Industry News

National City profits up 15% as bank exits subprime mortgage biz

Sale of First Franklin to Merrill Lynch expected to close by end of year

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Third-quarter profits at National City Corp. were up 15 percent as the Cleveland-based bank continued to reduce its subprime mortgage portfolio in order to concentrate on consumer and small-business banking. National City reported net income of $551 million, or 90 cents per share, compared with $478 million in the same quarter last year. Although income from lending was down 5 percent to $1.15 billion, fee income was up 22 percent to $916 million. National City said it expects a $1.3 billion sale of its First Franklin Financial Corp. subprime lending unit to Merrill Lynch & Co. to close by the end of the year. In the mean time, National City has sold about $6 billion in loans originated by First Franklin. Balances of broker-originated home equity and non-prime mortgage loans were down 21 percent from the same quarter a year ago, and average portfolio loans stood at $97 billion in the third quarter, down from $108 billion last year. Despite that, net charge-offs were up 41 perc...