National City Posts Big Loss, Plans to Cut 4,000 Jobs
National City Corp. has reported a big third-quarter loss, and also said it would be cutting about 4,000 jobs over the next three years as part of its previously announced “performance enhancement initiative.”
The bank said it was still assessing the impact on employment of its cost-saving actions, but that its total workforce should be down 14 percent as a result of the planned job cuts. The company did not specify the potential impact of those cuts on its home base of Cleveland. (Click here to read more stories about job cuts elsewhere.)
As for its financial results, National City said it posted a net loss available to common shareholders in the third quarter of more than $5.14 billion, which includes a $4.4 billion noncash dividend recorded last month on convertible preferred stock issued in conjunction with a $7 billion capital infusion into the banking company.
Excluding the effect of the preferred dividend, National City had a net loss in the quarter of $729 million, as it continued to build its loan-loss reserves. Its provision for loan-loss reserves in the quarter totaled $1.18 billion, and its net loan charge-offs in the quarter totaled $844 million.
In the third quarter of 2007, National City posted a net loss of $19 million, or 3 cents a share. Its provision for loan losses in that quarter totaled $368 million, and its net loan charges totaled $141 million.
National City noted that loans in what it calls its “exit portfolio,” or its portfolio of loans remaining from businesses it has exited or from discontinued products, total $21 billion. That portfolio consists of broker-originated home equity loans, subprime mortgages, non-agency mortgages, residential construction loans, and automobile, marine and recreational vehicle loans originated through dealers, National City said.
These loans “are in runoff mode” and have been declining about $500 million per month, National City said.
“A limited number of segments within our exit portfolio generated the majority of net charge-offs for the quarter,” National City chairman, president and CEO Peter Raskind said in a statement. “Specifically, $8.4 billion of exit portfolio loans, representing 8 percent of the company’s total loans, accounted for 40 percent of total net charge-offs. The remainder of our exit portfolio showed stable or improving trends.”