The Ticker

PNC Buys National City and Hits the TARP

By Kirk Shinkle

Posted: October 24, 2008

After weeks of speculation as its share price headed toward the floor, Cleveland-based regional bank National City goes to PNC Financial Services.

The deal creates the country's fifth-largest bank by deposits.

The deal:
PNC will pay $5.58 billion in stock and cash for National City and get $7.7 billion through the government's bailout plan. The deal values National City at about $2.23 a share, or about 19 percent below yesterday's closing price (it traded around $23 a year ago). PNC says its Tier 1 capital ration will be about 10 percent, and the combined firm will be well above regulatory standards for a "well-capitalized" bank.

Why this is good:
A couple of reasons: First, National City was probably the biggest regional at risk as the credit crisis spreads. Second, the use of the Troubled Asset Relief Program (TARP) funds is encouraging. It's a positive sign that banks are using the government's lending offer to get markets moving again.

And lastly, a quick note to National City's press team who just yesterday chided me for saying that the bank was up for sale: We won't be running that correction.

The perfect heist

Billions of taxpayer dollars so one bank can gobble another at 10 cents on the dollar? All facilitated by regulators/politicians controlled by bankers? It's the perfect crime: the perp is also the cop.

Steve of MI @ Oct 11, 2009 09:06:42 AM

Held Hostage

I guess I just don't understand all this tarp money. I thought it was to save the banks so that they could help get the economy going. With.. guess what, money! such as business loans, mortgage loans, and and other types of loans. This is the major business of banks.

Why, with perfect credit, income, etc. would National City refuse to subordinate what was already a 2nd lien. This stopped us from rewriting our first mortgage for a much lower rate and saving thousands of dollars which would have gone back in the economy. This wasn't a troubled mortgage, and we were not going to get any cash out. All that had to transpire was for National City to remain as 2nd lien holder.

I guess what I am getting at is, they used our money as taxpayers, collected and are continuing to collect interest on our loan, but are unwilling to allow us to save some money by lowering our interest rate. By the way, the first lien holder had already approved the loan, only if they would remain as first lien holder. I have no doubt NC would have no problem doing the first mortgage. We would absolutely refuse to do this.

Bailout, Tarp, government stimulus, or whatever you wish to call it is a well intentioned program being misused by some of the very same financial institutions that it is saving.

Be it PNC or National City, this and some of their other practices should be illegal.

Ron of FL @ Sep 23, 2009 18:01:13 PM

What The

I am sure that since PNC picked up all those mortgages for 10 cents on the dollar they will kindly go back to troubled homeowners who got beat up by National City and the economy, modify their loans so that both PNC and the homeowners can share in the bailout...... I am waiting for their call

brian of CA @ Jul 07, 2009 03:03:27 AM

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The Ticker

The Ticker

Kirk Shinkle is a senior editor at U.S. News. He writes daily about ups and downs in equity markets, sectors and stocks. Formerly, he covered business and economics on both coasts for Investor's Business Daily.

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