National City Reports Fourth Quarter and Full Year 2007 Results

CLEVELAND, Jan. 22 /PRNewswire-FirstCall/ -- National City Corporation
(NYSE: NCC) reported a net loss for the fourth quarter 2007 of $333 million,
or $.53 per diluted share. The loss resulted from a large provision for
credit losses, losses on mortgage loans held for sale, charges related to
Visa, Inc. indemnification obligations, and severance charges associated with
employment reductions during the quarter. In addition, the Corporation
recorded a charge of $181 million representing the impairment of goodwill
associated with the mortgage business. The goodwill impairment charge reduced
net income by $.26 per diluted share but had no impact on cash flows, tangible
book value or regulatory capital. Net income for the full year in 2007 was
$314 million, or $.51 per diluted share.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030428/NATIONALCITYLOGO )
Net income for the fourth quarter of 2006 was $842 million, or $1.36 per
diluted share, and net income for the full year 2006 was $2.3 billion, or
$3.72 per diluted share. The 2006 results included a $622 million after-tax
gain, approximately $1.00 per diluted share, on the sale of the Corporation's
former First Franklin mortgage origination and servicing platform, in the
fourth quarter.
Chairman's Comments
Chairman and CEO Peter A. Raskind commented, "The poor financial
performance of mortgage-related businesses, along with related restructuring
costs and other unusual charges, overshadowed solid fundamental results in
banking and wealth management. We believe that the restructuring actions
we've taken in recent months to reduce costs, and to lower credit and capital
markets risk in the mortgage business, while negative to earnings and costly
to shareholders in the short run, have put the company in position to deliver
better results going forward. In addition, we intend to build the capital
strength of the Corporation through the recently announced dividend reduction
as well as the issuance of new capital securities during the first quarter of
2008."
Net Interest Income and Margin
Tax-equivalent net interest income was $1.1 billion for the fourth quarter
of 2007, about equal to the preceding quarter, and down slightly compared with
the fourth quarter of 2006. Average earning assets for the fourth quarter of
2007 were $134.1 billion, an increase of 5% compared to the third quarter of
2007, and 10% compared to the fourth quarter a year ago. Net interest margin
was 3.30% in the fourth quarter of 2007, compared to 3.43% in the third
quarter of 2007, and 3.73% in the fourth quarter a year ago. The lower margin
in the fourth quarter 2007 reflects higher LIBOR-based funding costs, narrower
spreads on both commercial and consumer loans, and lower levels of
noninterest-bearing funds compared to the fourth quarter a year ago.
For the full year, tax-equivalent net interest income was $4.4 billion,
down approximately 5% compared to 2006. Average earning assets were $126.6
billion in 2007, up about 3% compared to 2006. Net interest margin was 3.49%
in 2007 and 3.75% in 2006. The lower margin in 2007 resulted from the same
reasons as occurred in the fourth quarter of 2007.
Loans and Deposits
Average portfolio loans were $113.5 billion for the fourth quarter of
2007, compared with $104.4 billion for the third quarter of 2007, and $93.1
billion for the fourth quarter a year ago. Both the linked-quarter and year-
over-year increases reflect growth in commercial loans, recent acquisitions,
and transfers to portfolio of mortgage loans formerly held for sale. For the
full year, average portfolio loans were $104.0 billion for 2007 and $99.4
billion for 2006. Average loans held for sale were $8.3 billion in the fourth
quarter of 2007, down $4.3 billion compared to the immediately preceding
quarter, and down $9.1 billion from the fourth quarter a year ago. This
decrease reflects transfers of formerly held for sale mortgage loans to
portfolio, lower levels of origination due to curtailment of certain mortgage
products, as well as the sale of the Corporation's former First Franklin unit
in late 2006. For the full year, average loans held for sale decreased to
$11.3 billion in 2007 compared to $13.5 billion in 2006.
Average total deposits were $98.3 billion in the fourth quarter of 2007,
up $4.8 billion from the preceding quarter, and up $13.8 billion compared to
the fourth quarter a year ago. Average core deposits, excluding mortgage
escrow and custodial balances, were $83.4 billion in the fourth quarter of
2007, up $5.8 billion compared to the preceding quarter, and up $16.9 billion
compared to the fourth quarter a year ago. Deposit balances have grown with
recent acquisitions as well as continued household growth and expansion.
Average total deposits for the full year 2007 were $92.5 billion, up 11%
compared to $83.5 billion in 2006.
Credit Quality
The provision for loan losses was $691 million in the fourth quarter of
2007, compared with $368 million in the preceding quarter and $325 million in
the fourth quarter of 2006. For the year, the provision was $1.3 billion in
2007 compared with $489 million in 2006. The larger provision in 2007
primarily reflects higher credit losses on liquidating portfolios of
nonconforming mortgage and out-of-footprint home equity loans, as well as
other mortgage loans.
Net charge-offs in the fourth quarter of 2007 were $275 million, compared
with $141 million in the preceding quarter, and $128 million in the fourth
quarter of last year. For the full year, net charge-offs were $661 million in
2007 compared with $442 million a year ago. Both the linked quarter and year-
over-year increases in net charge-offs are primarily related to higher credit
losses on residential mortgage and broker-sourced, out-of-footprint home
equity loans. Declining real estate values and financial stress on borrowers
have resulted in higher delinquencies and greater charge-offs in 2007.
Nonperforming assets were $1.5 billion at December 31, 2007, up from $732
million a year ago, primarily due to a larger number of delinquent residential
real estate loans.
As of December 31, 2007, the allowance for loan losses was $1.8 billion,
or 1.52% of portfolio loans, compared to $1.1 billion, or 1.18% of portfolio
loans, a year ago. The allowance has increased to reflect estimated probable
credit losses within the loan portfolio that have not yet reached charge-off
thresholds.
Noninterest Income
Noninterest income was $597 million for the fourth quarter of 2007,
compared to $624 million in the preceding quarter, and $1.7 billion in the
fourth quarter a year ago. Noninterest income for the last half of 2007
reflects losses on mortgage loans held for sale due to unfavorable or illiquid
markets for many mortgage products. Noninterest income for the fourth quarter
of 2006 included a $984 million pretax gain on the sale of the Corporation's
former First Franklin unit.
Net loan sale (loss)/revenue was $(149) million in the fourth quarter of
2007, $(74) million in the third quarter of 2007, versus $122 million in the
fourth quarter a year ago. During the fourth quarter of 2007, further
deterioration occurred in market values resulting in additional fair value
write-downs on loans held for sale. Substantially all originations of
residential mortgage loans, outside of agency-eligible products, have now been
curtailed. In addition, certain nonagency-eligible mortgage and home equity
loans formerly held for sale were transferred to portfolio in the fourth
quarter.
Loan servicing revenue was $115 million in the fourth quarter of 2007,
compared to $159 million in the immediately preceding quarter, and $52 million
in the fourth quarter a year ago. Net mortgage servicing right (MSR) hedging
pretax gains/(losses) were $11 million in the fourth quarter of 2007, $64
million in the preceding quarter, and $(60) million in the fourth quarter a
year ago.
Deposit service fees, other service fees and brokerage revenue all showed
growth in the fourth quarter of 2007. Deposit service fees were $249 million
in the fourth quarter of 2007, up 8% from the preceding quarter and 17%
compared to the fourth quarter a year ago, which reflects recent acquisitions,
continued growth in the number of accounts, and higher volumes of fee-
generating transactions. Other service fees were $41 million in the fourth
quarter of 2007, up 19% from the preceding quarter, and 15% from the fourth
quarter a year ago, due primarily to higher loan syndication fee revenue.
Brokerage revenue was $54 million in the fourth quarter of 2007, up 30% from
the preceding quarter, but down 9% from the fourth quarter a year ago. The
linked-quarter increase reflects stronger underwriting and advisory fee
revenue in the fourth quarter of 2007, although not as strong as the fourth
quarter a year ago.
For the full year, noninterest income was $2.6 billion in 2007, versus
$4.0 billion in 2006, inclusive of the $984 million gain on the sale of First
Franklin. Net loan sale (loss)/revenue was $(38) million in 2007 versus $766
million in 2006. Significant disruption in the mortgage markets resulted in
losses recognized on mortgage loans held for sale in the last half of 2007,
which completely offset loan sale revenues from the first half of the year.
Loan servicing revenue was $402 million in 2007 compared to $91 million in
2006. Growth in the servicing portfolio in 2007 offset $64 million of loan
servicing revenue lost with the sale of First Franklin in late 2006. Net MSR
hedging pretax gains /(losses), included within loan servicing revenue, were
$36 million in 2007 versus $(294) million in 2006.
Deposit service fees grew to $905 million in 2007, up $87 million, or 11%
from the prior year, due to the same factors described above. Leasing revenue
declined by $50 million year-over-year due to continued run-off of the leased
automobile portfolio. Brokerage revenue increased to $189 million in 2007, up
$31 million, or 20%, compared to the prior year due to higher business volumes
and lower trading losses. Other noninterest income for 2006 included $36
million of nonrecurring revenue associated with the release of a chargeback
guarantee liability.
Noninterest Expense
Noninterest expense was $1.6 billion in the fourth quarter of 2007,
compared to $1.4 billion in the third quarter of 2007, and $1.2 billion in the
fourth quarter a year ago. Noninterest expense for the fourth quarter of 2007
included a goodwill impairment loss of $181 million related to the mortgage
business and additional accruals of $132 million for estimated indemnification
losses arising from third-party litigation against Visa. Noninterest expense
for the preceding quarter included a Visa indemnification charge of $157
million, mortgage asset impairments of $44 million, and a probable litigation
settlement of $25 million. No similar items were present in the fourth
quarter of last year. Severance and outplacements costs were $66 million in
the fourth quarter of 2007, $23 million in the third quarter of 2007, and $9
million in the fourth quarter a year ago.
Noninterest expense was $5.3 billion for the full year 2007, compared to
$4.7 billion in 2006. Impairment, fraud and other losses increased by $563
million in 2007 primarily due to the previously described Visa indemnification
charges, impairment losses and litigation settlements. Personnel costs
decreased slightly year-over-year despite $59 million of higher severance
costs in 2007. Foreclosure costs increased by $55 million in 2007 due to more
loans in foreclosure and higher foreclosure losses. Intangible asset
amortization increased by approximately $35 million, which reflects
amortization of core deposit intangibles associated with recent acquisitions.
These higher costs were somewhat offset by lower depreciation expense on the
leased automobile portfolio as well as general cost savings measures.
Management expects that the value of its ownership in Visa, currently not
reflected in the financial statements, will ultimately more than offset the
aforementioned Visa-related liabilities recorded in 2007.
Income Tax Expense
The effective tax rates for the fourth quarter of 2007 and 2006 were (41)%
and 35%, respectively. The tax rate in the fourth quarter of 2007 reflects
adjustments to the prior estimate of annual pre-tax earnings as a result of
actual fourth quarter results. The effective tax rate for the full year was
approximately 15% in 2007 versus 33% in 2006. The lower rate in 2007 resulted
from favorable tax credits and other adjustments, which are fixed amounts,
representing a larger portion of income tax expense in 2007 due to the
Corporation's lower earnings.
Balance Sheet
At December 31, 2007, total assets were $150.4 billion, and stockholders'
equity was $13.4 billion or 8.9% of assets. At December 31, 2007, total
deposits were $97.6 billion, including core deposits of $87.5 billion. Total
purchased funds were $35.0 billion at December 31, 2007, compared to $33.3
billion at December 31, 2006. The higher level of purchased funds corresponds
to a larger loan portfolio and resulted from the inability to sell certain
mortgage loans during the last half of 2007.
The Corporation repurchased 86.2 million shares of its common stock in
2007. At December 31, 2007, the Corporation had remaining authorization to
repurchase 37.6 million shares. No share repurchases occurred in the fourth
quarter of 2007, and no repurchases are planned for the first quarter of 2008,
to allow capital ratios to migrate towards the top end of their target ranges.
Forward-Looking Statements
This document contains forward-looking statements. Forward-looking
statements, written or oral, provide current expectations or forecasts of
future events and are not guarantees of future performance, nor should they be
relied upon as representing management's views as of any subsequent date. The
forward-looking statements are based on management's expectations and are
subject to a number of risks and uncertainties. Although management believes
that the expectations reflected in such forward-looking statements are
reasonable, actual results may differ materially from those expressed or
implied in such statements. Risks and uncertainties that could cause actual
results to differ materially include, without limitation, the Corporation's
ability to effectively execute its business plans; changes in general economic
and financial market conditions including the housing and residential mortgage
markets; changes in interest rates; the timing, pricing and effects on the
Corporation of the proposed Visa Inc. initial public offering; changes in the
competitive environment; continuing consolidation in the financial services
industry; new litigation or changes in existing litigation; losses, customer
bankruptcies, claims and assessments; changes in banking regulations or other
regulatory or legislative requirements affecting the Corporation's business;
and changes in accounting policies or procedures as may be required by the
Financial Accounting Standards Board or other regulatory agencies. Additional
information concerning factors that could cause actual results to differ
materially from those expressed or implied in the forward-looking statements
is available in the Corporation's Annual Report on Form 10-K for the year
ended December 31, 2006, and subsequent filings with the United States
Securities and Exchange Commission (SEC). Copies of these filings are
available at no cost on the SEC's Web site at sec.gov or on the Corporation's
Web site at nationalcity.com/investorrelations. Management may elect to
update forward-looking statements at some future point; however, it
specifically disclaims any obligation to do so.
Conference Call
Management of National City will host a conference call at 11:00 a.m. (ET)
on Tuesday, January 22, 2008 to discuss the fourth quarter and full year 2007
results. Presentation slides to accompany the conference call remarks may be
found at
http://phx.corporate-ir.net/phoenix.zhtml?c=64242&p=irol-presentations .
Interested parties may access the conference call by dialing 1-888-428-4480.
Participants are encouraged to call in 15 minutes prior to the call in order
to register for the event. The conference call will also be accessible via
the Company's Web site, www.nationalcity.com/investorrelations . Questions
for discussion at the conference call may be submitted any time prior to or
during the call by sending an email to investor.relations@nationalcity.com.
A replay of the conference call will be available from 2:30 p.m. (ET) on
January 22, 2008, until midnight (ET) on January 29, 2008. The replay will be
accessible by calling 1-800-475-6701 (domestic) or 320-365-3844
(international) using the pass code of 893752 or via the Company's Web site.
About National City
National City Corporation (NYSE: NCC), headquartered in Cleveland, Ohio,
is one of the nation's largest financial holding companies. The company
operates through an extensive banking network primarily in Ohio, Florida,
Illinois, Indiana, Kentucky, Michigan, Missouri, Pennsylvania, and Wisconsin
and also serves customers in selected markets nationally. Its core businesses
include commercial and retail banking, mortgage financing and servicing,
consumer finance and asset management. For more information about National
City, visit the company's Web site at nationalcity.com.

Unaudited
National City Corporation
CONSOLIDATED FINANCIAL HIGHLIGHTS
(In millions, except per share data)

2007

4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
EARNINGS

Tax-equivalent interest income $2,381 $2,360 $2,255 $2,218
Interest expense 1,272 1,258 1,159 1,100
Tax-equivalent net interest income 1,109 1,102 1,096 1,118
Provision for loan losses 691 368 145 122
Tax-equivalent NII after provision
for loan losses 418 734 951 996
Noninterest income 597 624 764 621
Noninterest expense 1,567 1,396 1,186 1,156
(Loss) income before taxes and tax-
equivalent adjustment (552) (38) 529 461
Income tax (benefit) expense (226) (26) 175 134
Tax-equivalent adjustment 7 7 7 8
Net (loss) income ($333) ($19) $347 $319
Effective tax rate (40.5)% (58.4)% 33.6% 29.5%

PER COMMON SHARE
Net (loss) income:
Basic(1) ($.53) ($.03) $.60 $.50
Diluted(1) (.53) (.03) .60 .50
Dividends paid .41 .41 .39 .39
Book value 21.15 21.86 21.45 22.12
Market value (close) 16.46 25.09 33.32 37.25
Average shares:
Basic 633.2 588.1 572.7 631.7
Diluted 633.2 588.1 580.4 640.5

PERFORMANCE RATIOS
Return on average common equity - - 11.35% 8.98%
Return on average total equity - - 11.37 8.99
Return on average assets - - 1.00 .94
Net interest margin 3.30% 3.43% 3.59 3.69
Efficiency ratio 91.86 80.89 63.76 66.50

LINE OF BUSINESS (LOB) RESULTS
Net Income:
Retail Banking $177 $173 $195 $171
Commercial Banking - Regional 79 101 96 126
Commercial Banking - National 68 44 78 96
Mortgage Banking (445) (166) 61 9
Asset Management 23 21 29 27
Parent and Other (235) (192) (112) (110)
Total Consolidated National City
Corporation ($333) ($19) $347 $319

LOB Contribution to Diluted Earnings
Per Share(1):
Retail Banking $.28 $.29 $.33 $.27
Commercial Banking - Regional .13 .17 .17 .20
Commercial Banking - National .11 .08 .13 .15
Mortgage Banking (.70) (.28) .11 .01
Asset Management .04 .03 .05 .04
Parent and Other (.39) (.32) (.19) (.17)
Total Consolidated National City
Corporation(1) ($.53) ($.03) $.60 $.50

2006 2005

4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
EARNINGS

Tax-equivalent interest income $2,270 $2,298 $2,243 $2,153 $2,113
Interest expense 1,137 1,148 1,076 969 921
Tax-equivalent net interest income 1,133 1,150 1,167 1,184 1,192
Provision for loan losses 325 70 62 32 136
Tax-equivalent NII after provision
for loan losses 808 1,080 1,105 1,152 1,056
Noninterest income 1,702 877 784 656 777
Noninterest expense 1,208 1,187 1,172 1,144 1,263
(Loss) income before taxes and
tax-equivalent adjustment 1,302 770 717 664 570
Income tax (benefit) expense 452 236 238 197 164
Tax-equivalent adjustment 8 8 6 8 8
Net (loss) income $842 $526 $473 $459 $398
Effective tax rate 34.9% 30.9% 33.5% 30.1% 29.1%

PER COMMON SHARE
Net (loss) income:
Basic(1) $1.37 $.87 $.77 $.75 $.65
Diluted(1) 1.36 .86 .77 .74 .64
Dividends paid .39 .39 .37 .37 .37
Book value 23.06 21.44 20.84 20.69 20.51
Market value (close) 36.56 36.60 36.19 34.90 33.57
Average shares:
Basic 611.9 603.8 609.7 611.9 618.2
Diluted 620.7 612.1 618.2 619.7 625.4

PERFORMANCE RATIOS
Return on average common equity 24.93% 16.45% 15.08% 14.91% 12.57%
Return on average total equity 24.94 16.46 15.10 14.92 12.59
Return on average assets 2.44 1.51 1.35 1.33 1.10
Net interest margin 3.73 3.73 3.73 3.81 3.74
Efficiency ratio 42.64 58.59 60.04 62.18 64.14

LINE OF BUSINESS (LOB) RESULTS
Net Income:
Retail Banking $129 $192 $206 $173 $158
Commercial Banking - Regional 113 112 105 113 123
Commercial Banking - National 77 100 99 96 77
Mortgage Banking 38 70 (17) (33) 60
Asset Management 22 24 30 22 14
Parent and Other 463 28 50 88 (34)
Total Consolidated National City
Corporation $842 $526 $473 $459 $398

LOB Contribution to Diluted
Earnings Per Share(1):
Retail Banking $.21 $.31 $.33 $.28 $.25
Commercial Banking - Regional .19 .18 .17 .18 .20
Commercial Banking - National .12 .16 .16 .15 .12
Mortgage Banking .06 .11 (.03) (.05) .10
Asset Management .03 .04 .05 .04 .02
Parent and Other .75 .06 .09 .14 (.05)
Total Consolidated National City
Corporation(1) $1.36 $.86 $.77 $.74 $.64

For the Year
2007 2006 2005
EARNINGS

Tax-equivalent interest income $9,214 $8,964 $7,763
Interest expense 4,789 4,330 3,036
Tax-equivalent net interest
income 4,425 4,634 4,727
Provision for loan losses 1,326 489 300
Tax-equivalent NII after
provision for loan losses 3,099 4,145 4,427
Noninterest income 2,606 4,019 3,304
Noninterest expense 5,305 4,711 4,735
(Loss) income before taxes and
tax-equivalent adjustment 400 3,453 2,996
Income tax (benefit) expense 57 1,123 980
Tax-equivalent adjustment 29 30 31
Net (loss) income $314 $2,300 $1,985
Effective tax rate 15.3% 32.8% 33.1%

PER COMMON SHARE
Net (loss) income:
Basic(1) $.51 $3.77 $3.13
Diluted(1) .51 3.72 3.09
Dividends paid 1.60 1.52 1.44
Book value
Market value (close)
Average shares:
Basic 606.4 609.3 633.4
Diluted 612.2 617.7 641.6

PERFORMANCE RATIOS
Return on average common equity 2.36% 17.98% 15.54%
Return on average total equity 2.38 18.00 15.55
Return on average assets .22 1.66 1.40
Net interest margin 3.49 3.75 3.74
Efficiency ratio 75.46 54.45 58.95

LINE OF BUSINESS (LOB) RESULTS
Net Income:
Retail Banking $716 $700 $616
Commercial Banking - Regional 402 443 486
Commercial Banking - National 286 372 316
Mortgage Banking (541) 58 419
Asset Management 100 98 80
Parent and Other (649) 629 68
Total Consolidated National City
Corporation $314 $2,300 $1,985

LOB Contribution to Diluted
Earnings Per Share(1):
Retail Banking $1.17 $1.13 $.96
Commercial Banking - Regional .66 .72 .76
Commercial Banking - National .47 .60 .49
Mortgage Banking (.88) .09 .65
Asset Management .16 .15 .12
Parent and Other (1.07) 1.03 .11
Total Consolidated National
City Corporation(1) $.51 $3.72 $3.09

(1) The sum of the quarterly earnings per share may not equal the
year-to-date earnings per share due to rounding

Unaudited
National City Corporation
CONSOLIDATED FINANCIAL HIGHLIGHTS (continued)
($ in millions)

2007

4th Qtr 3rd Qtr 2nd Qtr 1st Qtr

CREDIT QUALITY STATISTICS
Net charge-offs $275 $141 $98 $147
Provision for loan losses 691 368 145 122
Loan loss allowance 1,762 1,373 1,136 1,104
Lending-related commitment
allowance 65 54 61 63
Nonperforming assets 1,523 1,211 848 801
Annualized net charge-offs to
average portfolio loans .96% .54% .39% .61%
Loan loss allowance to period-end
portfolio loans 1.52 1.23 1.14 1.11
Loan loss allowance to
nonperforming portfolio loans 161.55 159.42 202.16 206.08
Loan loss allowance (period-end)
to annualized net charge-offs 161.24 245.43 291.06 184.68
Nonperforming assets to period-end
portfolio loans and other
nonperforming assets 1.31 1.08 .85 .80

CAPITAL AND LIQUIDITY RATIOS
Tier 1 capital(1) 6.52% 6.78% 6.56% 7.08%
Total risk-based capital(1) 10.26 10.37 10.28 10.13
Leverage(1) 6.39 6.96 6.53 6.92
Period-end equity to assets 8.92 8.98 8.64 9.51
Period-end tangible common equity
to assets (2) 5.28 5.29 5.43 6.26
Average equity to assets 8.88 8.71 8.83 10.45
Average equity to portfolio loans 11.94 12.10 12.27 14.66
Average portfolio loans to
deposits 115.45 111.70 110.74 111.78
Average portfolio loans to core
deposits 130.20 128.17 127.87 128.66
Average portfolio loans to earning
assets 84.60 81.43 81.48 80.79
Average securities to earning
assets 6.58 6.11 5.84 6.34

AVERAGE BALANCES
Assets $152,566 $145,095 $138,587 $137,810
Portfolio loans 113,484 104,439 99,689 98,198
Loans held for sale or
securitization 8,340 12,643 12,615 11,769
Securities (at cost) 8,826 7,835 7,143 7,704
Earning assets 134,142 128,249 122,344 121,543
Core deposits 87,164 81,484 77,964 76,322
Purchased deposits and funding 47,450 47,093 44,604 43,001
Total equity 13,554 12,636 12,231 14,398

PERIOD-END BALANCES

Assets $150,374 $154,166 $140,636 $138,559
Portfolio loans 116,022 111,991 99,683 99,566
Loans held for sale or
securitization 4,290 11,987 14,421 10,693
Securities (at fair value) 8,731 8,977 7,024 7,208
Core deposits 87,536 86,450 79,043 77,884
Purchased deposits and funding 45,067 49,193 45,036 42,897
Total equity 13,408 13,843 12,147 13,170

2006 2005

4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr

CREDIT QUALITY
STATISTICS
Net charge-offs $128 $117 $76 $121 $138
Provision for loan
losses 325 70 62 32 136
Loan loss allowance 1,131 932 989 1,001 1,094
Lending-related
commitment allowance 78 80 77 79 84
Nonperforming assets 732 689 667 647 596
Annualized net charge-
offs to average
portfolio loans .54% .48% .30% .46% .52%
Loan loss allowance to
period-end portfolio
loans 1.18 1.00 .98 .98 1.03
Loan loss allowance to
nonperforming portfolio
loans 226.13 198.25 202.14 207.14 223.11
Loan loss allowance
(period-end) to
annualized net charge-
offs 223.38 200.10 326.17 204.29 199.42
Nonperforming assets to
period-end portfolio
loans and other
nonperforming assets .76 .74 .66 .63 .56

CAPITAL AND LIQUIDITY
RATIOS
Tier 1 capital(1) 8.93% 7.48% 7.31% 7.38% 7.43%
Total risk-based
capital(1) 12.16 10.30 10.20 10.31 10.54
Leverage(1) 8.56 7.13 6.89 6.92 6.83
Period-end equity to
assets 10.40 9.34 8.91 9.00 8.86
Period-end tangible
common equity to assets
(2) 7.77 6.99 6.60 6.70 6.57
Average equity to assets 9.78 9.16 8.97 8.94 8.78
Average equity to
portfolio loans 14.38 13.03 12.35 11.83 11.79
Average portfolio loans
to deposits 110.18 116.64 122.88 127.05 126.68
Average portfolio loans
to core deposits 131.69 140.31 146.55 155.09 156.15
Average portfolio loans
to earning assets 76.65 79.11 81.32 84.71 83.41
Average securities to
earning assets 6.43 6.40 6.24 6.20 6.00

AVERAGE BALANCES
Assets $136,893 $138,434 $140,019 $139,396 $142,983
Portfolio loans 93,124 97,404 101,757 105,431 106,433
Loans held for sale or
securitization 17,425 15,065 12,760 8,826 11,172
Securities (at cost) 7,806 7,874 7,802 7,719 7,657
Earning assets 121,488 123,126 125,127 124,459 127,608
Core deposits 70,717 69,419 69,434 67,979 68,160
Purchased deposits and
funding 48,917 52,321 54,338 55,105 58,661
Total equity 13,388 12,687 12,565 12,468 12,549

PERIOD-END BALANCES

Assets $140,191 $138,123 $141,486 $140,231 $142,397
Portfolio loans 95,492 92,963 100,973 102,269 106,039
Loans held for sale or
securitization 12,853 19,505 12,964 11,779 9,667
Securities (at fair
value) 7,509 7,906 7,726 7,609 7,875
Core deposits 73,375 68,788 69,744 69,884 68,408
Purchased deposits and
funding 47,147 51,987 54,069 52,879 56,564
Total equity 14,581 12,902 12,610 12,623 12,613

For the Year

2007 2006 2005

CREDIT QUALITY STATISTICS
Net charge-offs $661 $442 $380
Provision for loan losses 1,326 489 300
Loan loss allowance
Lending-related commitment
allowance
Nonperforming assets
Annualized net charge-offs
to average portfolio loans .64% .44% .36%
Loan loss allowance to period
-end portfolio loans
Loan loss allowance to
nonperforming portfolio loans
Loan loss allowance (period
-end) to annualized net
charge-offs 266.49 256.20 287.26
Nonperforming assets to
period-end portfolio loans
and other nonperforming
assets

CAPITAL AND LIQUIDITY RATIOS
Tier 1 capital(1)
Total risk-based capital(1)
Leverage(1)
Period-end equity to assets
Period-end tangible common
equity to assets (2)
Average equity to assets 9.19% 9.21% 9.02%
Average equity to portfolio
loans 12.69 12.86 12.13
Average portfolio loans to
deposits 112.49 119.09 127.23
Average portfolio loans to
core deposits 128.76 143.22 155.12
Average portfolio loans to
earning assets 82.14 80.45 83.40
Average securities to earning
assets 6.22 6.31 6.15

AVERAGE BALANCES
Assets $143,559 $138,678 $141,556
Portfolio loans 103,996 99,390 105,275
Loans held for sale or
securitization 11,336 13,547 11,090
Securities (at cost) 7,880 7,801 7,759
Earning assets 126,609 123,541 126,224
Core deposits 80,765 69,395 67,869
Purchased deposits and funding 45,554 52,652 57,217
Total equity 13,200 12,779 12,765

PERIOD-END BALANCES

Assets
Portfolio loans
Loans held for sale or
securitization
Securities (at fair value)
Core deposits
Purchased deposits and funding
Total equity

(1) Fourth quarter 2007 regulatory capital ratios are based upon
preliminary data
(2) Excludes goodwill and other intangible assets

Supplemental financial information available at:
http://media.corporate-ir.net/media_files/irol/64/64242/sup/4Q07.pdf

SOURCE National City Corporation

Investors, Jill Hennessey, +1-216-222-9253, jill.hennessey@nationalcity.com,
or Media, Kristen Baird Adams, +1-216-222-8202,
kristen.bairdadams@nationalcity.com, both of National City Corporation