Midwest bank and mortgage originator National City Corp. saw its Q3 profits tumble 80%, largely on mortgage-related losses. Shares were down nearly 4.5% shortly after the open (as of 9:38 AM ET). Net income was $106 million, good for EPS of $0.18, versus EPS of $0.86 in the year-earlier period. Mortgage-related losses shaved $0.25 a share off of earnings. Consensus analyst estimates were for EPS of $0.33. The company reported loan-loss provisions of $361 million - five times what they were a year ago. CEO Peter Raskind blamed "unprecedented disruption and weakness in the mortgage and housing markets" for his company's weak results (full earnings call transcript later today). Looking ahead, National City feels that, "Based on the difficult conditions in the financial markets, which we expect to persist into 2008, we have undertaken an aggressive review of our cost structure across the company," leading to the elimination of 2,500 jobs, with expected annual savings of $125 million. NCC's shares are down 35% this year (through Tuesday's close), versus a 13% drop in the Philadelphia KBW Bank Index.
Commentary: Lehman, National City Cut Staff at Mortgage Units • Cramer on NCC
Stocks to watch: NCC. Competitors: KEY, FITB, USB. ETFs: IAT, KBE
Earnings call transcript: National City Q2 2007