By Tony, Bank Implode

National City Corp. was delivered from purgatory to the hell that is bankruptcy cloaked as a merger with PNC. The road to hell for National City Corp. was paved with subprime missteps with good intentions planted at the roadside. In business since 1845 National City Corp. rode the wave of the credit bubble to become the 11th largest bank by deposits in the US. But the bubble burst in the summer of 2007 and in the shock wave national city has lost more than $3 billion taken another billion dollars in write-downs and level 3 assets swelled to over $3 billion. The bank’s market cap is a fraction of what it once was in its share price has fallen nearly 90% this year.

National City, once among the nation’s top 10 subprime lenders, joins Washington Mutual nc. and Wachovia Corp. in submitting to takeovers after losses tied to failed home loans.  Cleveland-based National City lost more than $3 billion during the past five quarters, and its stock plunged 87 percent this year. PNC is still profitable.

For National City Corp. the end began in 1999 when it bought subprime specialist first Franklin from Bank of America. Read more….

By Teresa Dixon Murray, The Plain Dealer

As Northeast Ohio tries to digest the demise of National City Corp., one of Greater Cleveland’s oldest companies, the simple question arises: Why did it happen?

How did one of the nation’s top 10 banks, which was founded when Abraham Lincoln was just a prairie lawyer, become the latest casualty in the nation’s financial mess?

This economic catastrophe has now taken down three of the nation’s 10 largest banks, its two largest mortgage lenders, the No. 1 mortgage originator, the world’s largest insurance company and three of the nation’s top five investment banks.

Now, though, it has hit really close to home with Friday’s sale of National City to PNC Financial Services Corp. of Pittsburgh.

The events that caused National City’s collapse can be traced to four periods of time:

• The late 1990s: Former Chairman and Chief Executive David Daberko wanted the bank to become a mortgage superpower. In essence, the bank’s mortgage business was put on steroids and, in just four years, mortgage profits grew twentyfold — from $50 million to $1 billion a year.

It was the volatile, unpredictable mortgage business that eventually did in National City.

• Early 2005: This is when National City executives started talking about selling First Franklin, the part of the company that specialized in subprime mortgages. However, it took until late 2006 for them to get around to selling it. It was almost as if they wanted to hold on to the money machine as long as possible.

But the $10 billion hangover caused by First Franklin’s high-risk loans ended up being the biggest weight around National City’s neck. Read more….

By Tony, Bank Implode

For National City Corp. pathway to insolvency was a well paved highway. In business since 1845 and highly profitable at the height of the housing bubble in 2006 the Cleveland-based bank got caught in the shock wave of the bubble burst and imploded dropping onto the balance sheet of PNC with barely a thud. The end came with stunning swiftness for the bank which was once the 11th largest by deposits in the United States, it was acquired by PNC for fraction what had been its market value.

PNC Financial Services Group Inc., Pennsylvania’s biggest bank, plans to buy National City Corp. for about $5.2 billion in stock after receiving U.S. Treasury funds.

PNC will pay $2.23 a share, 19 percent less than National City’s closing price yesterday, to create the fifth-largest U.S. bank by deposits, the Pittsburgh-based lender said today in a statement. The $7.7 billion of Treasury funding, part of the government’s $250 billion plan to recapitalize banks, “put this transaction on a very solid footing,” PNC said.

National City, once among the nation’s top 10 subprime lenders, joins Washington Mutual Inc. and Wachovia Corp. in submitting to takeovers after losses tied to failed home loans. Cleveland-based National City lost more than $3 billion during the past five quarters, and its stock plunged 87 percent this year. PNC is still profitable. Read more….

By Tony, Bank Implode

National City lingers now in purgatory, open for business as usual, but drifting toward insolvency. As the credit crisis works its way down the food chain to second tier banks National City becomes the caricature for the regional banks that Washington Mutual and Lehman Brothers were for the big banks. For its fiscal third-quarter 2008 national city reported losses, write-downs, loan-loss builds and the elimination of 4000 employees.

National City will cut about 4,000 jobs, or 14 percent of its workforce, over the next three years after posting a net loss of $729 million, or 85 cents a share, the Cleveland-based company said in a statement today.

National City’s provision for loan losses tripled to $1.18 billion in the third quarter from a year earlier. The company’s total deposits averaged $98.7 billion during the third quarter, declining less than $1 billion from the previous quarter and up $5.2 billion from a year earlier. The bank said new customers added in the quarter “partially offset declines in deposit balances in excess of FDIC insurance limits.” Read more….