National City today reported a first quarter loss of $171 million, or 27 cents per share, compared to net income of $319 million, or 60 cents per share, a year earlier.
The Cleveland-based bank and mortgage lender attributed much of the quarterly loss to a higher provision for loan losses, partially offset by its gains related to Visa’s IPO.
The company noted that the increase in loan loss reserves was primarily tied to the liquidation of subprime and mortgage broker-sourced mortgage and home equity loan portfolios, including its residential construction portfolio.
Net charge-offs increased to $538 million, up from $275 million a quarter earlier, and nonperforming assets were approximately $2.3 billion, up from $1.5 billion at December 31, 2007.
As of March 31, 2008, the allowance for loan losses increased to $2.6 billion, or 2.23% of portfolio loans, compared to $1.8 billion, or 1.52% of portfolio loans, as of December 31.
Additionally, the company cut more than 1,000 mortgage banking jobs during the quarter.
In an effort to strengthen its capital position, National City will receive $985 million in private equity from Corsair Capital and issue 126.2 million shares of common stock at a purchase price of $5, along with about 64,000 preferred shares.
The company’s board has also agreed to reduce its common dividend to a penny a share, down from 21 cents per share previously.
Shares of National City fell $2.24, or 26.89%, to $6.09 in afternoon trading on Wall Street.