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Ohio Bank Secures Financing To Weather Mortgage Crisis
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"Over time, the old banking culture of National City, which at one point reflected strong Midwestern values and decision making, may emerge. Unfortunately, our guess is that, prior to that, National City will be a part of a much larger financial institution," they wrote.
On Monday, the bank said it lost 27 cents per share in the January-March period. A year earlier, it had a profit of $319 million, or 50 cents per share, in the quarter.
Its shares fell $2.30 to close at $6.03 after sinking to a 52-week low of $5.92 earlier in the session. Its shares are about 85 percent below their high for the past year.
National City will issue 126.2 million shares of common stock at a purchase price of $5 per share. It will also issue 63,690 shares of preferred stock that will automatically convert into 20,000 shares of the company's common stock.
Corsair Capital and certain other participating investors will receive warrants with an exercise price of 115 percent of the company's average closing price for the five-trading-day period beginning Monday, with a cap of $8.50 per share.
The moves allow the National City board to remain in control. Corsair Capital vice chairman Richard Thornburgh, who will represent the company on National City's board, said the bank has strong core services.
National City, Ohio's largest bank holding company with assets of $155 billion, was heavily exposed to the nation's troubled mortgage and housing woes, but it has cut jobs and moved away from broker-originated subprime lending.
On Jan. 2, National City disclosed that it was shutting down its wholesale mortgage division, eliminating 900 jobs, because of the weakened housing and credit markets. In all, National City has eliminated about 3,400 jobs over the past few months.
On Monday, the company revised future loss expectations and said it had significantly increased reserves, in particular liquidating portfolios of nonprime mortgage and broker-sourced home-equity loans.
