National City Corp. reported a $622 million after-tax gain on the sale of its First Franklin subsidiary, but is still trying to unload $7.3 billion in loans made by the subprime lender before the sale.
The First Franklin “run-off” portfolio cost National City $172 million in the fourth quarter and $197 million for the year, as the bank realized losses on the sale of loans or wrote down the value of those it still held. At $1.1 billion, the allowance for loan losses as of Dec. 31 represented 1.18 percent of National City’s portfolio, a 15-basis-point increase from end of 2005.
The sale of First Franklin to Merrill Lynch & Co. was completed on Dec. 30, National City said, although proceeds from the sale are subject to adjustment under the sale contract.
National City reported fourth-quarter profits of $842 million, up 116 percent from $398 million in 2005. Profits for the year were $2.3 billion, up from $2 billion in 2005. The bank’s wholesale, consumer and small-business units posted their best year ever, with loan volumes, deposit volumes and fee income all on the rise.
As it moves out of subprime lending, National City is increasing its presence in consumer banking through its acquisition of Fidelity Bankshares Inc., which operates 52 branches in southeast Florida. That purchase was completed Jan. 5, National City said.
