National City Reports First Quarter 2007 Earnings

CLEVELAND, April 30 /PRNewswire-FirstCall/ -- National City Corporation today reported first quarter 2007 net income of $319 million, or $.50 per diluted share, compared to $459 million, or $.74 per diluted share for the first quarter of 2006. Fourth quarter 2006 earnings were $842 million, or $1.36 per diluted share, including a nonrecurring gain of $1.00 per diluted share from the sale of the Corporation's former First Franklin nonconforming mortgage origination and servicing platform, partially offset by charges associated with the retained First Franklin portfolio. First quarter 2007 results included further charges associated with the retained First Franklin portfolio. In addition, other unusual or nonrecurring items also affect comparisons between periods, as described further throughout this release.

(Logo: http://www.newscom.com/cgi-bin/prnh/20030428/NATIONALCITYLOGO ) Chairman's Comments

Chairman and CEO David A. Daberko commented, "The first quarter 2007 results were mixed and continue to reflect a focus on execution in our direct banking businesses. Our retail, corporate, and asset management businesses all had a solid quarter, consistent with our business plans for the year. These businesses are experiencing good growth in loan and deposit volumes and customer relationships. Both net interest margin and credit quality have been stable. The integration of our recently acquired Florida banks has been successfully completed. We're excited about the opportunity to build and grow the National City brand in these vibrant markets. Our mortgage business continues to operate in a difficult environment, but we have less exposure to the mortgage sector than in prior years. Overall, we expect each successive quarter from here to show improved earnings. Comparisons to the prior year will be challenging due to the fact that 2006 results included profits from businesses we have discontinued or sold, particularly First Franklin."

Net Interest Income and Margin

Tax-equivalent net interest income was $1.1 billion for the first quarter of 2007, approximately equal to the preceding quarter, and down about 6% from the first quarter a year ago. Net interest margin for the first quarter of 2007 was 3.69%, about equal to the preceding quarter and down slightly compared to the first quarter last year. Average earning assets were $121.5 billion in the first quarter of 2007, essentially equal to the preceding quarter and down slightly compared to the first quarter a year ago. This decline is a direct outcome of the Corporation's "originate-and-sell" strategy for indirect, out-of-footprint nonconforming mortgages and home equity lines and loans initiated in late 2005. The remaining run-off portfolios will continue to decline over the balance of the year.

Loans and Deposits

Average portfolio loans were $98.2 billion for the first quarter of 2007, compared to $93.1 billion in the fourth quarter of 2006, and $105.4 billion in the first quarter of 2006. Average portfolio loans increased on a linked- quarter basis primarily due to recent acquisitions which added approximately $6 billion to portfolio loans. Average portfolio loans decreased compared to the first quarter a year ago due to the previously described originate-and- sell strategy, as well as the decision to transfer $6 billion of nonconforming mortgage loans to held for sale in the latter part of 2006.

Of the $6 billion of nonconforming mortgage loans transferred to held for sale, approximately $4 billion were sold in 2006. No further sales occurred in the first quarter of 2007. In light of unfavorable market conditions, the remaining loans totaling $1.6 billion were returned to portfolio in March 2007. Prior to that transfer, fair value writedowns and other charges of $28 million were recorded as a reduction to loan sale revenue.

Average total deposits were $87.8 billion in the first quarter of 2007, up $3.3 billion from the preceding quarter, and $4.9 billion from the first quarter a year ago, primarily due to deposit balances obtained in recent acquisitions. Average core deposits, excluding mortgage banking escrow balances, were $72.8 billion, up 9% compared to year end, and 13% compared to the first quarter last year.

Credit Quality

The provision for credit losses for the first quarter of 2007 was $107 million, compared to $323 million in the fourth quarter of 2006, and $27 million in the first quarter a year ago. As previously disclosed in the Corporation's midquarter report, one of the third party mortgage insurance providers for the run-off nonconforming mortgage loan portfolio has been rejecting a meaningful number of claims for reasons that management feels are unjustified. In light of this situation, adjustments were made to the Corporation's charge-off practices and loss forecast to reflect an assumed loss of insurance coverage for loans in dispute. Approximately $20 million of the provision for credit losses in the first quarter of 2007 arose from these revised assumptions regarding insurance coverage. Notwithstanding these adjustments, management believes it is entitled to insurance recovery and continues to pursue its contractual rights under the contract. Within the nonconforming mortgage portfolio itself, delinquencies and credit losses have been in line with loss forecasts established at the end of 2006.

First quarter 2007 net charge-offs were $147 million, compared to $128 million in the preceding quarter, and $121 million in the first quarter a year ago. Charge-offs for the first quarter of 2007 included $53 million of nonconforming mortgage loans of which approximately $24 million were associated with the previously described insurance matter. In addition, $18 million of previously reserved passenger airline leases were charged-off in the first quarter of 2007.

Nonperforming assets were $801 million at March 31, 2007, up from $732 million at December 31, 2006. The acquisition of Fidelity in the first quarter added $38 million to nonperforming assets. Loans in foreclosure increased $31 million since year end which reflects higher foreclosure rates and weakness in the housing market. The allowance for loan losses was $1.1 billion at both March 31, 2007 and December 31, 2006, representing 1.11% and 1.18% of portfolio loans, respectively.

Noninterest Income

Noninterest income for the first quarter of 2007 was $621 million, compared to $1.7 billion in the fourth quarter of 2006, and $656 million in the first quarter a year ago. The fourth quarter of 2006 included a $984 million gain on the sale of the First Franklin origination and servicing platform. Excluding this transaction, the decline in noninterest income was primarily due to lower loan sale and servicing revenue.

Loan sales revenue was $75 million for the first quarter of 2007, down from $122 million in the preceding quarter, and $144 million in the first quarter a year ago. Fair value writedowns and other charges on the nonconforming mortgage portfolio held for sale were $28 million in the first quarter of 2007 and $73 million in the preceding quarter. In general, gain on sale margins declined in the first quarter, reflecting less liquidity in the capital markets, with higher recourse and hedging losses also depressing revenue. Compared to the first quarter a year ago, loan sale revenue decreased for the same reason, as well as the sale of the First Franklin origination and sales platform in late 2006.

Loan servicing revenue was $32 million for the first quarter of 2007, compared to $52 million in the fourth quarter of 2006, and a loss of $44 million in the first quarter a year ago. The decrease compared to the fourth quarter of 2006 was primarily due to the sale of the nonconforming mortgage servicing platform, National City Home Loan Services (NCHLS), on December 30, 2006. NCHLS contributed $23 million and $13 million to loan servicing revenue in the fourth quarter and first quarter of 2006, respectively. Also affecting results were net pretax mortgage servicing right (MSR) hedging losses of $49 million in the first quarter of 2007, compared to $60 million in the fourth quarter of 2006 and $128 million in the first quarter of 2006.

Deposit service fees and brokerage revenue decreased compared to the preceding quarter due to seasonally lower volumes of fee-generating transactions. Compared to a year ago, deposit service fees were up 8% and brokerage revenue was up 18%. There were no significant unusual items in other noninterest income in the first quarter of 2007. In the first quarter of 2006, other noninterest income included $31 million related to the partial release of a chargeback guarantee liability associated with a now-terminated credit card processing agreement for a major airline.

Noninterest Expense

Noninterest expense was $1.2 billion, down $39 million, or 3%, compared to the fourth quarter of 2006, but up $22 million, or 2%, versus the first quarter a year ago. The decline from the fourth quarter of 2006 was due primarily to lower incentive-based compensation costs. Partially offsetting this decline, state and local tax expense increased $29 million due to a nonrecurring net benefit of $9 million recognized in the fourth quarter of 2006. The increase in noninterest expense compared to the first quarter a year ago primarily reflects acquisition and divestiture-related costs as well as higher foreclosure costs. Intangible amortization, occupancy costs, and acquisition integration costs all increased compared to the first quarter a year ago due to recent acquisitions. Acquisition integration costs were $16 million in the first quarter of 2007 with no such costs in the first quarter a year ago. Foreclosure costs increased compared to a year ago reflective of more properties in foreclosure and continued weakness in the housing market.

Income Taxes

The effective tax rate for the first quarter of 2007 was 30%, equal to the first quarter a year ago, but down from 35% in the fourth quarter of 2006. The fourth quarter of 2006 reflects a higher rate applied to the gain on sale of First Franklin. In addition, the income tax provision for the first quarter of 2007 benefited from rate changes resulting from internal reorganizations and mergers. The full year effective tax rate is currently estimated at approximately 32% for 2007.

Balance Sheet

At March 31, 2007, total assets were $138.6 billion, and stockholders' equity was $13.2 billion, or 9.5% of total assets. At March 31, 2007, total deposits were $88.6 billion, including core deposits of $77.9 billion. Total purchased funds were $32.1 billion at March 31, 2007, down from $33.3 billion at December 31, 2006, and $41.3 billion at March 31, 2006. Growth in the deposit base as well as reductions in certain portfolio loan categories and loans held for sale have reduced the need for borrowing.

The Corporation repurchased 55 million shares of its common stock during the first quarter of 2007 by way of a tender offer and subsequent open market repurchases. At March 31, 2007, the Corporation had remaining authorization to repurchase 29 million shares. Through April 26, 2007, an additional 20 million shares were repurchased. On April 24, 2007, the Corporation's Board of Directors authorized the repurchase of up to an additional 40 million shares. Management intends to continue share repurchases over the rest of the year, subject to maintenance of capital targets, market conditions, and applicable regulatory constraints.

Acquisitions and Divestitures

On December 1, 2006, the Corporation completed its acquisition of Harbor Florida Bankshares, Inc., a banking company operating 42 branches along the central east coast of Florida. On January 5, 2007, the Corporation completed its acquisition of Fidelity Bankshares, Inc., a banking company operating 52 branches along Florida's southeast coast. On December 30, 2006, the Corporation completed the sale of its First Franklin mortgage origination and servicing platform.

Forward-Looking Statements

This document contains forward-looking statements. Forward-looking statements 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; changes in interest rates; changes in the competitive environment; continuing consolidation in the financial services industry; new litigation or changes in existing litigation; losses, customer bankruptcy, 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 http://www.sec.gov/ or on the Corporation's Web site at nationalcity.com. Management may elect to update forward-looking statements at some future point; however, it specifically disclaims any obligation to do so.

Conference Call

National City Corporation's executive management will host a conference call at 11:00 a.m. (ET) on Monday, April 30, 2007 to discuss the first quarter 2007 financial results. Interested parties may access the conference call by dialing 1-800-230-1085. 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, http://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 April 30, 2007, until midnight (ET) on May 7, 2007. The replay will be accessible by calling 1-800-475-6701 (domestic) or 320-365-3844 (international) using the pass code of 864857 or via the Company's Web site.

About National City

National City Corporation , 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 and Pennsylvania, 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 2006 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr EARNINGS Tax-equivalent interest income $2,218 $2,270 $2,298 $2,243 $2,153 Interest expense 1,100 1,137 1,148 1,076 969 Tax-equivalent net interest income 1,118 1,133 1,150 1,167 1,184 Provision for credit losses 107 323 73 60 27 Tax-equivalent NII after provision for credit losses 1,011 810 1,077 1,107 1,157 Noninterest income 621 1,702 877 784 656 Noninterest expense 1,171 1,210 1,184 1,174 1,149 Income before taxes and tax- equivalent adjustment 461 1,302 770 717 664 Income taxes 134 452 236 238 197 Tax-equivalent adjustment 8 8 8 6 8 Net income $319 $842 $526 $473 $459 Effective tax rate 29.5% 34.9% 30.9% 33.5% 30.1% PER COMMON SHARE Net income: Basic $.50 $1.37 $.87 $.77 $.75 Diluted .50 1.36 .86 .77 .74 Dividends paid .39 .39 .39 .37 .37 Book value 22.12 23.06 21.44 20.84 20.69 Market value (close) 37.25 36.56 36.60 36.19 34.90 Average shares: Basic 631.7 611.9 603.8 609.7 611.9 Diluted 640.5 620.7 612.1 618.2 619.7 PERFORMANCE RATIOS Return on average common equity 8.98% 24.93% 16.45% 15.08% 14.91% Return on average total equity 8.99 24.94 16.46 15.10 14.92 Return on average assets .94 2.44 1.51 1.35 1.33 Net interest margin 3.69 3.73 3.73 3.73 3.81 Efficiency ratio 67.37 42.71 58.43 60.14 62.45 LINE OF BUSINESS (LOB) RESULTS Net Income: Retail Banking $173 $133 $194 $210 $177 Commercial Banking - Regional 160 124 154 138 141 Commercial Banking - National 58 61 58 65 66 Mortgage Banking 2 39 67 (18) (34) Asset Management 26 21 24 30 22 Parent and Other (100) 464 29 48 87 Total Consolidated National City Corporation $319 $842 $526 $473 $459 LOB Contribution to Diluted Earnings Per Share: Retail Banking $.27 $.22 $.32 $.34 $.28 Commercial Banking - Regional .25 .20 .25 .22 .23 Commercial Banking - National .09 .10 .10 .11 .11 Mortgage Banking - .06 .11 (.03) (.06) Asset Management .04 .03 .04 .05 .04 Parent and Other (.15) .75 .04 .08 .14 Total Consolidated National City Corporation $.50 $1.36 $.86 $.77 $.74 CREDIT QUALITY STATISTICS Net charge-offs $147 $128 $117 $76 $121 Provision for credit losses 107 323 73 60 27 Loan loss allowance 1,104 1,131 932 989 1,001 Lending-related commitment allowance 63 78 80 77 79 Nonperforming assets 801 732 689 667 647 Annualized net charge-offs to average portfolio loans .61% .54% .48% .30% .46% Loan loss allowance to period-end portfolio loans 1.11 1.18 1.00 .98 .98 Loan loss allowance to nonperforming portfolio loans 206.08 226.13 198.25 202.14 207.14 Loan loss allowance (period-end) to annualized net charge-offs 184.68 223.38 200.10 326.17 204.29 Nonperforming assets to period-end portfolio loans and other nonperforming assets .80 .76 .74 .66 .63 CAPITAL AND LIQUIDITY RATIOS Tier 1 capital(1) 7.07% 8.93% 7.48% 7.31% 7.38% Total risk-based capital(1) 10.12 12.16 10.30 10.20 10.31 Leverage(1) 6.92 8.56 7.13 6.89 6.92 Period-end equity to assets 9.51 10.40 9.34 8.91 9.00 Period-end tangible common equity to assets(2) 6.26 7.77 6.99 6.60 6.70 Average equity to assets 10.45 9.78 9.16 8.97 8.94 Average equity to portfolio loans 14.66 14.38 13.03 12.35 11.83 Average portfolio loans to deposits 111.78 110.18 116.64 122.88 127.05 Average portfolio loans to core deposits 128.66 131.69 140.31 146.55 155.09 Average portfolio loans to earning assets 80.79 76.65 79.11 81.32 84.71 Average securities to earning assets 6.34 6.43 6.40 6.24 6.20 AVERAGE BALANCES Assets $137,810 $136,893 $138,434 $140,019 $139,396 Portfolio loans 98,198 93,124 97,404 101,757 105,431 Loans held for sale or securitization 11,769 17,425 15,065 12,760 8,826 Securities (at cost) 7,704 7,806 7,874 7,802 7,719 Earning assets 121,543 121,488 123,126 125,127 124,459 Core deposits 76,322 70,717 69,419 69,434 67,979 Purchased deposits and funding 43,001 48,917 52,321 54,338 55,105 Total equity 14,398 13,388 12,687 12,565 12,468 PERIOD-END BALANCES Assets $138,559 $140,191 $138,123 $141,486 $140,231 Portfolio loans 99,566 95,492 92,963 100,973 102,269 Loans held for sale or securitization 10,693 12,853 19,505 12,964 11,779 Securities (at fair value) 7,208 7,509 7,906 7,726 7,609 Earning assets Core deposits 77,884 73,375 68,788 69,744 69,884 Purchased deposits and funding 42,897 47,147 51,987 54,069 52,879 Total equity 13,170 14,581 12,902 12,610 12,623 (1) First quarter 2007 regulatory capital ratios are based upon preliminary data (2) Excludes goodwill and other intangible assets Unaudited National City Corporation CONSOLIDATED FINANCIAL HIGHLIGHTS (In millions, except per share data) 2005 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr EARNINGS Tax-equivalent interest income $2,113 $2,034 $1,865 $1,751 Interest expense 921 827 694 594 Tax-equivalent net interest income 1,192 1,207 1,171 1,157 Provision for credit losses 132 56 26 70 Tax-equivalent NII after provision for credit losses 1,060 1,151 1,145 1,087 Noninterest income 777 747 981 799 Noninterest expense 1,267 1,156 1,180 1,148 Income before taxes and tax- equivalent adjustment 570 742 946 738 Income taxes 164 256 313 247 Tax-equivalent adjustment 8 8 8 7 Net income $398 $478 $625 $484 Effective tax rate 29.1% 34.9% 33.4% 33.8% PER COMMON SHARE Net income: Basic $.65 $.75 $.98 $.75 Diluted .64 .74 .97 .74 Dividends paid .37 .37 .35 .35 Book value 20.51 20.54 20.42 19.82 Market value (close) 33.57 33.44 34.12 33.50 Average shares: Basic 618.2 635.9 636.9 643.0 Diluted 625.4 644.7 644.1 652.5 PERFORMANCE RATIOS Return on average common equity 12.57% 14.59% 19.65% 15.35% Return on average total equity 12.59 14.61 19.66 15.37 Return on average assets 1.10 1.31 1.80 1.42 Net interest margin 3.74 3.72 3.76 3.78 Efficiency ratio 64.35 59.19 54.83 58.67 LINE OF BUSINESS (LOB) RESULTS Net Income: Retail Banking $165 $174 $156 $144 Commercial Banking - Regional 126 145 146 133 Commercial Banking - National 73 68 55 55 Mortgage Banking 59 59 180 118 Asset Management 14 19 26 21 Parent and Other (39) 13 62 13 Total Consolidated National City Corporation $398 $478 $625 $484 LOB Contribution to Diluted Earnings Per Share: Retail Banking $.26 $.27 $.24 $.22 Commercial Banking - Regional .20 .22 .23 .21 Commercial Banking - National .12 .11 .08 .08 Mortgage Banking .10 .09 .28 .18 Asset Management .02 .03 .04 .03 Parent and Other (.06) .02 .10 .02 Total Consolidated National City Corporation $.64 $.74 $.97 $.74 CREDIT QUALITY STATISTICS Net charge-offs $138 $83 $72 $87 Provision for credit losses 132 56 26 70 Loan loss allowance 1,094 1,108 1,125 1,179 Lending-related commitment allowance 84 88 100 93 Nonperforming assets 596 585 572 578 Annualized net charge-offs to average portfolio loans .52% .30% .27% .35% Loan loss allowance to period-end portfolio loans 1.03 1.02 1.05 1.15 Loan loss allowance to nonperforming portfolio loans 223.11 230.08 238.64 245.11 Loan loss allowance (period-end) to annualized net charge-offs 199.42 336.67 391.50 330.46 Nonperforming assets to period-end portfolio loans and other nonperforming assets .56 .54 .53 .56 CAPITAL AND LIQUIDITY RATIOS Tier 1 capital(1) 7.43% 7.68% 7.96% 7.91% Total risk-based capital(1) 10.54 10.78 11.20 11.25 Leverage(1) 6.83 7.03 7.36 7.22 Period-end equity to assets 8.86 8.80 9.02 8.97 Period-end tangible common equity to assets (2) 6.57 6.57 6.75 6.65 Average equity to assets 8.78 8.95 9.13 9.23 Average equity to portfolio loans 11.79 11.98 12.16 12.62 Average portfolio loans to deposits 126.68 127.88 130.12 124.24 Average portfolio loans to core deposits 156.15 158.32 154.90 150.92 Average portfolio loans to earning assets 83.41 83.59 84.13 82.45 Average securities to earning assets 6.00 5.75 6.21 6.67 AVERAGE BALANCES Assets $142,983 $144,967 $139,673 $138,516 Portfolio loans 106,433 108,386 104,908 101,283 Loans held for sale or securitization 11,172 11,570 10,109 11,502 Securities (at cost) 7,657 7,450 7,746 8,195 Earning assets 127,608 129,659 124,691 122,847 Core deposits 68,160 68,462 67,728 67,109 Purchased deposits and funding 58,661 59,567 55,859 54,713 Total equity 12,549 12,980 12,752 12,779 PERIOD-END BALANCES Assets $142,397 $146,750 $144,143 $140,982 Portfolio loans 106,039 108,910 106,808 102,932 Loans held for sale or securitization 9,667 11,942 11,539 11,639 Securities (at fair value) 7,875 7,568 7,694 8,085 Earning assets Core deposits 68,408 67,738 67,922 68,336 Purchased deposits and funding 56,564 61,839 58,639 55,274 Total equity 12,613 12,920 13,002 12,643 (1) First 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/1Q07.pdf