Shares of National City took a big hit today as market rumors and the recent seizure of Indymac continued to put pressure on the ailing bank.
In a bid to ease investor nerves, the Cleveland-based bank and mortgage lender issued a statement regarding their financial health, though it hasn’t seemed to quell the tension.
“National City is experiencing no unusual depositor or creditor activity,” the bank said in a statement posted on its website. “As of the close of Friday’s business, the bank maintained more than $12 billion of excess short-term liquidity.”
“Further, as a result of our recent $7 billion capital raise, National City maintains one of the highest Tier I regulatory capital ratios among large banks.”
But despite the capital raise, the WSJ reported that National City had entered into a memorandum of understanding with federal regulators, which is a nice way of saying they’re on probation and working on a plan to make things right.
In early April, the company said it was considering a variety of strategic options, including a possible sale after accelerating mortgage losses forced the bank to shut its wholesale and correspondent mortgage divisions and stamp out second mortgages.
Fortunately, they were somehow able to pawn off their subprime lending unit First Franklin to Merrill Lynch for a staggering $1.3 billion, which had they held, may have sunk them much earlier.
Shares of National City were down $1.06, or 23.98%, to $3.36 in afternoon trading, briefly hitting a new 52-week low of $2.99 in the session.
In related news, shares of WaMu plummeted $1.49, or 30.10%, to $3.46 on similar concerns.