----- | ----- | ---- | ----- | ----- | ----- |  | ----- | ----- | ----- | -
|                                 |                                       
|                                 |                                        | As of                                                           |       |      |                      
|                                 |                                        | December 31                                                     |       |      | For the Calendar Year |  
|                                 |                                        |                                                                 |       |      |                       |  
|                                 |                                        | Net Derivative                                                  |       |      |                      
|                                 |                                        | Asset                                                           |       |      |                      
|                                 |                                        | (Liability)                                                     |       |      | Net Gains (Losses)    |  
|                                 |                                        |                                                                 |       |      |                       |  
|(In Millions)                    |                                        | 2005                                                            |       |      | 2004                  |   |      | 2005 |      |  | 2004  |       |       | 2003 |      
|                                 |                                       
|Other derivative
    instruments |                                        |                                                                 |       |      |                       |   |      |      |      |  |       |       |       |      |       |       |       |  |       |      
|                                 | Mortgage banking-related:              |                                                                 |       |      |                       |   |      |      |      |  |       |       |       |      |       |       |       |  |       |       |      
|                                 |                                        | Mortgage servicing right risk
    management                    |       | $    | (6.4                  | ) |      | $    | 12.7 |  |       | $     | 166.1 |      |       | $     | 618.9 |  |       | $     | 133.7 |  
|                                 |                                        | Mortgage loan commitments and
    mortgage loan risk management |       |      | (9.0                  | ) |      |      | 4.5  |  |       |       | 51.4  |      |       |       | 136.9 |  |       |       | (24.3 | )
|                                
|Total mortgage banking-related   |                                        |                                                                 | (15.4 | )    |                       |   | 17.2 |      |      |  | 217.5 |       |       |      | 755.8 |       |       |  | 109.4 |      
|                                
|                                 | Customer risk management               |                                                                 |       | 23.5 |                       |   |      | 13.7 |      |  |       | 17.4  |       |      |       | 12.1  |       |  |       | 11.5  |      
|                                 | Other                                  |                                                                 |       | 30.3 |                       |   |      | 37.3 |      |  |       | 24.9  |       |      |       | 29.8  |       |  |       | 60.6  |      
|                                
|Total other                      |                                        |                                                                 | 53.8  |      |                       |   | 51.0 |      |      |  | 42.3  |       |       |      | 41.9  |       |       |  | 72.1  |      
|                                
|                                 | Total other derivative
    instruments |                                                                 | $     | 38.4 |                       |   | $    | 68.2 |      |  | $     | 259.8 |       |      | $     | 797.7 |       |  | $     | 181.5 |      
|                                



|    |                                    
|--- | -----------------------------------
|25. | Fair Value of Financial Instruments







|                                             |  |          |         |   |            |   |          |       |  |      |         |   |  |   |         |  
|-------------------------------------------- |  | -------- | ------- | - | ---------- | - | -------- | ----- |  | ---- | ------- | - |  | - | ------- | -
|                                             | 
|                                             |  | 2005     |         |   | 2004       |  
|                                             |  |          |         |   |            |  
|                                             |  | Carrying |         |   |            |   | Carrying |       |  | Fair |        
|(In Millions)                                |  | Value    |         |   | Fair Value |   |          | Value |  |      | Value   |  
|                                             | 
|Financial Assets                             |  |          |         |   |            |   |          |       |  |      |         |   |  |   |         |  
|Cash and cash equivalents                    |  | $        | 6,060   |   |            | $ | 6,060    |       |  | $    | 5,540   |   |  | $ | 5,540   |  
|Loans held for sale or
    securitization    |  |          | 9,667   |   |            |   | 9,696    |       |  |      | 12,430  |   |  |   | 12,445  |  
|Loans, net of allowance for loan
    losses  |  |          | 104,945 |   |            |   | 105,722  |       |  |      | 99,083  |   |  |   | 103,315 |  
|Securities                                   |  |          | 7,875   |   |            |   | 7,875    |       |  |      | 8,765   |   |  |   | 8,765   |  
|Derivative assets                            |  |          | 773     |   |            |   | 773      |       |  |      | 886     |   |  |   | 886     |  
|Other                                        |  |          | 1,212   |   |            |   | 1,212    |       |  |      | 1,184   |   |  |   | 1,184   |  
|                                            
|Financial Liabilities                        |  |          |         |   |            |   |          |       |  |      |         |   |  |   |         |  
|Deposits                                     |  | $        | (83,986 | ) |            | $ | (79,449  | )     |  | $    | (85,955 | ) |  | $ | (81,547 | )
|Short-term borrowings                        |  |          | (10,017 | ) |            |   | (10,025  | )     |  |      | (7,928  | ) |  |   | (7,932  | )
|Long-term debt                               |  |          | (30,969 | ) |            |   | (31,244  | )     |  |      | (28,696 | ) |  |   | (28,875 | )
|Derivative liabilities                       |  |          | (738    | ) |            |   | (738     | )     |  |      | (597    | ) |  |   | (597    | )
|Other                                        |  |          | (369    | ) |            |   | (369     | )     |  |      | (353    | ) |  |   | (353    | )
|                                            
|Other Financial
    Instruments              |  |          |         |   |            |   |          |       |  |      |         |   |  |   |         |  
|Commitments to extend credit                 |  |          | (99     | ) |            |   | (99      | )     |  |      | (116    | ) |  |   | (116    | )
|Standby and commercial letters of
    credit |  |          | (45     | ) |            |   | (45      | )     |  |      | (49     | ) |  |   | (49     | )
|                                            



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##### Table of Contents

ANNUAL REPORT2005  77



________________________________________________________________________________




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, commercial, commercial real estate, and credit card 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 are 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.

26. Line of Business Results

At December 31, 2005, 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. A sixth business line,
National Processing, was sold in October 2004.

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. In
late 2005, the Corporation announced its decision to exit the
indirect automobile business. No new originations of indirect
automobile loans will occur going forward. Consumer lending
products include home equity, automobile floorplan, marine, and
recreational vehicle installment loans, government or privately
guaranteed student loans, and credit cards and other unsecured
personal and small 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, and international
payment and clearing services. A major source of revenue is from
companies with annual sales 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.

National City Mortgage (NCM) primarily originates
conventional residential mortgage and home equity loans both
within National Citys banking footprint and nationally.
NCMs activities also include servicing mortgage loans for
third-party investors. Mortgage loans originated by NCM
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
2005, approximately 44% of NCM mortgage loans were originated
through wholesale and correspondent channels, while 56% were
originated through retail mortgage branches operated by NCM
nationally, or through CSB bank branches within National
Citys banking footprint. During 2004, approximately 50% of
NCM mortgage loans were originated through the wholesale and
correspondent channels, with the remaining 50% being originated
through the retail network. Significant revenue streams for NCM
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 involved in the origination and servicing of home
equity loans and nonconforming residential mortgage loans. Loans
are originated nationally through



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##### Table of Contents

78ANNUAL
REPORT2005



________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)


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 2005,
28% of First Franklin originated loans were retained in
portfolio at NCFs National City Home Loan Services
(NCHLS) business unit compared to approximately 33% for
2004. During 2005, 79% of the First Franklin loans sold were
sold with servicing retained versus 10% of loans sold servicing
retained in 2004. The NCHLS unit also services loans for others.
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,
primarily through brokers, prime-quality home equity loans
outside National Citys banking footprint. Historically,
all of these loans were held in portfolio, but in late 2005,
some of these loans were sold. The National City Warehouse
Resources business unit within NCF 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, sale and servicing of loans. Expenses include
personnel costs, branch office costs, and loan servicing and
collection expenses.

The Asset Management business includes both institutional asset
and personal wealth management. Institutional asset management
services are provided by two business units 
Allegiant Asset Management Group and Allegiant Asset Management
Company. These business units provide investment management,
custody, retirement planning services, and other corporate trust
services to institutional clients, and act as the investment
advisor for the
Allegiant®
mutual funds (formerly the
Armada®
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 services are provided
by two business units  Private Client Group and
Sterling. 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. Sterling offers financial management services and
alternative investments for high net worth clients.

National Processing consisted 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 are
also considered funding activities and the effects of such
securitizations are generally 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.



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##### Table of Contents

ANNUAL REPORT2005  79



________________________________________________________________________________




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 follows:
Consumer and
    
    
    
    NationalSmall Business
    
    Wholesale
    
    National City
    
    Consumer
    
    Asset
    
    National(In Thousands)
    
    Financial Services
    
    Banking
    
    Mortgage
    
    Finance
    
    Management
    
    Processing2005Net interest income
    (expense)(a)
    
    $
    2,136,207
    
    
    $
    1,428,908
    
    
    $
    365,050
    
    
    $
    1,165,982
    
    
    $
    118,292
    
    
    $
    Provision (benefit) for credit
    losses
    
    
    321,697
    
    
    
    (26,038
    )
    
    
    37,435
    
    
    
    27,138
    
    
    
    7,635
    
    
    
    Net interest income
    (expense) after provision
    
    
    1,814,510
    
    
    
    1,454,946
    
    
    
    327,615
    
    
    
    1,138,844
    
    
    
    110,657
    
    
    
    Noninterest income
    
    
    1,108,664
    
    
    
    603,223
    
    
    
    866,718
    
    
    
    303,504
    
    
    
    343,984
    
    
    
    Noninterest expense
    
    
    1,784,239
    
    
    
    818,763
    
    
    
    758,884
    
    
    
    542,861
    
    
    
    326,398
    
    
    
    Income (loss) before taxes
    
    
    1,138,935
    
    
    
    1,239,406
    
    
    
    435,449
    
    
    
    899,487
    
    
    
    128,243
    
    
    
    Income tax expense
    (benefit)(a)
    
    
    439,755
    
    
    
    469,222
    
    
    
    151,449
    
    
    
    340,006
    
    
    
    48,476
    
    
    
    Net income (loss)
    
    $
    699,180
    
    
    $
    770,184
    
    
    $
    284,000
    
    
    $
    559,481
    
    
    $
    79,767
    
    
    $
    Intersegment revenue (expense)
    
    $
    (3,332
    )
    
    $
    29,214
    
    
    $
    57,466
    
    
    $
    (38,186
    )
    
    $
    6,049
    
    
    $
    Average assets (in millions)
    
    
    32,042
    
    
    
    43,549
    
    
    
    14,528
    
    
    
    37,557
    
    
    
    3,433
    
    
    
    2004Net interest income
    (expense)(a)
    
    $
    2,050,108
    
    
    $
    1,246,849
    
    
    $
    549,127
    
    
    $
    1,088,169
    
    
    $
    111,851
    
    
    $
    3,500Provision (benefit) for credit
    losses
    
    
    299,673
    
    
    
    51,033
    
    
    
    12,036
    
    
    
    44,536
    
    
    
    4,165
    
    
    
    Net interest income
    (expense) after provision
    
    
    1,750,435
    
    
    
    1,195,816
    
    
    
    537,091
    
    
    
    1,043,633
    
    
    
    107,686
    
    
    
    3,500Noninterest income
    
    
    977,200
    
    
    
    503,996
    
    
    
    856,333
    
    
    
    435,780
    
    
    
    413,493
    
    
    
    409,755Noninterest expense
    
    
    1,631,870
    
    
    
    644,618
    
    
    
    680,726
    
    
    
    452,860
    
    
    
    307,400
    
    
    
    357,018Income (loss) before taxes
    
    
    1,095,765
    
    
    
    1,055,194
    
    
    
    712,698
    
    
    
    1,026,553
    
    
    
    213,779
    
    
    
    56,237Income tax expense
    (benefit)(a)
    
    
    419,034
    
    
    
    392,981
    
    
    
    270,774
    
    
    
    388,037
    
    
    
    80,809
    
    
    
    22,244Net income (loss)
    
    $
    676,731
    
    
    $
    662,213
    
    
    $
    441,924
    
    
    $
    638,516
    
    
    $
    132,970
    
    
    $
    33,993Intersegment revenue (expense)
    
    $
    (3,434
    )
    
    $
    19,544
    
    
    $
    58,263
    
    
    $
    (27,322
    )
    
    $
    4,850
    
    
    $
    4,840Average assets (in millions)
    
    
    29,450
    
    
    
    35,326
    
    
    
    16,009
    
    
    
    28,954
    
    
    
    3,088
    
    
    
    5692003Net interest income
    (expense)(a)
    
    $
    1,953,439
    
    
    $
    1,048,640
    
    
    $
    1,096,617
    
    
    $
    754,805
    
    
    $
    102,859
    
    
    $
    3,251Provision (benefit) for credit
    losses
    
    
    307,327
    
    
    
    340,716
    
    
    
    5,764
    
    
    
    60,867
    
    
    
    7,635
    
    
    
    Net interest income
    (expense) after provision
    
    
    1,646,112
    
    
    
    707,924
    
    
    
    1,090,853
    
    
    
    693,938
    
    
    
    95,224
    
    
    
    3,251Noninterest income
    
    
    707,884
    
    
    
    331,549
    
    
    
    1,247,988
    
    
    
    286,838
    
    
    
    341,246
    
    
    
    479,875Noninterest expense
    
    
    1,365,731
    
    
    
    513,245
    
    
    
    779,543
    
    
    
    306,880
    
    
    
    286,209
    
    
    
    402,044Income (loss) before taxes
    
    
    988,265
    
    
    
    526,228
    
    
    
    1,559,298
    
    
    
    673,896
    
    
    
    150,261
    
    
    
    81,082Income tax expense
    (benefit)(a)
    
    
    373,564
    
    
    
    197,188
    
    
    
    620,179
    
    
    
    254,733
    
    
    
    56,798
    
    
    
    32,321Net income (loss)
    
    $
    614,701
    
    
    $
    329,040
    
    
    $
    939,119
    
    
    $
    419,163
    
    
    $
    93,463
    
    
    $
    48,761Intersegment revenue (expense)
    
    $
    (3,664
    )
    
    $
    20,542
    
    
    $
    48,136
    
    
    $
    (22,284
    )
    
    $
    6,004
    
    
    $
    5,435Average assets (in millions)
    
    
    26,355
    
    
    
    30,679
    
    
    
    28,371
    
    
    
    19,423
    
    
    
    2,896
    
    
    
    622

[Additional columns below][Continued from above table, first column(s) repeated]
Parentand
    
    Consolidated(In Thousands)
    
    Other(b)
    
    Total2005Net interest income
    (expense)(a)
    
    $
    (487,965
    )
    
    $
    4,726,474Provision (benefit) for credit
    losses
    
    
    (84,273
    )
    
    
    283,594Net interest income
    (expense) after provision
    
    
    (403,692
    )
    
    
    4,442,880Noninterest income
    
    
    78,226
    
    
    
    3,304,319Noninterest expense
    
    
    524,165
    
    
    
    4,755,310Income (loss) before taxes
    
    
    (849,631
    )
    
    
    2,991,889Income tax expense
    (benefit)(a)
    
    
    (442,248
    )
    
    
    1,006,660Net income (loss)
    
    $
    (407,383
    )
    
    $
    1,985,229Intersegment revenue (expense)
    
    $
    (51,211
    )
    
    $
    Average assets (in millions)
    
    
    10,447
    
    
    
    141,5562004Net interest income
    (expense)(a)
    
    $
    (589,277
    )
    
    $
    4,460,327Provision (benefit) for credit
    losses
    
    
    (88,171
    )
    
    
    323,272Net interest income
    (expense) after provision
    
    
    (501,106
    )
    
    
    4,137,055Noninterest income
    
    
    843,624
    
    
    
    4,440,181Noninterest expense
    
    
    397,145
    
    
    
    4,471,637Income (loss) before taxes
    
    
    (54,627
    )
    
    
    4,105,599Income tax expense
    (benefit)(a)
    
    
    (248,214
    )
    
    
    1,325,665Net income (loss)
    
    $
    193,587
    
    
    $
    2,779,934Intersegment revenue (expense)
    
    $
    (56,741
    )
    
    $
    Average assets (in millions)
    
    
    11,007
    
    
    
    124,4032003Net interest income
    (expense)(a)
    
    $
    (595,857
    )
    
    $
    4,363,754Provision (benefit) for credit
    losses
    
    
    (83,891
    )
    
    
    638,418Net interest income
    (expense) after provision
    
    
    (511,966
    )
    
    
    3,725,336Noninterest income
    
    
    197,691
    
    
    
    3,593,071Noninterest expense
    
    
    399,649
    
    
    
    4,053,301Income (loss) before taxes
    
    
    (713,924
    )
    
    
    3,265,106Income tax expense
    (benefit)(a)
    
    
    (386,741
    )
    
    
    1,148,042Net income (loss)
    
    $
    (327,183
    )
    
    $
    2,117,064Intersegment revenue (expense)
    
    $
    (54,169
    )
    
    $
    Average assets (in millions)
    
    
    10,179
    
    
    
    118,525

(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.



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##### Table of Contents

80ANNUAL
REPORT2005



________________________________________________________________________________NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Continued)


27. Financial Holding Company

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

Balance Sheets

|                                               |                                                |                      |            |            |            |   |            |            |            | 
|---------------------------------------------- | ---------------------------------------------- | -------------------- | ---------- | ---------- | ---------- | - | ---------- | ---------- | ---------- | 
|                                               |                                               
|                                               |                                                | December 31          |           
|                                               |                                                |                      |           
|(In Thousands)                                 |                                                | 2005                 |            |            | 2004       |  
|                                               |                                               
|Assets                                         |                                                |                      |            |            |            |   |            |           
|                                               | Cash and demand balances due from
    banks    |                      | $          | 509,001    |            |   | $          | 91,495     |           
|                                               | Loans to and receivables from
    subsidiaries |                      |            | 988,695    |            |   |            | 747,581    |           
|                                               | Securities                                     |                      |            | 337,882    |            |   |            | 409,503    |           
|                                               | Other investments                              |                      |            | 238,655    |            |   |            | 77,027     |           
|                                               | Investments in:                                |                      |            |            |            |   |            |            |           
|                                               |                                                | Subsidiary banks     |            |            | 12,901,087 |   |            |            | 13,557,393 | 
|                                               |                                                | Nonbank subsidiaries |            |            | 394,523    |   |            |            | 369,184    | 
|                                               | Goodwill                                       |                      |            | 121,865    |            |   |            | 109,096    |           
|                                               | Derivative assets                              |                      |            | 90,655     |            |   |            | 118,857    |           
|                                               | Other assets                                   |                      |            | 728,260    |            |   |            | 704,760    |           
|                                              
|Total Assets                                   |                                                | $                    | 16,310,623 |            |            | $ | 16,184,896 |           
|                                              
|Liabilities and
    Stockholders Equity       |                                                |                      |            |            |            |   |            |           
|                                               | Long-term debt                                 |                      | $          | 2,330,416  |            |   | $          | 1,913,946  |           
|                                               | Borrowed funds from subsidiaries               |                      |            | 473,522    |            |   |            | 604,629    |           
|                                               | Derivative liabilities                         |                      |            | 34,540     |            |   |            | 16,933     |           
|                                               | Accrued expenses and other
    liabilities     |                      |            | 859,274    |            |   |            | 845,859    |           
|                                              
|                                               |                                                | Total liabilities    |            |            | 3,697,752  |   |            |            | 3,381,367  | 
|                                               | Stockholders equity                           |                      |            | 12,612,871 |            |   |            | 12,803,529 |           
|                                              
|Total Liabilities and
    Stockholders Equity |                                                | $                    | 16,310,623 |            |            | $ | 16,184,896 |           
|                                              

® ®


Statements of Income


|                                                                               |                                           |                       |           |         |           |   |           |         |           |   |           |         |           | 
|------------------------------------------------------------------------------ | ----------------------------------------- | --------------------- | --------- | ------- | --------- | - | --------- | ------- | --------- | - | --------- | ------- | --------- | 
|                                                                               |                                          
|                                                                               |                                           | For the Calendar Year |          
|                                                                               |                                           |                       |          
|(In Thousands)                                                                 |                                           | 2005                  |           |         | 2004      |   |           | 2003    |          
|                                                                               |                                          
|Income                                                                         |                                           |                       |           |         |           |   |           |         |           |   |           |        
|                                                                               | Dividends from:                           |                       |           |         |           |   |           |         |           |   |           |         |          
|                                                                               |                                           | Subsidiary banks      |           | $       | 1,225,000 |   |           | $       | 2,150,000 |   |           | $       | 1,262,810 | 
|                                                                               |                                           | Nonbank subsidiaries  |           |         | 11,411    |   |           |         | 6,061     |   |           |         | 10,000    | 
|                                                                               | Interest on loans to subsidiaries         |                       |           | 47,463  |           |   |           | 17,272  |           |   |           | 1,471   |          
|                                                                               | Interest and dividends on securities      |                       |           | 14,651  |           |   |           | 8,744   |           |   |           | 8,208   |          
|                                                                               | Securities gains, net                     |                       |           | 20,481  |           |   |           | 3,609   |           |   |           | 40,575  |          
|                                                                               | Gain on sale of National Processing       |                       |           |        |           |   |           | 714,195 |           |   |           |        |          
|                                                                               | Other income                              |                       |           | 51,542  |           |   |           | 27,616  |           |   |           | 33,272  |          
|                                                                              
|Total Income                                                                   |                                           |                       | 1,370,548 |         |           |   | 2,927,497 |         |           |   | 1,356,336 |        
|                                                                              
|Expense                                                                        |                                           |                       |           |         |           |   |           |         |           |   |           |        
|                                                                               | Interest on debt and other
    borrowings |                       |           | 121,793 |           |   |           | 81,974  |           |   |           | 97,242  |          
|                                                                               | Other expense                             |                       |           | 124,971 |           |   |           | 100,070 |           |   |           | 118,749 |          
|                                                                              
|Total Expense                                                                  |                                           |                       | 246,764   |         |           |   | 182,044   |         |           |   | 215,991   |        
|                                                                              
|Income before taxes and equity in
    undistributed net income of subsidiaries |                                           |                       | 1,123,784 |         |           |   | 2,745,453 |         |           |   | 1,140,345 |        
|Income tax (benefit) expense                                                   |                                           |                       | (32,964   | )       |           |   | 92,316    |         |           |   | (25,746   | )      
|                                                                              
|Income before equity in
    undistributed net income of subsidiaries           |                                           |                       | 1,156,748 |         |           |   | 2,653,137 |         |           |   | 1,166,091 |        
|Equity in undistributed net income
    of subsidiaries                         |                                           |                       | 828,481   |         |           |   | 126,797   |         |           |   | 950,973   |        
|                                                                              
|Net Income                                                                     |                                           | $                     | 1,985,229 |         |           | $ | 2,779,934 |         |           | $ | 2,117,064 |        
|                                                                              



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##### Table of Contents

ANNUAL REPORT2005  81



________________________________________________________________________________




Statements of Cash Flows

|                                                                   |                                                                                       |                                                                                 |            |            |          |   |            |            |           |   |            |            |          |  
|------------------------------------------------------------------ | ------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | ---------- | ---------- | -------- | - | ---------- | ---------- | --------- | - | ---------- | ---------- | -------- | -
|                                                                   |                                                                                      
|                                                                   |                                                                                       | For the Calendar Year                                                           |           
|                                                                   |                                                                                       |                                                                                 |           
|                                                                   |                                                                                       | 2005                                                                            |            |            | 2004     |   |            | 2003       |          
|(In Thousands)                                                     |                                                                                       |                                                                                 |            |            |          |  
|                                                                   |                                                                                      
|Operating Activities                                               |                                                                                       |                                                                                 |            |            |          |   |            |            |           |   |            |           
|                                                                   | Net income                                                                            |                                                                                 | $          | 1,985,229  |          |   | $          | 2,779,934  |           |   | $          | 2,117,064  |         
|                                                                   | Adjustments to reconcile net income
    to net cash provided by operating activities: |                                                                                 |            |            |          |   |            |            |           |   |            |            |         
|                                                                   |                                                                                       | Equity in undistributed net income
    of subsidiaries                          |            |            | (828,481 | ) |            |            | (126,797  | ) |            |            | (950,973 | )
|                                                                   |                                                                                       | Gain on sale of operating units                                                 |            |            | (16,001  | ) |            |            | (714,195  | ) |            |            |         |  
|                                                                   |                                                                                       | Depreciation and amortization of
    properties and equipment                   |            |            | 2,691    |   |            |            | 2,288     |   |            |            | 1,263    |  
|                                                                   |                                                                                       | Decrease (increase) in receivables
    from subsidiaries                        |            |            | 43,886   |   |            |            | 324,214   |   |            |            | (351,238 | )
|                                                                   |                                                                                       | Securities gains, net                                                           |            |            | (20,481  | ) |            |            | (3,609    | ) |            |            | (40,575  | )
|                                                                   |                                                                                       | Other losses (gains), net                                                       |            |            | 35,716   |   |            |            | (3,273    | ) |            |            | 20,614   |  
|                                                                   |                                                                                       | Amortization of premiums and
    discounts on securities and debt               |            |            | (9,510   | ) |            |            | (6,738    | ) |            |            | (795     | )
|                                                                   |                                                                                       | (Decrease) increase in accrued
    expenses and other liabilities               |            |            | (7,751   | ) |            |            | 167,448   |   |            |            | 2,560    |  
|                                                                   |                                                                                       | Other, net                                                                      |            |            | (2,291   | ) |            |            | (3,454    | ) |            |            | (33,573  | )
|                                                                  
|Net cash provided by operating
    activities                      |                                                                                       |                                                                                 | 1,183,007  |            |          |   | 2,415,818  |            |           |   | 764,347    |           
|                                                                  
|Investing Activities                                               |                                                                                       |                                                                                 |            |            |          |   |            |            |           |   |            |           
|                                                                   | Proceeds from sale of operating
    units                                             |                                                                                 |            | 30,226     |          |   |            | 1,180,120  |           |   |            |           |         
|                                                                   | Purchases of securities                                                               |                                                                                 |            | (305,160   | )        |   |            | (363,917   | )         |   |            | (484,371   | )       
|                                                                   | Proceeds from sales and maturities
    of securities                                  |                                                                                 |            | 339,822    |          |   |            | 159,245    |           |   |            | 569,726    |         
|                                                                   | Net (increase) decrease in other
    investments                                      |                                                                                 |            | (161,628   | )        |   |            | 455,935    |           |   |            | 76,729     |         
|                                                                   | Principal collected on loans to
    subsidiaries                                      |                                                                                 |            | 750,000    |          |   |            | 690,000    |           |   |            | 1,177,334  |         
|                                                                   | Loans to subsidiaries                                                                 |                                                                                 |            | (1,035,000 | )        |   |            | (1,089,000 | )         |   |            | (606,000   | )       
|                                                                   | Investments in subsidiaries                                                           |                                                                                 |            | (75,525    | )        |   |            | (969,547   | )         |   |            | (50,857    | )       
|                                                                   | Returns of investment from
    subsidiaries                                           |                                                                                 |            | 1,436,071  |          |   |            | 259,454    |           |   |            | 300,000    |         
|                                                                   | Net (increase) decrease in
    properties and equipment                               |                                                                                 |            |           |          |   |            | (13,521    | )         |   |            | 10,840     |         
|                                                                   | Cash paid for acquisitions, net of
    cash acquired                                  |                                                                                 |            |           |          |   |            | (190,756   | )         |   |            |           |         
|                                                                  
|Net cash provided by investing
    activities                      |                                                                                       |                                                                                 | 978,806    |            |          |   | 118,013    |            |           |   | 993,401    |           
|                                                                  
|Financing Activities                                               |                                                                                       |                                                                                 |            |            |          |   |            |            |           |   |            |           
|                                                                   | Net decrease in borrowed funds                                                        |                                                                                 |            |           |          |   |            | (46,562    | )         |   |            | (1,020,000 | )       
|                                                                   | Issuance of debt                                                                      |                                                                                 |            | 698,875    |          |   |            | 200,000    |           |   |            | 300,000    |         
|                                                                   | Repayment of debt                                                                     |                                                                                 |            | (366,860   | )        |   |            | (749,558   | )         |   |            | (880       | )       
|                                                                   | Dividends paid                                                                        |                                                                                 |            | (923,993   | )        |   |            | (861,139   | )         |   |            | (764,817   | )       
|                                                                   | Issuances of common stock                                                             |                                                                                 |            | 339,374    |          |   |            | 345,873    |           |   |            | 170,477    |         
|                                                                   | Repurchases of common stock                                                           |                                                                                 |            | (1,491,703 | )        |   |            | (1,468,752 | )         |   |            | (352,617   | )       
|                                                                  
|Net cash used in financing
    activities                          |                                                                                       |                                                                                 | (1,744,307 | )          |          |   | (2,580,138 | )          |           |   | (1,667,837 | )         
|                                                                  
|Increase (decrease) in cash and
    demand balances due from banks |                                                                                       |                                                                                 | 417,506    |            |          |   | (46,307    | )          |           |   | 89,911     |           
|Cash and demand balances due from
    banks, January 1             |                                                                                       |                                                                                 | 91,495     |            |          |   | 137,802    |            |           |   | 47,891     |           
|                                                                  
|Cash and Demand Balances Due
    from Banks, December 31           |                                                                                       | $                                                                               | 509,001    |            |          | $ | 91,495     |            |           | $ | 137,802    |           
|                                                                  
|Supplemental
    Information                                      
|                                                                   | Cash paid for interest                                                                |                                                                                 | $          | 118,555    |          |   | $          | 101,442    |           |   | $          | 92,916     |         
|                                                                   | Noncash transactions:                                                                 |                                                                                 |            |            |          |   |            |            |           |   |            |            |         
|                                                                   |                                                                                       | Carrying value of securities
    donated to National City Charitable Foundation |            |            | 24,179   |   |            |            | 422       |   |            |            | 25,007   |  
|                                                                   |                                                                                       | Common shares, preferred shares,
    and stock options issued for acquisitions  |            |            | (10,842  | ) |            |            | 2,643,431 |   |            |            |         |  
|                                                                  





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##### Table of Contents

82ANNUAL
REPORT2005



________________________________________________________________________________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 2005 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, 2005

o 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)

8.375% Senior Notes Due 2032



(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 if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act
YES ü    NO

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act.
YES          NO ü

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 ü    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 a large
accelerated filer, an accelerated filer or a non-accelerated
filer (as defined in
Rule 12b-2 of the
Act). 
 Large accelerated
filer ü    Accelerated
filer    Non-accelerated
filer

Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2 of the
Exchange Act).
YES          NO ü

The aggregate market value of the registrants outstanding
voting common stock held by nonaffiliates on June 30, 2005,
determined using a per share closing price on that date of
$34.12, as quoted on the New York Stock Exchange, was
$20,316,181,910.

The number of shares outstanding of each of the
registrants classes of common stock, as of
December 31, 2005:

Common Stock, $4.00 Per
Share  615,047,663

Documents Incorporated By Reference:

Portions of the registrants Proxy Statement (to be dated
approximately March 8, 2006) 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.



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##### Table of Contents

ANNUAL REPORT2005  83



________________________________________________________________________________




Form 10-K Cross Reference Index

|                                              |             |                                                                                                                         |                                                                                                                   |       |                      |              | 
|--------------------------------------------- | ----------- | ----------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ----- | -------------------- | ------------ | 
|                                              |             |                                                                                                                         |                                                                                                                   | Pages |                     
|                                              |            
|Part I                                        |             |                                                                                                                         |                                                                                                                   |       |                      |             
|                                              | Item  1    |                                                                                                                         | Business                                                                                                          |       |                      |              | 
|Description of Business                       |             |                                                                                                                         | 9, 41, 50-51, 84-85                                                                                               |      
|Average Balance
    Sheets/Interest/Rates     |             |                                                                                                                         | 10-12                                                                                                             |      
|Volume and Rate Variance Analysis             |             |                                                                                                                         | 12                                                                                                                |      
|Securities                                    |             |                                                                                                                         | 21, 57-58                                                                                                         |      
|Loans                                         |             |                                                                                                                         | 18-21, 55-57                                                                                                      |      
|Risk Elements of Loan Portfolio               |             |                                                                                                                         | 22-25, 55-57                                                                                                      |      
|Interest Bearing Liabilities                  |             |                                                                                                                         | 10-12,21-22,62-64                                                                                                 |      
|Line of Business Results                      |             |                                                                                                                         | 16-17, 77-79                                                                                                      |      
|Financial Ratios                              |             |                                                                                                                         | 34                                                                                                                |      
|                                              | Item  1A   |                                                                                                                         | Risk Factors                                                                                                      |       |                      | 85           | 
|                                              | Item  1B   |                                                                                                                         | Unresolved Staff Comments - None                                                                                  |       |                      |              | 
|                                              | Item  2    |                                                                                                                         | Properties                                                                                                        |       |                      | 85           | 
|                                              | Item  3    |                                                                                                                         | Legal Proceedings                                                                                                 |       |                      | 67-70, 85    | 
|                                              | Item  4    |                                                                                                                         | Submission of Matters to a Vote of
    Security Holders - None                                                    |       |                      |              | 
|                                             
|Part II                                       |             |                                                                                                                         |                                                                                                                   |       |                      |             
|                                              | Item  5    |                                                                                                                         | Market for Registrants Common
    Equity, Related Stockholder                                                   
|                                              |             | Matters, and Issuer Purchases
    of                                                                                    |                                                                                                                   |       | 22, 26-27, 33, 70-71 |             
|                                              |             | Equity Securities 
    Note (1)                                                                                        |                                                                                                                   |       | inside back cover    |             
|                                              | Item  6    |                                                                                                                         | Selected Financial Data                                                                                           |       |                      | 34           | 
|                                              | Item  7    |                                                                                                                         | Managements Discussion and
    Analysis of Financial Condition and Results
    of Operations                     |       |                      | 9-32         | 
|                                              | Item  7A   |                                                                                                                         | Quantitative and Qualitative                                                                                      |       |                      |              | 
|                                              |             | Disclosures About Market Risk                                                                                           |                                                                                                                   |       | 25-26                |             
|                                              | Item  8    |                                                                                                                         | Financial Statements and
    Supplementary Data                                                                   |       |                      | 32-33, 35-81 | 
|                                              | Item  9    |                                                                                                                         | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure - None                   |       |                      |              | 
|                                              | Item  9A   |                                                                                                                         | Controls and Procedures                                                                                           |       |                      | 35, 36, 86   | 
|                                              | Item  9B   |                                                                                                                         | Other Information 
    Note (2)                                                                                  |       |                      |              | 
|                                             
|Part III                                      |             |                                                                                                                         |                                                                                                                   |       |                      |             
|                                              | Item 10    |                                                                                                                         | Directors and Executive Officers of
    the Registrant:                                                           |       |                      |              | 
|                                              |             | Directors - Note (3)                                                                                                    |                                                                                                                   |       |                      |             
|                                              |             | Executive Officers                                                                                                      |                                                                                                                   |       | 85-86                |             
|                                              |             | Audit Committee Financial Expert -
    Note (3)                                                                         |                                                                                                                   |       |                      |             
|                                              |             | Identification of the Audit
    Committee - Note (3)                                                                    |                                                                                                                   |       |                      |             
|                                              |             | Changes to Director Nominating
    Procedures - None                                                                    |                                                                                                                   |       |                      |             
|                                              |             | Compliance with Section 16(a) of
    the Securities Exchange Act - Note (3)                                             |                                                                                                                   |       |                      |             
|                                              |             | Code of Ethics - Note (3)                                                                                               |                                                                                                                   |       |                      |             
|                                              | Item 11    |                                                                                                                         | Executive Compensation -
    Note (3)                                                                            
|                                              | Item 12    |                                                                                                                         | Security Ownership of Certain
    Beneficial Owners and Management and Related Stockholder
    Matters - Note (3) |       |                      |              | 
|                                              |             | Equity Compensation
    Plan Table                                                                                      |                                                                                                                   |       | 71                   |             
|                                              | Item 13    |                                                                                                                         | Certain Relationships and Related
    Transactions - Note (3)                                                     |       |                      |              | 
|                                              | Item 14    |                                                                                                                         | Principal Accounting Fees and
    Services - Note (3)                                                             |       |                      |              | 
|                                             
|Part IV                                       |             |                                                                                                                         |                                                                                                                   |       |                      |             
|                                              | Item 15    |                                                                                                                         | Exhibits, Financial Statement
    Schedules                                                                       |       |                      | 83           | 
|                                              |             | Report on Consolidated
    Financial Statements of Ernst & Young LLP, Independent
    Registered Public Accounting Firm |                                                                                                                   |       | 36                   |             
|                                              |             | Consolidated Financial Statements                                                                                       |                                                                                                                   |       | 37-81                |             
|Signatures                                    |             |                                                                                                                         | 87                                                                                                                |      
|Certifications of Chief Executive
    Officer |             |                                                                                                                         | 87                                                                                                                |      
|Certifications of Chief Financial
    Officer |             |                                                                                                                         | 88                                                                                                                |      
|                                             

10-K











|           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|---------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note (1)  |  | Recent Sales of Unregistered Securities  A total of
    75,758 common shares were issued in consideration of a
    settlement and release agreement entered into as of
    November 4, 2005 between National City Corporation and
    First Banks, Inc. These shares were valued at the closing price
    on October 17, 2005 of $33.00 per share. The shares are
    exempt from registration under the Securities Act of 1933
    pursuant to Section 4(2) of the 1933 Act and the provisions
    of Rule 506 of Regulation D under the 1933 Act and based on
    reliance of First Banks representation and warranty that
    it is an accredited investor, as that term is
    defined in Rule 501 of Regulation D, and other
    representations and warranties required under Regulation D.
|          
|Note (2)  |  | On February 6, 2006, the Corporation entered into an amended
    Severance Agreement, in the form of the agreement referenced in
    exhibit 10.10 to this
    Form 10-K, with
    Daniel J. Frate, an executive vice president of the Corporation.
    The agreement provides for certain benefits for senior
    executives in the event of a change in control and allows a
    senior executive to terminate employment with the Corporation or
    any subsidiary for any reason, or without reason, during the
    30-day period immediately following the first anniversary of the
    first occurrence of a change in control with the right to the
    severance compensation provided for in the agreement.                                                                                
|          
|Note (3)  |  | Incorporated by reference from the Corporations Proxy
    Statement to be dated approximately March 8, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        






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84ANNUAL
REPORT2005



________________________________________________________________________________FORM 10-K
(Continued)


Business

National City Corporation (National City or the Corporation),
founded in 1845, is a $142.4 billion in assets financial
holding company headquartered in Cleveland, Ohio. National City
operates through an extensive distribution network in Ohio,
Illinois, Indiana, 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 540 retail and wholesale
mortgage offices located throughout the United States. National
City and its subsidiaries had 34,270 full-time-equivalent
employees at December 31, 2005.

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.

The Sarbanes-Oxley Act of 2002 addresses, among other issues,
corporate governance, auditing and accounting, executive
compensation, and enhanced and timely disclosure of corporate
information. The Corporation is also subject to New York Stock
Exchange corporate governance rules.

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 has approved a series of
actions to strengthen and improve corporate governance practices
including 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) 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 17 to the Corporations
consolidated financial statements.

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

National Citys subsidiary banks are also subject to
certain laws of each state in which such bank is located. Such
state laws may restrict branching of banks within the state and
acquisition or merger involving banks located in other states.
Ohio, 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 con-



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ANNUAL REPORT2005  85



________________________________________________________________________________




trolled 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.

Risk Factors

Investments in National City common stock involve risk.

The market price of National City common stock may fluctuate
significantly in response to a number of factors, including:




    changes in securities analysts estimates of financial
    performance
    volatility of stock market prices and volumes
    rumors or erroneous information
    changes in market valuations of similar companies
    changes in interest rates
    new developments in the banking industry
    variations in quarterly or annual operating results
    new litigation or changes in existing litigation
    regulatory actions
    changes in accounting policies or procedures as may be required
    by the Financial Accounting Standards Board or other regulatory
    agenciesIf National City does not adjust to changes in the financial
services industry, its financial performance may suffer.

National Citys ability to maintain its history of strong
financial performance and return on investment to shareholders
will depend in part on its ability to expand its scope of
available financial services to its customers. In addition to
other banks, competitors include securities dealers, brokers,
mortgage bankers, investment advisors, and finance and insurance
companies. The increasingly competitive environment is, in part,
a result of changes in regulation, changes in technology and
product delivery systems, and the accelerating pace of
consolidation among financial service providers.

Future governmental regulation and legislation could limit
growth.

National City and its subsidiaries are subject to extensive
state and federal regulation, supervision and legislation that
govern nearly every aspect of its operations. Changes to these
laws could affect National Citys ability to deliver or
expand its services and diminish the value of its business.

Changes in interest rates could reduce income and cash flow.

National Citys income and cash flow depends to a great
extent on the difference between the interest earned on loans
and investment securities, and the interest paid on deposits and
other borrowings. Interest rates are beyond National Citys
control, and they fluctuate in response to general economic
conditions and the policies of various governmental and
regulatory agencies, in particular, the Federal Reserve Board.
Changes in monetary policy, including changes in interest rates,
will influence the origination of loans, the purchase of
investments, the generation of deposits and the rates received
on loans and investment securities and paid on deposits.

Additional risks and uncertainties could have a negative effect
on financial performance.

Additional factors could have a negative effect on the financial
performance of National City and National City common stock.
Some of these factors are general economic and financial market
conditions, competition, continuing consolidation in the
financial services industry, new litigation or changes in
existing litigation, regulatory actions, and losses.

Properties

National City owns its corporate headquarters building, National
City Center, located in Cleveland, Ohio. The Corporation also
owns freestanding operations 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 21 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 3,
2006) are as follows:

|                         |  |     |    |  |          |                                                             
|------------------------ |  | --- | -- |  | -------- | ------------------------------------------------------------
|Name                     |  | Age |    |  | Position
|                        
|David A. Daberko         |  |     | 60 |  |          | Chairman and Chief Executive Officer                        
|Jeffrey D. Kelly         |  |     | 52 |  |          | Vice Chairman and
    Chief Financial Officer               
|William E. MacDonald III |  |     | 59 |  |          | Vice Chairman                                               
|Peter E. Raskind         |  |     | 49 |  |          | Vice Chairman                                               
|James R. Bell III        |  |     | 49 |  |          | Executive Vice President                                    
|Daniel J. Frate          |  |     | 44 |  |          | Executive Vice President                                    
|John D. Gellhausen       |  |     | 40 |  |          | Executive Vice President                                    
|Paul D. Geraghty         |  |     | 52 |  |          | Executive Vice President                                    
|Jon L. Gorney            |  |     | 55 |  |          | Executive Vice President                                    
|Timothy J. Lathe         |  |     | 50 |  |          | Executive Vice President                                    
|Ted M. Parker            |  |     | 45 |  |          | Executive Vice President                                    
|Richard B. Payne, Jr.    |  |     | 57 |  |          | Executive Vice President                                    
|Philip L. Rice           |  |     | 47 |  |          | Executive Vice President                                    
|Shelley J. Seifert       |  |     | 51 |  |          | Executive Vice President                                    
|David L. Zoeller         |  |     | 56 |  |          | Executive Vice President, General
    Counsel, and Secretary
|James P. Gulick          |  |     | 47 |  |          | Senior Vice President and General
    Auditor               
|Robert B. Crowl          |  |     | 42 |  |          | Senior Vice President and
    Comptroller                   
|Thomas A. Richlovsky     |  |     | 54 |  |          | Senior Vice President and Treasurer                         
|Jon N. Couture           |  |     | 40 |  |          | Senior Vice President                                       
|Clark H. Khayat          |  |     | 34 |  |          | Senior Vice President                                       
|                        









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86ANNUAL
REPORT2005



________________________________________________________________________________FORM 10-K
(Continued)


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

Mr. MacDonald III has been vice chairman since 2001.
Prior to that time, he was a senior executive vice president
from 1999 to 2001.

Mr. Raskind has been vice chairman since December 2004. He
was an executive vice president from 2000 to December 2004.

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. Frate has been an executive vice president since
November 2005. He had been a senior vice president since 2003.
Prior to joining National City, he served as president and chief
operating officer of Bank One Card Services and president of
U.S. Bancorps Payment Systems.

Mr. Gellhausen has been an executive vice president since
2002. Prior to that time, he was president and chief operating
officer of National City Mortgage Co. from 2000 to 2002.

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

Mr. Lathe has been an executive vice president since 2000.
He has been chairman and chief executive officer of NatCity
Investments, Inc. since August 2004 and chairman and chief
executive officer of National City Bank of the Midwest since
2000.

Mr. Parker has been an executive vice president since 2001
and president and chief executive officer for the state of
Michigan since December 2005. He was the head of Institutional
Asset Management from May 2004 to December 2005 and the
president and chief executive officer of National City Bank of
Kentucky from 2001 to 2004.

Mr. Payne has been an executive vice president since 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. Rice has been an executive vice president and president
and chief executive officer of National City Bank since 2000.

Ms. Seifert has been an executive vice president since 2000.

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

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

Mr. Crowl has been a senior vice president since 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.

Mr. Couture has been a senior vice president since November
2004 and director of corporate human resources for National City
since September 2004. Mr. Couture joined National City in
July 2004 and prior to that was senior vice president, human
resources at Siemens Business Services Inc. from April 2000 to
July 2004.

Mr. Khayat has been a senior vice president since November
2005 and is the head of Corporate Planning. He has been with
National City since 2003 and, prior to rejoining National City,
he was an engagement manager at McKinsey & Company.
Prior to McKinsey and Company, Mr. Khayat was a vice
president in NatCity Investments Corporate Finance Group.

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, 2005,
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, 2005 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, 2005 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, 2005, 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,
2005, 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, 2005.



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##### Table of Contents

ANNUAL REPORT2005  87



________________________________________________________________________________




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 6, 2006.

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 6, 2006.

-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

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; andd) 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; and5. 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; andb) 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 6, 2006



By:
    -s- David A. Daberko

David A. Daberko

Chairman and Chief Executive Officer



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##### Table of Contents

88ANNUAL
REPORT2005



________________________________________________________________________________FORM 10-K
(Continued)


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, 2005 (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 6, 2006



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

In accordance with the rules of the New York Stock Exchange, the
chief executive officer of National City submitted the required
annual Section 303A.12(a) chief executive officer
certification to the New York Stock Exchange on May 18,
2005. National Citys
Form 10-K for its
fiscal year ended December 31, 2005, as filed with the
Securities and Exchange Commission includes, as exhibits, the
certifications of National Citys chief executive officer
and chief financial officer required by Section 302 of the
Sarbanes-Oxley Act of 2002.

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; andd) 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; and5. 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; andb) 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 6, 2006



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, 2005 (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 6, 2006



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.



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##### Table of Contents



Corporate
Headquarters
 
 Transfer
Agent and Registrar
 
  Investor
Information
 
 Web
Site Access to United States Securities and Exchange Commission Filings
  Common
Stock Listing
 NCC NtlCity
 Corporate
Governance
  Annual
Meeting
  Dividend
Reinvestment and Stock Purchase Plan
  Direct
Deposit of Dividends
  NAIC
   Dominion
    
    
    
    
    MoodysBond Rating
    
    
    Fitch
    
    Investors
    
    StandardService
    
    
    Ratings
    
    Service
    
    & PoorsNational City
Corporation
    
    
    
    
    
    A/BCommercial Paper
    
    R-1(mid)
    
    F1+
    
    P-1
    
    A-1Senior Debt
    
    A(high)
    
    AA-
    
    A1
    
    ASubordinated debt
    
    
    
    
    
    A+
    
    A2
    
    A-Bank Subsidiaries
    
    
    
    
    
    A/BShort-term
certificates of
deposit
    
    R-1(mid)
    
    F1+
    
    P-1
    
    A-1Long -term
certificates of
Deposit
    
    AA(low)
    
    AA
    
    Aa3
    
    A+Senior bank notes
    
    AA(low)
    
    AA-
    
    Aa3
    
    A+Subordinated bank
notes
    
    
    
    
    
    A+
    
    A1
    
    A
  First
    
    
    Second
    
    
    Third
    
    
    Fourth
    
    
    FullQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Year2005Dividends Paid
    
    $
    .35
    
    
    $
    .35
    
    
    $
    .37
    
    
    $
    .37
    
    
    $
    1.44High
    
    
    37.75
    
    
    
    35.30
    
    
    
    37.85
    
    
    
    35.04
    
    
    
    37.85Low
    
    
    32.85
    
    
    
    32.08
    
    
    
    33.37
    
    
    
    29.80
    
    
    
    29.80Close
    
    
    33.50
    
    
    
    34.12
    
    
    
    33.44
    
    
    
    33.57
    
    
    
    33.572004Dividends Paid
    
    $
    .32
    
    
    $
    .32
    
    
    $
    .35
    
    
    $
    .35
    
    
    $
    1.34High
    
    
    37.10
    
    
    
    36.10
    
    
    
    39.35
    
    
    
    39.66
    
    
    
    39.66Low
    
    
    32.14
    
    
    
    32.60
    
    
    
    34.35
    
    
    
    36.07
    
    
    
    32.14Close
    
    
    35.58
    
    
    
    35.01
    
    
    
    38.62
    
    
    
    37.55
    
    
    
    37.55




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##### Table of Contents








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##### Table of Contents

Exhibit Index

|        |      |  |                     |                                                                                                                                                                                                                                                                                                                                                   
|------- | ---- |  | ------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |  |                    
|Number  |      |  | Exhibit Description
|        |      |  |                    
|        | 3.1  |  |                     | Amended and Restated Certificate of
    Incorporation of National City Corporation dated April 13, 1999
    (filed as Exhibit 3.2 to Registrants Quarterly Report
    on Form 10-Q for the quarter and nine months ended September 30,
    2000, and incorporated herein by reference).                                                          
|        | 3.2  |  |                     | National City Corporation First
    Restatement of By-laws adopted April 27, 1987 (as Amended
    through February 28, 2005) (filed as Exhibit 3(ii) to
    Registrants Current Report on Form 8-K filed on
    February 28, 2005, and incorporated herein by reference).                                                                        
|        | 3.3  |  |                     | Certificate of Designation Rights
    and Preferences of the Series D Non-voting Convertible Preferred
    Stock Without Par Value of National City Corporation (filed as
    Exhibit 3.3 to Registrants Annual Report on
    Form 10-K for the fiscal year ended December 31, 2004,
    and incorporated herein by reference).                  
|        | 4.1  |  |                     | Amended and restated Certificate of
    Incorporation of National City Corporation dated April 13, 1999
    (filed as Exhibit 3.2 to Registrants Quarterly Report
    on Form 10-Q for the quarter and nine months ended September 30,
    2000, and incorporated herein by reference) related to capital
    stock of National City Corporation.
|        | 4.2  |  |                     | National City Corporation First
    Restatement of By-laws adopted April 27, 1987 (as Amended
    through February 28, 2005) (filed as Exhibit 3(ii) to
    Registrants Current Report on Form 8-K filed on
    February 28, 2005, and incorporated herein by reference)
    related to stockholder rights.                                      
|        | 4.3  |  |                     | Certificate of Designation Rights
    and Preferences of the Series D Non-voting Convertible Preferred
    Stock Without Par Value of National City Corporation (filed as
    Exhibit 3.3 to Registrants Annual Report on
    Form 10-K for the fiscal year ended December 31, 2004,
    and incorporated herein by reference).                  
|        | 4.4  |  |                     | National City agrees to furnish
    upon request to the Commission a copy of each instrument
    defining the rights of holders of Senior and Subordinated debt
    of National City.                                                                                                                                                             
|        | 10.1 |  |                     | National City Corporation 1989
    Stock Option Plan (filed as Exhibit 10.1 to
    Registrants Quarterly Report on Form 10-Q for the quarter
    ended March 31, 2003, and incorporated herein by reference).                                                                                                                                    
|        | 10.2 |  |                     | National City Corporations
    1993 Stock Option Plan (filed as Exhibit 10.5 to
    Registration Statement No. 33-49823 and incorporated herein by
    reference).                                                                                                                                                                               
|        | 10.3 |  |                     | National City Corporation 150th
    Anniversary Stock Option Plan (filed as Exhibit 4 to
    Registrants Form S-8 Registration Statement No. 33-58815
    dated April 25, 1995, and incorporated herein by reference).                                                                                                                           
|        | 10.4 |  |                     | National City Corporation Plan for
    Deferred Payment of Directors Fees, as Amended (filed as
    Exhibit 10.5 to Registration Statement No. 2-914334 and
    incorporated herein by reference).                                                                                                                                               
|        | 10.5 |  |                     | National City Corporation
    Supplemental Executive Retirement Plan, as Amended and Restated
    July 1, 2002 (filed as Exhibit 10.7 to
    Registrants Quarterly Report on Form 10-Q for the quarter
    ended June 30, 2002, and incorporated herein by reference).                                                                           
|        | 10.6 |  |                     | National City Corporation Amended
    and Second Restated 1991 Restricted Stock Plan (filed as
    Exhibit 10.9 to Registration Statement No. 33-49823 and
    incorporated herein by reference).                                                                                                                                                 
|        | 10.7 |  |                     | Form of grant made under National
    City Corporation 1991 Restricted Stock Plan in connection with
    National City Corporation Supplemental Executive Retirement Plan
    as Amended (filed as Exhibit 10.7 to Registrants
    Quarterly Report on Form 10-Q for the quarter ended March 31,
    2003, and incorporated herein by reference).
|        | 10.8 |  |                     | Central Indiana Bancorp Option Plan
    effective March 15, 1991 (filed as Exhibit 10.8 to
    Registrants Quarterly Report on Form 10-Q for the quarter
    ended March 31, 2003, and incorporated herein by reference).                                                                                                                        
|        | 10.9 |  |                     | Central Indiana Bancorp 1993 Option
    Plan effective October 12, 1993 (filed as Exhibit 10.9
    to Registrants Quarterly Report on Form 10-Q for the
    quarter ended March 31, 2003, and incorporated herein by
    reference).                                                                                                             



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##### Table of Contents



|        |       |  |                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------- | ----- |  | ------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |                    
|Number  |       |  | Exhibit Description
|        |       |  |                    
|        | 10.10 |  |                     | Form of contracts with David A.
    Daberko, William E. MacDonald III, Jon L. Gorney, Jeffrey D.
    Kelly, David L. Zoeller, Thomas A. Richlovsky, James P. Gulick,
    John D. Gellhausen, James R. Bell III, Peter E. Raskind, Philip
    L. Rice, Timothy J. Lathe, Shelley J. Seifert, Daniel J. Frate,
    Ted M. Parker, Paul D. Geraghty, and Richard B.
    Payne, Jr. (filed as Exhibit 10.29 to
    Registrants Form S-4 Registration Statement No. 333-45609
    dated February 4, 1998, and incorporated herein by reference).
|        | 10.11 |  |                     | Split Dollar Insurance Agreement
    effective January 1, 1994, between National City Corporation and
    certain key employees (filed as Exhibit 10.11 to
    Registrants Quarterly Report on Form 10-Q for the quarter
    ended March 31, 2003, and incorporated herein by reference).                                                                                                                                                                                                                                                  
|        | 10.12 |  |                     | Restated First of America Bank
    Corporation 1987 Stock Option Plan (filed as Exhibit 4.4 to
    Registrants Post-Effective Amendment No. 2 [on Form S-8]
    to Form S-4 Registration Statement No. 333-46571 dated March 19,
    1998, and incorporated herein by reference).                                                                                                                                                                                                                                                          
|        | 10.13 |  |                     | Amended and Restated First of
    America Bank Corporation Stock Compensation Plan (filed as
    Exhibit 4.5 to Registrants Post-Effective Amendment
    No. 2 [on Form S-8] to Form S-4 Registration Statement No.
    333-46571 dated March 19, 1998, and incorporated herein by
    reference).                                                                                                                                                                                                                                         
|        | 10.14 |  |                     | First of America Bank Corporation
    Directors Stock Compensation Plan (filed as Exhibit 4.6 to
    Registrants Post-Effective Amendment No. 2 [on Form S-8]
    to Form S-4 Registration Statement No. 333-46571 dated March 19,
    1998, and incorporated herein by reference).                                                                                                                                                                                                                                                        
|        | 10.15 |  |                     | National City Corporation 1997
    Stock Option Plan as Amended and Restated effective October 22,
    2001 (filed as Exhibit 10.17 to Registrants Annual
    Report on Form 10-K for the fiscal year ended December 31, 2001,
    and incorporated herein by reference).                                                                                                                                                                                                                                                                  
|        | 10.16 |  |                     | National City Corporation 1997
    Restricted Stock Plan as Amended and Restated effective
    October 31, 2001 (filed as Exhibit 10.18 to
    Registrants Annual Report on Form 10-K for the fiscal year
    ended December 31, 2001, and incorporated herein by
    reference).                                                                                                                                                                                                                                                          
|        | 10.17 |  |                     | National City Corporation Retention
    Plan for Executive Officers, Amended and Restated effective
    January 1, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 10.18 |  |                     | Integra Financial Corporation
    Employee Stock Option Plan (filed as Exhibit 4.3 to
    Registrants Post-Effective Amendment No. 1 [on Form S-8]
    to Form S-4 Registration Statement No. 333-01697, dated April
    30, 1996, and incorporated herein by reference).                                                                                                                                                                                                                                                                  
|        | 10.19 |  |                     | Integra Financial Corporation
    Management Incentive Plan (filed as Exhibit 4.4 to
    Registrants Post-Effective Amendment No. 1 [on Form S-8]
    to Form S-4 Registration Statement No. 333-01697, dated April
    30, 1996, and incorporated herein by reference).                                                                                                                                                                                                                                                                   
|        | 10.20 |  |                     | Integra Financial Corporation
    Non-Employee Directors Stock Option Plan (filed as
    Exhibit 4.5 to Registrants Post-Effective Amendment
    No. 1 [on Form S-8] to Form S-4 Registration Statement No.
    333-01697, dated April 30, 1996, and incorporated herein by
    reference).                                                                                                                                                                                                                                                
|        | 10.21 |  |                     | National City Corporation Amended
    and Restated Long-Term Incentive Compensation Plan for Senior
    Officers as Amended and Restated effective January 1, 2001
    (filed as Exhibit 10.32 to Registrants Quarterly Report on
    Form 10-Q for the quarter and nine months ended September 30,
    2000, and incorporated herein by reference).                                                                                                                                                                                       
|        | 10.22 |  |                     | The National City Corporation
    Management Incentive Plan for Senior Officers, as Amended and
    Restated effective February 23, 2004 (filed as Exhibit D to
    Registrants Proxy Statement dated March 11, 2004, and
    incorporated herein by reference).                                                                                                                                                                                                                                                                           
|        | 10.23 |  |                     | National City Corporation
    Supplemental Cash Balance Pension Plan as Amended and Restated
    effective November 1, 2001 (filed as Exhibit 10.25 to
    Registrants Annual Report on Form 10-K for the fiscal year
    ended December 31, 2001, and incorporated herein by reference).                                                                                                                                                                                                                                                  
|        | 10.24 |  |                     | The National City Corporation 2001
    Stock Option Plan as Amended and Restated effective October 22,
    2001 (filed as Exhibit 10.27 to Registrants Annual
    Report on Form 10-K for the fiscal year ended December 31, 2001,
    and incorporated herein by reference).                                                                                                                                                                                                                                                              
|        | 10.25 |  |                     | [Reserved]                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10.26 |  |                     | [Reserved]                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10.27 |  |                     | National City Corporation 2002
    Restricted Stock Plan (filed as Exhibit A to
    Registrants Proxy Statement dated March 8, 2002, and
    incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                            



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##### Table of Contents



|        |       |  |                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------- | ----- |  | ------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |                    
|Number  |       |  | Exhibit Description
|        |       |  |                    
|        | 10.28 |  |                     | The National City Corporation
    Long-Term Deferred Share Compensation Plan effective
    April 22, 2002 (filed as Exhibit 10.33 to
    Registrants Quarterly Report on Form 10-Q for the quarter
    ended June 30, 2002, and incorporated herein by reference).                                                                                                                                                                                                               
|        | 10.29 |  |                     | The National City Corporation
    Deferred Compensation Plan as Amended and Restated effective
    July 23, 2002 (filed as Exhibit 10.34 to Registrants
    Quarterly Report on Form 10-Q for the quarter ended June 30,
    2002, and incorporated herein by reference).                                                                                                                                                                                                        
|        | 10.30 |  |                     | Form of Agreement Not To Compete
    with David A. Daberko and William E. MacDonald III (filed as
    Exhibit 10.35 to Registrants Quarterly Report on Form
    10-Q for the quarter ended June 30, 2002, and incorporated
    herein by reference).                                                                                                                                                                                                                             
|        | 10.31 |  |                     | Visa®
    U.S.A. Inc. limited guaranty between National City Corporation
    and
    Visa®
    U.S.A. Inc. dated August 6, 2002 (filed as Exhibit 10.36 to
    Registrants Quarterly Report on Form 10-Q for the quarter
    and nine months ended September 30, 2002, and incorporated
    herein by reference).                                                                                                                                                                
|        | 10.32 |  |                     | The National City Corporation
    Executive Savings Plan, as Amended and Restated effective
    January 1, 2003 (filed as Exhibit 10.32 to
    Registrants Annual Report on Form 10-K for the fiscal year
    ended December 31, 2002, and incorporated herein by
    reference).                                                                                                                                                                                                
|        | 10.33 |  |                     | The National City Corporation
    Savings and Investment Plan, as Amended and Restated effective
    January 1, 2001 (filed as Exhibit 10.33 to
    Registrants Annual Report on Form 10-K for the fiscal year
    ended December 31, 2002, and incorporated herein by reference).                                                                                                                                                                                               
|        | 10.34 |  |                     | [Reserved]                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 10.35 |  |                     | Amendment No. 1 to the National
    City Savings and Investment Plan, as Amended and Restated
    effective January 1, 2001 (filed as Exhibit 10.35 to
    Registrants Annual Report on Form 10-K for the fiscal year
    ended December 31, 2002, and incorporated herein by reference).                                                                                                                                                                                        
|        | 10.36 |  |                     | [Reserved]                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 10.37 |  |                     | Amendment No. 1 to the Split Dollar
    Insurance Agreement effective January 1, 2003 (filed as
    Exhibit 10.37 to Registrants Annual Report on Form
    10-K for the fiscal year ended December 31, 2002, and
    incorporated herein by reference).                                                                                                                                                                                                                          
|        | 10.38 |  |                     | Credit Agreement dated as of April
    12, 2001, by and between National City and the banks named
    therein (filed as Exhibit 4.2 to Registrants
    Quarterly Report on Form 10-Q for the quarter ended March 31,
    2001, and incorporated herein by reference) and the Assumption
    Agreement dated June 11, 2002 (filed as Exhibit 4.2 to
    Registrants Quarterly Report on Form 10-Q for the quarter
    ended June 30, 2002, and incorporated herein by reference).
|        | 10.39 |  |                     | MasterCard International
    Incorporated limited guaranty between National City Corporation
    and MasterCard International Incorporated dated April 30, 2003
    (filed as Exhibit 10.39 to Registrants Quarterly
    Report on Form 10-Q for the quarter ended March 31, 2003, and
    incorporated herein by reference).                                                                                                                                                    
|        | 10.40 |  |                     | The National City Corporation
    Long-Term Cash and Equity Incentive Plan (filed as
    Exhibit 10.40 to the Registrants Quarterly Report on
    Form 10-Q for the quarter year ended September 30,
    2005, and incorporated herein by reference).                                                                                                                                                                                                                            
|        | 10.41 |  |                     | National City Executive Long-Term
    Disability Plan (filed as Exhibit 10.41 to
    Registrants Annual Report on Form 10-K for the fiscal
    year ended December 31, 2004, and incorporated herein by
    reference).                                                                                                                                                                                                                                                          
|        | 10.42 |  |                     | Amendment No. 2 to the National
    City Savings and Investment Plan, as Amended and Restated
    effective January 1, 2001 (filed as Exhibit 10.42 to the
    Registrants Quarterly Report on Form 10-Q for the quarter
    ended March 31, 2004, and incorporated herein by reference).                                                                                                                                                                                        
|        | 10.43 |  |                     | [Reserved]                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 10.44 |  |                     | Amendment No. 3 to the National
    City Savings and Investment Plan, as Amended and Restated
    effective January 1, 2001 (filed as Exhibit 10.1 to the
    Registrants Post-Effective Amendment No. 3 to Form
    S-8 Registration Statement No. 333-61712 dated April 19, 2004,
    and incorporated herein by reference).                                                                                                                                                   
|        | 10.45 |  |                     | [Reserved]                                                                                                                                                                                                                                                                                                                                                                                                                                                                        



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##### Table of Contents



|        |       |  |                     |                                                                                                                                                                                                                                                                                                                                
|------- | ----- |  | ------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |                    
|Number  |       |  | Exhibit Description
|        |       |  |                    
|        | 10.46 |  |                     | Amendment No. 4 to the National
    City Savings and Investment Plan, as Amended and Restated
    effective January 1, 2001 (filed as Exhibit 10.3 to the
    Registrants Post-Effective Amendment No. 3 to Form
    S-8 Registration Statement No. 333-61712 dated April 19, 2004,
    and incorporated herein by reference).
|        | 10.47 |  |                     | Allegiant Bancorp, Inc. 2002 Stock
    Incentive Plan (filed as Appendix A to Allegiant Bancorp,
    Inc.s Proxy Statement for its 2002 Annual Meeting, and
    incorporated herein by reference).                                                                                                                            
|        | 10.48 |  |                     | Allegiant Bancorp, Inc. 2000 Stock
    Incentive Plan (filed as Annex A to Allegiant Bancorp,
    Inc.s Proxy Statement for its 2000 Annual Meeting, and
    incorporated herein by reference).                                                                                                                               
|        | 10.49 |  |                     | Provident Financial Group, Inc.
    1988 Stock Option Plan (filed as Exhibit 10.18 to Provident
    Financial Group, Inc.s Annual Report on Form 10-K for the
    fiscal year ended December 31, 2002, and incorporated herein by
    reference).                                                                             
|        | 10.50 |  |                     | Provident Financial Group, Inc.
    1996 Non-Executive Officer Stock Option Plan (filed as
    Exhibit 10.19 to Provident Financial Group, Inc.s
    Annual Report on Form 10-K for the fiscal year ended
    December 31, 2002, and incorporated herein by reference).                                                       
|        | 10.51 |  |                     | Provident Financial Group, Inc.
    1997 Stock Option Plan (filed as Exhibit 10.20 to Provident
    Financial Group, Inc.s Annual Report on Form 10-K for the
    fiscal year ended December 31, 2002, and incorporated herein by
    reference).                                                                             
|        | 10.52 |  |                     | Provident Financial Group, Inc.
    2000 Employee Stock Option Plan (filed as Exhibit 10.21 to
    Provident Financial Group, Inc.s Annual Report on Form
    10-K for the fiscal year ended December 31, 2002, and
    incorporated herein by reference).                                                                    
|        | 10.53 |  |                     | Provident Financial Group, Inc.
    2002 Outside Directors Stock Option Plan (filed as
    Exhibit 10.23 to Provident Financial Group, Inc.s
    Annual Report on Form 10-K for the fiscal year ended
    December 31, 2002, and incorporated herein by reference).                                                           
|        | 10.54 |  |                     | Provident Financial Group, Inc.
    1992 Outside Directors Stock Option Plan (filed with Provident
    Financial Group, Inc.s Form S-8 Registration Statement No.
    33-51230, and incorporated herein by reference).                                                                                                        
|        | 10.55 |  |                     | [Reserved]                                                                                                                                                                                                                                                                                                                     
|        | 10.56 |  |                     | Provident Financial Group, Inc.
    Deferred Compensation Plan (filed as Exhibit 10.22 to
    Provident Financial Group, Inc.s Annual Report on Form
    10-K for the fiscal year ended December 31, 2002, and
    incorporated herein by reference).                                                                         
|        | 10.57 |  |                     | Provident Financial Group, Inc.
    Outside Directors Deferred Compensation Plan (filed as
    Exhibit 10.24 to Provident Financial Group, Inc.s
    Annual Report on Form 10-K for the fiscal year ended December
    31, 2002, and incorporated herein by reference).                                                       
|        | 10.58 |  |                     | Provident Financial Group, Inc.
    Supplemental Executive Retirement Plan (filed as
    Exhibit 10.25 to Provident Financial Group, Inc.s
    Annual Report on Form 10-K for the fiscal year ended
    December 31, 2002, and incorporated herein by reference).                                                             
|        | 10.59 |  |                     | [Reserved]                                                                                                                                                                                                                                                                                                                     
|        | 10.60 |  |                     | National City Corporation 2004
    Deferred Compensation Plan (filed as Exhibit 10.60 to
    Registrants Annual Report on Form 10-K for the fiscal
    year ended December 31, 2004, and incorporated herein by
    reference).                                                                                               
|        | 10.61 |  |                     | Amendment No. 5 to the National
    City Savings and Investment Plan, as Amended and Restated
    effective January 1, 2001 (filed as Exhibit 10.61 to
    Registrants Annual Report on Form 10-K for the fiscal
    year ended December 31, 2004, and incorporated herein by
    reference).                                 
|        | 10.62 |  |                     | Amendment No. 6 to the
    National City Savings and Investment Plan, as Amended and
    Restated effective January 1, 2001.                                                                                                                                                                                                   
|        | 10.63 |  |                     | Appendices AO, AP, AQ, and AR to
    the National City Savings and Investment Plan, as Amended and
    Restated effective January 1, 2001 (filed as Exhibit 10.63
    to Registrants Annual Report on Form 10-K for the
    fiscal year ended December 31, 2004, and incorporated
    herein by reference).                   
|        | 10.64 |  |                     | Form of Restricted Stock Agreement
    (filed as Exhibit 10.64 to Registrants Quarterly Report on
    Form 10-Q for the quarter ended June 30, 2005, and
    incorporated herein by reference).                                                                                                                               



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##### Table of Contents



|        |       |  |                     |                                                                                                                                                                                                                                                                                                          
|------- | ----- |  | ------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |                    
|Number  |       |  | Exhibit Description
|        |       |  |                    
|        | 10.65 |  |                     | Form of Restricted Stock Agreement
    used in connection with National City Corporation Management
    Incentive Plan for Senior Officers (filed as Exhibit 10.65
    to Registrants Quarterly Report on Form 10-Q for the
    quarter ended March 31, 2005, and incorporated herein by
    reference).
|        | 10.66 |  |                     | Form of Incentive Stock Option
    Agreement (filed as Exhibit 10.66 to Registrants
    Quarterly Report on Form 10-Q for the quarter ended
    September 30, 2005, and incorporated herein by reference).                                                                                              
|        | 10.67 |  |                     | Form of Non-qualified Stock Option
    Agreement (filed as Exhibit 10.67 to Registrants
    Quarterly Report on Form 10-Q for the quarter ended
    September 30, 2005, and incorporated herein by reference).                                                                                          
|        | 10.68 |  |                     | Form of contracts with Robert B.
    Crowl and Jon N. Couture (filed as Exhibit 10.68 to
    Registrants Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2005, and incorporated herein by
    reference).                                                                              
|        | 10.69 |  |                     | Release and Non-competition
    Agreement between National City Corporation and Jose Armando
    Ramirez (filed as Exhibit 10.69 to Registrants
    Quarterly Report on Form 10-Q for the quarter ended
    September 30, 2005, and incorporated herein by reference).                                  
|        | 10.70 |  |                     | Appendices AS, AT, AU, AV, and AW
    to the National City Savings and Investment Plan, as Amended and
    Restated effective January 1, 2001                                                                                                                                                            
|        | 11.0  |  |                     | Statement re computation of
    per share earnings incorporated by reference to Note 19 of
    the Notes to the Consolidated Financial Statements of this
    report.                                                                                                                                    
|        | 12.1  |  |                     | Computation of Ratio of Earnings to
    Fixed Charges.                                                                                                                                                                                                                                                   
|        | 14.1  |  |                     | Code of Ethics (filed as
    Exhibit 14.1 to Registrants Current Report on Form
    8-K filed on April 26, 2005, and incorporated herein by
    reference).                                                                                                                                             
|        | 14.2  |  |                     | Code of Ethics for Senior Financial
    Officers (filed as Exhibit 14.2 to Registrants
    Current Report on Form 8-K filed on April 26, 2005,
    and incorporated herein by reference).                                                                                                               
|        | 21.1  |  |                     | Subsidiaries of Registrant.                                                                                                                                                                                                                                                                              
|        | 23.1  |  |                     | Consent of Ernst & Young, LLP,
    Independent Registered Public Accounting Firm for National City
    Corporation.                                                                                                                                                                                      
|        | 24.1  |  |                     | Power of Attorney.                                                                                                                                                                                                                                                                                       
|        | 31.1  |  |                     | Chief Executive Officer
    Sarbanes-Oxley Act 302 Certification dated February 6, 2006
    for National City Corporations Annual Report on Form 10-K
    for the year ended December 31, 2005.                                                                                                         
|        | 31.2  |  |                     | Chief Financial Officer
    Sarbanes-Oxley Act 302 Certification dated February 6, 2006
    for National City Corporations Annual Report on Form 10-K
    for the year ended December 31, 2005.                                                                                                         
|        | 32.1  |  |                     | Chief Executive Officer
    Sarbanes-Oxley Act 906 Certification dated February 6, 2006
    for National City Corporations Annual Report on Form 10-K
    for the year ended December 31, 2005.                                                                                                         
|        | 32.2  |  |                     | Chief Financial Officer
    Sarbanes-Oxley Act 906 Certification dated February 6, 2006
    for National City Corporations Annual Report on Form 10-K
    for the year ended December 31, 2005.