Posted on 04/21/2008 10:15:38 AM PDT by Jagermonster
National City Corp. this morning announced details of its $7 billion bailout and said it lost $171 million, or 27 cents a share, in the first quarter.
That was not as bad as the fourth quarter, when the Cleveland bank lost $333 million, but it was worse than last year's first quarter, when it had profits of $319 million.
In a written statement, Ohio's largest bank said its board had finished details on a deal reached Sunday. As the Plain Dealer reported Sunday evening, National City is getting $7 billion of much-needed capital from the New York private equity firm Corsair Capital LLC and more than a dozen existing institutional investors.
The bank is issuing new shares at $5 each to the investors, who will own a 50 percent stake in National City.
The carnage from the mortgage market was even worse than expected: The bank's provision for loan losses was $1.4 billion in the first quarter, up from $691 million in the fourth quarter and up from $122 million a year ago.
The 71 percent increase from just three months ago "reflects further deterioration in the credit quality of residential real estate loans," the company said. It specifically cited its risky subprime mortgage loans, as well as mortgages originated by brokers, second mortgages and residential construction loans.
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The deal with Corsair and others will preserve the 163-year-old bank's Cleveland headquarters and allow it to remain independent with its 7,800 local workers and 32,000 employees nationwide.
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In its announcement this morning, National City said the deal "solidifies the company's financial foundation" as it serves shareholders, customers and the communities in nine states where it operates.
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(Excerpt) Read more at blog.cleveland.com ...
Stock (NCC) went from $38 to $6 within a year...
NCC sold equity.
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