National City Slashes More Jobs… And Its Dividend (NCC)

National City Corp. (NYSE: NCC) is following suit of many of the financial lending companies.  The company has slashed its dividend by 49% down to a new $0.21 dividend rather than its historic $0.41 normal dividend.

National City has also tapped Goldman Sachs as a capital advisor and it will issue non-dilutive Tier-1 capital in the first quarter of 2008.  This is to set that capital ratio at the high-end of a previous target of 5% to 6% for tangible common equity and 7% to 8% for Tier-1 risk-based capital.

In recent months it has targeted curbing mortgage operations with eliminated or restricted production of non-agency eligible mortgages, staff cuts of 1,700 positions, and an exit of all broker-based mortgage lending.  But today it will have an additional 900 job cuts in its decision to exit the wholesale mortgage channel.

National City Chairman, President & CEO Peter E. Raskind: "Today’s environment requires aggressive steps to overcome the near-term challenges facing the industry and our company, while positioning our businesses to continue delivering solid performance."  While that may sound like an understatement, we still expect more of this to come in Q1 2008 from other financial lenders.   We just recently noted how banks were raising cash in record numbers.

We issued another list of other financial stocks that may also have to trim their dividends:

• Which Financials May Slash Dividends Next? (WM, FMD, RWT, BAC, C, KEY, WB, SFI, CSE)

While this is still more of the same in bad news in a battered sector that still needs more cuts, National City is still targeting mortgage originations in 2008 of approximately $15 billion to $20 billion.  NCC shares are down 2% at $16.10 right after the open and its 52-week trading range is $15.76 to $38.94.

Jon C. Ogg
January 2, 2008