July 24, 2008 – 6:35 pm

As National City and the financial media break their neck to see no evil, losses steepen and NCC quietly transitions from recording write-downs to charge-offs:

National City Corp. rose as much as 11 percent in New York trading after Chief Executive Officer Peter Raskind said the bank, Ohio’s largest, has enough capital to survive the credit-market contraction.

“We are highly confident we now have more than sufficient capital to ride out turbulent credit markets,” Raskind said in a conference call today. “We have no intention, plan or need to raise additional capital.” Raskind spoke after the Cleveland- based company reported a $1.76 billion second-quarter loss. National City Corp. rose as much as 11 percent in New York trading after Chief Executive Officer Peter Raskind said the bank, Ohio’s largest, has enough capital to survive the credit-market contraction.

A positive attitude is needed, but “highly confident we now have more than sufficient capital to ride out turbulent credit markets” is as delusional as “We have no intention, plan or need to raise additional capital” is dishonest. The reality is that the only capitial NCC has is due to the $7B acquired by an issue of shares to Corsair Capital at $5 a share — today those share closed at $4.67, under water already — so NCC is unlikely to be able to raise the cash it says it doesn’t need.

As for National City Corp. rose as much as 11 percent in New York trading after Chief Executive Officer Peter Raskind said the bank, Ohio’s largest, has enough capital to survive the credit-market contraction, when you stop laughing do the math, it comes to a whopping 51 cents. When you add the $7B to the $2B of raised capital, you can start crying.

Back on Earth, the bank was reporting real world results that were more realistic. The $1.8B loss was the fourth quarterly drubbing the bank has taken in a row. NCC slashed its dividend to a pathetic one cent per share from 21 cents (why even bother?), increased loan loss provisions to $1.6B from $145M in 2007’s second quarter, and net charge-offs jumped to $740M from $98M. Check the math, but we eyeball that as a TEN FOLD increase.

That’s the kind of frenzy activity that spells D-E-S-P-E-R-A-T-I-O-N. That kind of confidence in the face of such desperation is either called delusion or lying.

Net loan charge-offs for the quarter were $18.9M, compared with $12.1M in the first quarter and $2.3M in the second quarter of 2007. The increase in net charge-offs occurred overwhelmingly in the residential homebuilder portfolio. About 75 percent of second quarter charge-offs and loans on non-accrual are related to residential construction and development projects.

<>

The Level 3 assets come in about $3.3billion while level 3 liabilities are at $26M according to the banks Q1 2008 10Q.

Post a Comment