As reported here
on HW last week, National City Corporation confirmed today that it has exited the wholesale mortgage origination channel.
The bank also slashed its dividend by nearly 50 percent in order to "position the company properly for the future," and said it will issue additional capital in an effort to increase its tier-1 risk based capital ratio. (For readers needing a primer on capital requirements, click here
In a press statement
, National City said its decision to exit the wholesale mortgage channel will reduce staffing at its National City Mortgage unit by an additional 900 positions beyond the 1,700 announced partly in September
The bank's mortgage arm will continue to originate loans via its national retail office network, as well as through 1,400 National City Bank branches in nine states.
"We remain committed to the mortgage business, as the home mortgage is an essential consumer product," said Raskind. "However, it is clear that origination volumes will be lower going forward, and we are configuring our mortgage business to operate profitably in that environment."
National City also announced a 49 percent reduction in its quarterly dividend to $0.21 per share from $0.41 per share, with president and CEO Peter E. Raskind saying that the bank "did not take the decision to reduce it lightly."
The move to preserve capital came with a decision to raise even more:
In addition to the dividend action, National City also intends to issue non-dilutive, Tier 1 capital in the first quarter of 2008. These actions will accelerate previously stated plans to increase capital ratios to the high end of their respective target ranges: 5 percent to 6 percent for tangible common equity and 7 percent to 8 percent for Tier 1 risk-based capital.
The bank has been heavily-focused on 'right-sizing' its operations. Third quarter staffing in core bank operations saw approximately 800 positions eliminated, the bank said, combined with the announced cuts in mortgage banking. Combined, National City said it had reduced headcount by a total of 3,400 positions going into 2008.
Standard & Poor's said the move by National City to exit wholesale lending and raise capital will not affect
the bank's ratings.
For more information, visit http://www.nationalcity.com