Oppenheimer feeling good about NCC

Missed this from Thomson Financial News last Wednesday:

National City Corp. has taken steps to bolster investor confidence and isn't at risk of going the way of IndyMac Bancorp Inc. as reports have suggested, Oppenheimer said Tuesday.

In a note entitled: "Proactive Steps Already Taken; Bank Not About to Float Down the Cuyahoga River," Analyst Terry McEvoy backed a "perform" rating on National City, whose shares have plunged more than 20% since news reports identified it as one that could follow a similar path as IndyMac. McEvoy cited the bank's initiative to build up reserves and capital over the past few quarters for her upbeat view.

[...]

"Reserves grew from $1.4 billion at the end of third quarter 2007 to $2.6 billion at the end of the first quarter of 2008," McEvoy wrote to clients. "Because of the $7 billion of new capital raised in April 2007, the company's tangible capital level is well above peer levels."

She sees the company's tangible book value at $6.86 a share by the end of fiscal 2009, and expects National City to post a loss of 18 cents a share when it reports its second quarter results on July 24, narrower than the 26 cents-a-share mean estimate of analysts polled by Thomson Reuters.

"The difficulty today in predicting NCC's quarterly earnings lies not so much in the size of the credit losses, but when they will be realized," McEvoy wrote, noting management's forecast for $2 billion to $2.4 billion of net charge-offs in 2008 ($538 million recorded in the first quarter) taking into account all loan categories. McEvoy's loss estimate includes her projection that National City will record $850 million of the net charge-offs on bad loans in the second quarter.

Meanwhile, National City, which holds $925 million worth of restricted Visa Inc. shares it acquired in the credit card company's IPO during the first quarter, said it would explore options for unlocking the value in these shares before the lock-up period expires.

Source: National City not at risk of going the IndyMac way -- Oppenheimer

Yes, the message is directed to shareholders. But, depositors and employees can feel re-assured, too.

Also, very interesting to note the Visa shares.