Some notes from the National City (NCC) earnings call.
From the presentation, here is a look at the current credit portfolio performance:
Home Equity portfolio is remaining stable:
Non-Prime mortgage exposure has dropped dramatically:
Q&A Merger Talk:
Kevin St. Pierre – Sanford Bernstein Co.
“Peter, just to address some of the issues the last two callers asked from a different perspective, it looks like your stock is going to open down again today, market price of about $3 per share and a bit below and tangible book value of just over $6 so the market is clearly pricing in a non-zero probability that National City has to either fail or partner up in a take under.
With the performance improvement initiative and with deposits apparently stabilizing since the end of September, you don’t sound to me like a company in a panic mode or running to a partner to rescue you. Could you comment on that assessment?”
CEO Peter E. Raskind
“Well, I guess I’d say the following, first I would profess to comment on what the market is or is not thinking about with respect to pricing our stock. Secondly, we are doing what we think are all the right things to take this company forward in to the future as we have described this morning including the performance improvement initiative of course.
All that said, as we have always said and I’ll repeat again today, this will always be the case, we will always do what’s best for our shareholders. In any given point, if there’s a transaction that makes more sense for our shareholders than continuing on, of course our board will fulfill its obligations by considering that and acting upon it if appropriate. That has always been the case, it remains the case today.”
Nancy Bush – NAB Research, LLC
“My other question here would just go back to the previous question and obviously with your stock at $3 or whatever, there are concerns about viability and I would just reflect that at the time that Wachovia failed they were also telling us that they had adequate capital but the issue seemed to be debt downgrades and these silent runs by corporate customers.
Do you think that the environment has changed sufficiently now that a) the Moody’s indicated that they might downgrade your debt that the rating agencies will look at you differently and are you fairly sanquant that corporate customers are a little more comfortable now than they were a month ago?”
Peter E. Raskind
“Well, it’s hard to forecast what Moody’s will or won’t do. You’re quite right, they do have us in review for downgrade and we’re in very, very close contact with Moody’s and the other rating agencies on a regular basis as we have always been. As it relates to corporate customers, we’ve tried this morning to be as trans as we can be about what we’ve experienced over the last quarter.
We do think that the actions taken last week specifically the FDIC guarantee now of all transactions accounts without limit is a very powerful mechanism to calm corporate customers who may be concerned whether it’s for National City or any other institution in the country. As I think Tom mentioned in this remarks, I mean we have already seen in the early going a greater sense of calm on the part of our customer base whether they be corporate or consumer.
So, we’ll see how that plays out over time. I would remind you that while the share price is $3 as you point out, in terms of market cap, that translates to over $6 billion of market cap given our new share count after the conversion of the Series G preferred in September. Those are all the comments I would offer. We stand by our comments this morning.”
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Disclosure (“none” means no position):
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