Provides Details on Mortgage Banking Restructuring and Updates on Corporate
and Business Strategies
NEW YORK, Sept. 6 /PRNewswire/ -- In conjunction with the company's annual
Analysts' Conference in New York City, members of National City Corporation's
senior management team met today with analysts and institutional investors to
provide an update on overall corporate strategies and to discuss current
developments across the company's major businesses.
The meeting commenced with an update on the Mortgage Banking business,
with Vice Chairman and CFO Jeffrey D. Kelly detailing aggressive steps the
company has taken at its National City Mortgage and National Home Equity
business units in response to changing conditions in the mortgage markets. An
overview of those actions -- along with their financial effects -- includes:
-- Suspension of broker-sourced originations of home equity loans and
merging the National Home Equity (NHE) unit into National City Mortgage
in August, resulting in the elimination of approximately 500 positions.
Severance and other charges totaling up to $10 million will be recorded
in the third quarter.
-- Reduction in non-agency eligible origination capacity at National City
Mortgage in light of expected lower demand for these types of products
going forward. This action was initiated in early September and will
result in the elimination of approximately 800 positions in the
Mortgage unit and related support functions. The company expects to
record severance and other one-time charges of $18 million to $25
million in September in connection with this action.
-- Evaluation as to whether held-for-sale mortgage and home equity loans
should be reclassified to held for investment based on continued lack
of liquidity in the mortgage capital markets. In connection with that
review, certain held-for-sale home equity loans and lines were
transferred into portfolio at fair value, which approximated their cost
basis. The status of other held-for-sale loans, principally so-called
Alt-A and closed end second mortgages, will continue to be monitored in
September, with the potential for fair value writedowns currently
estimated at around $30 million.
-- And, an ongoing review of the Mortgage Banking cost structure, with the
objective of assuring future profitability of the mortgage origination
function at lower levels of volume.
Including the aforementioned items, the charges and unusual items expected
to be recorded in the third quarter related to the Mortgage Banking line of
business total approximately $200 million pre-tax, and are consistent with
expectations of a loss for the quarter in this business line of $130 million
to $160 million after tax, exclusive of net MSR (mortgage servicing rights)
hedging gains estimated at $20 million to $25 million after tax. The Mortgage
Banking business line had net income of $69 million for the first half of
2007, including net MSR hedging, and is expected to be modestly profitable in
the fourth quarter.
Also during today's conference, National City Chief Credit Officer Robert
C. Rowe reviewed credit trends, noting that the commercial loan portfolio is
stable, and that the consumer portfolio continues to be very strong.
The primary area of credit focus is in real estate. While the majority of
the company's real estate risk levels are stable to modestly increasing, there
are certain sub-sectors of the portfolio that have come under greater stress
as difficult market conditions continue. In particular, portions of the First
Franklin sub-prime run-off portfolio, investment real estate, and loans to
individuals to finance real estate investment are subject to increased loan
loss reserve requirements in the second half of this year.
National City also discussed developments and strategies in its core
retail, corporate, and wealth management businesses. These businesses are
dedicated to serving customers throughout National City's footprint in an
integrated, synergistic fashion. In all three business lines, the focus is on
long-term relationships and gaining "share of wallet" across all customer
segments. This business model and market approach has been and will be
applied to the company's recent acquisitions in Florida and Chicago.
Finally, President and CEO Peter E. Raskind discussed overall strategic
objectives, including near term areas of focus for the company:
-- Continued improvement in penetration of customer share of wallet, both
businesses and consumers;
-- Continued progress in the company's Market Sales Process, designed to
consistently deliver one bank to National City customers across all
lines of business;
-- Enhanced cost management;
-- Continued improvement in the company's mortgage segment, ensuring
staffing and anticipated origination volumes are appropriately in line;
-- Ongoing progress in the integration of National City's Florida
operations and MAF Bancorp of Chicago following last week's close of
that transaction;
-- And, continuing to instill a heightened sense of accountability
throughout the organization.
A replay of National City's Analysts' Conference will be available
beginning 12:30 a.m. ET, Friday, September 7, 2007 through 11:59 p.m. ET,
Friday, September 14, 2007 by dialing 1-800-475-6701 (domestic) or 1-320-365-
3844 (international) using the confirmation code 882759. A replay of the
video Web cast will be available on the Corporation's Web site after the live
event and remain on the site for 60 days.
Forward-Looking Statements
This news release 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, the Corporation'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. Additional information
concerning factors that could cause actual results to differ materially from
those expressed or implied in forward-looking statements is available in the
Corporation's annual report on Form 10-K for the year ended December 31, 2006,
and subsequent filings with the United States Securities and Exchange
Commission (SEC). Copies of these filings are available at no cost on the
SEC's Web site at www.sec.gov or on the Corporation's Web site at
nationalcity.com. Management may elect to update forward-looking statements at
some future point; however, it specifically disclaims any obligation to do so.
About National City
National City Corporation (NYSE: NCC), headquartered in Cleveland, Ohio,
is one of the nation's largest financial holding companies. The company
operates through an extensive banking network primarily in Ohio, Florida,
Illinois, Indiana, Kentucky, Michigan, Missouri, Pennsylvania and Wisconsin,
and also serves customers in selected markets nationally. Its core businesses
include commercial and retail banking, mortgage financing and servicing,
consumer finance and asset management. For more information about National
City, visit the company's Web site at www.nationalcity.com.
SOURCE National City Corporation
CONTACT: Investors, Jill Hennessey, +1-216-222-9253,
jill.hennessey@nationalcity.com, or Media, Kristen Baird Adams,
+1-216-346-6803 or +1-216-222-8202, kristen.bairdadams@nationalcity.com, or
Kelly Wagner Amen, +1-216-222-9514, kelly.wagneramen@nationalcity.com/
