National City trading halted after stock takes a hit!

NEW YORK - July 14, 2008 - In a crazy day for banking stocks, National City Corp. shares dropped more than 32 percent Monday before recovering to close almost 15 percent lower.

The decline came after Friday's news that IndyMac Bank, a major California savings and loan, had failed, and amid mounting speculation about who could be next.

The New York Stock Exchange briefly halted trading of National City Corp. shares around noon to allow the Cleveland bank to address its plummeting stock price. The bank issued a statement to reassure investors that nothing unusual was happening at the bank and that it remained financially sound.

National City shares actually opened the day up slightly from Friday's close of $4.42, but fell quickly. When trading was halted at about 11:54 a.m., the last trade was just shy of $3.21, a drop of more than 27 percent.

Trading resumed around 12:10 p.m. at $3.22. The day's low point, $2.99 a share, occurred shortly thereafter. The stock mounted a comeback and closed at $3.77.

NYSE Regulation, the exchange's not-for-profit watchdog, stopped trading to give the market time to absorb National City's statement, which said that the bank was not experiencing any unusual "depositor or creditor activity."

The bank also added that it has $12 billion in cash and immediately accessible short-term investments, as well as one of the highest Tier 1 capital ratios among large banks, thanks to a $7 billion infusion in April from Corsair Capital LLC and other institutional investors. The Tier 1 capital ratio measures a bank's most reliable and liquid assets that can be tapped if money is tight.

Other bank stocks took big hits as well on Monday. Cleveland's KeyCorp. was off 11 percent, Fifth Third Bancorp of Cincinnati was down 11 percent and Columbus-based Huntington Bancshares closed 17 percent lower.

Washington Mutual Inc., the mortgage-heavy savings and loan that received a bailout of its own earlier this year, watched its stock price drop 35 percent. Wachovia Corp. of Charlotte was down 15 percent.

Those hit hardest tended to have a tie to the mortgage business, said Jeff Davis, an analyst with FTN Midwest Securities in Nashville.

"It's a very jittery market," Davis said. He credited the IndyMac failure as the biggest driver in Monday's across-the-board deterioration.