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National City shares plummet along with rest of market
By Joe Milicia
Associated Press
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CLEVELAND -- National City Corp. shares plummeted Monday as bank stocks tumbled amid another bank buyout and the overall market plunged after a financial bailout package failed in the House. The bank has locations throughout the Twin Cities.

National City shares lost $2.35, or 63.3 percent, to $1.36 on Monday after falling as low as $1.25 in what the bank called an “irrational reaction.” The sharp decline comes after shares closed down 26 percent on Friday.

Early Monday, Wachovia Corp. became the latest big bank to be rescued from bad mortgage debt, agreeing to a Federal Deposit Insurance Corp.-brokered buyout of its banking operations by Citigroup Inc.

National City spokeswoman Kelly Wagner Amen said the stock decline is an irrational reaction to problems at other larger banks such as Wachovia and Washington Mutual.

“We are far better capitalized than Wachovia and other national banks,” Wagner Amen said.

National City has been hit hard this year by high-risk mortgage loans and was forced to arrange a $7 billion capital infusion in April.

National City reported a $1.76 billion loss in July for the second quarter. It has shifted away from risky mortgage lending since late last year.

“National City is well positioned from a capital stance to address the market turmoil,” Wagner Amen said. “We feel we have not only the adequate capital but are in a position of strength to help our customers reach their financial goals.”

The drop in stock price came as several analysts upgraded National City’s stock to “outperform,” including Terry McEvoy of Oppenheimer & Co.

“I continue to feel the company has an adequate level of capital and reserves to absorb future loan losses,” he said.

He agreed that the company’s risk profile is different than that of Wachovia or Washington Mutual Inc., which collapsed under mounting losses.

“I understand the reaction to the stock price on Friday and today but I think the move is unwarranted and the stock is undervalued at current prices,” McEvoy said.

He said a key indicator for National City and other banks will be deposit flow.

“A few months ago it was people moving money from bank to bank. Today, it’s bank to mattress,” McEvoy said. “All banks are vulnerable given the headlines.”

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Reader comments on this story - 4 total

Note: All views and opinions expressed in reader comments are solely those of the individual submitting the comment, and not those of the Pantagraph or its staff.

imacynic2 wrote on Oct 1, 2008 10:26 AM:

" I did have money in my account. The bank put a hold on a check written on another bank here in town. Because of that hold when the checks from that day cleared and were posted at midnight I was overdrafted by less than $20. At 12:01 a.m. (the next day) my funds from my check became available. In that one minute National City charged me five overdraft fees at $35.00 each. "

shiloh wrote on Oct 1, 2008 7:52 AM:

" Sanity - You must be one of those perfect people who makes no mistakes. "

sanity wrote on Oct 1, 2008 6:46 AM:

" imacynic2 - Maybe you should have money in your account that covers all the checks you write. Don't blame the bank for your mistake. "

imacynic2 wrote on Sep 30, 2008 2:50 PM:

" National City needs to learn to service its customers. Currently National City is all about taking money from its customers i.e. its "policy" of paying large items first and then smaller items. If you make a mistake in your checkbook and you happen to bank at National City - watch out. They will pay your largest check/debit and then bill you $35.00 each for each smaller item rather than paying the items in the order they came in. Perhaps now they will need to listen to their customers and service them rather than taking advantage of them. "
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