If Midwestern regional banks -- National City Corp., Fifth Third Bancorp and KeyCorp -- were in a hospital, they'd be listed in critical condition with doctors and nurses scrambling for ways to stop the bleeding. Their peer U.S. Bancorp would be down the hall, in fair condition, but with its vital signs being closely monitored. All four regional banks announced third-quarter earnings Tuesday morning, with U.S. Bancorp coming in as the lone profitable bank of the group.
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The most gravely ill is Cleveland-based National City. Although rumored to be a likely takeover candidate, all bets might be off with its announcement of a fifth-consecutive quarterly loss, amounting to $729 million, or $5.86 a share. The amount is a far cry away from the loss of $19 million, or 3 cents a share, reported in the same quarter a year ago. National City blamed the skyrocketing losses on an increase in reserves for mortgage and real estate construction loan losses and said it would cut 4,000 jobs to save money.
Similar woes -- although not as dire -- afflict its statewide rivals Fifth Third, and KeyCorp.
Both KeyCorp and Fifth Third announced a second consecutive quarterly loss, as Key was $36 million, or 10 cents a share, in the red. Fifth notched a $56 million loss as it was stung by write-downs on preferred stock of Fannie Mae and Freddie Mac. Added to that was a 5 cents per share charge from a Visa settlement with Discover Financial Services and a 4 cents a share charge for some bank-owned life insurance policies.
Even Minneapolis-based U.S. Bancorp, in the best financial shape among the quartet, saw net income slip dramatically to $576 million, or 32 cents a share, from $1.1 billion, or 62 cents a share, a year earlier. - Gerald Magpily
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