National City Confirms Regulatory Agreements, Says Business Unaffected
National City Corp. (NCC) CEO peter Raskind went on the offensive Tuesday morning, confirming recent reports that the Ohio-based bank had been subject to sanctions by regulators, but suggesting that agreements with both the Office of the Comptroller of the Currency and the Federal Reserve Bank of Cleveland meant little to the bank's overall operation. "Generally, the relationship between a bank and its regulators is characterized by confidentiality," Raskind said in a press statement. "Unfortunately, however, someone has breached the confidential relationship between National City and our regulators." Raskind said that the so-called memoradums of understanding between National City and regulators span "capital management, risk management, asset quality and liquidity management which have already been publicly disclosed and discussed, including in our most recent 10-Q filing," and said that the agreement with regulators had "no material impact on our ability to serve our customers." Shares of National City were up $.35, or 7.72 percent, to $4.82 when this story was published. In April, National City raised roughly $7 billion in fresh capital in an effort to shore up its balance sheet amid rising mortgage-led losses. Mortgage banking contributed a full $.47 per share loss to the bank’s quarterly performance during the first quarter -- an amount nearly double the $.27 per share consolidated loss reported for Q1. National City set aside $1.4 billion in the first quarter to cover expected losses on its loans, as nonperforming assets jumped to $2.27 billion — an increase of 49 percent within just one quarter. NPAs represented nearly 2 percent of the bank’s loan portfolio at the end of Q1. Disclosure: The author was held no positions in NCC when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.