U.S. Stocks Struggle, National City Plunges

123jump.com Staff
21 Apr, 2008
New York City

U.S. stocks fell after Bank of America earnings plunged 76% and reported a provision of $6 billion for loan losses. National City, Ohio based lender nearly eliminated its dividend and raised $7 billion at $5 per share, 40% from its stock price on Friday. Arch Coal jumped 5% after it reported surging earnings and revenues on rising coal prices. Sears Holdings fell after Bank of America declined to renew its credit line.

[R]1:20PM New York – U.S. stocks edge lower after National City raises $7 billion at a discount and earnings at Bank of America plunge 76%.[/R]

U. S. stocks declined after four hours of trading in the morning on more credit market related losses.

Bank of America ((BAC)) fell 96 cents to $37.60 after it reported first quarter earnings declined 76% to $1.21 billion from $5.26 billion from a year ago. Diluted earnings per share plunged 80% to 23 cents from $1.16 in the previous year. Provision for loan loss in the quarter rose to $6 billion.

National City ((NCC)) plunged 26% or $2.20 to $6.14 after it nearly eliminated dividend. The company also reported a net loss of $171 million or 27 cents per share compared to $319 million or 50 cents per share. The Ohio based lender with branches in Michigan and Ohio accumulated subprime loans in Florida through recent acquisitions.

National will lower its current annual dividend to 1 cent from 21 cents a share and sell 126.2 million shares at $5 each and 63,690 preferred shares at $100,000 each. Of the total $7 billion raised from existing investors, $985 million will be from a private equity group Corsair Capital LLC.

Non-performing loans surged to 1.95% from 0.8% and National recorded a gain of $772 million from a stake sale in Visa Inc. through public offering.

Arch Coal, Inc., coal miner said that the first quarter 2008 consolidated revenues increased 22% to $699.4 million from a year ago.

First quarter 2008 net income was $81.1 million, or $0.56 per diluted share, compared to $28.7 million, or $0.20 per share in the year ago. Adjusted earnings before interest, taxes, depreciation and amortization Income from operations more than doubled to $116.5 million.

Arch Coal ((ACI)) stock jumped 5% or $3.50 to $61.90.

Citigroup offering

Citigroup stock ((C)) lost 41 cents to $24.70 ahead of its rumored offering of convertible offering. Estimates of the offering have ranged between $3 and $7 billion and could be priced as early as this evening.

Ratings revisions

Caterpillar ((CAT)) fell $2.54 or $82.71 a day after it reported rising earnings and today Credit Suisse and Wachovia lowered its rating on the stock.

Schlumberger ((SLB)) jumped after Morgan Stanley raised its rating on the stock to “overweight” from “equal-weight” and target price was lifted to $135 from $125.

Commodities update

Crude oil reached another record high as speculators leveraged declining dollar and tight supply and demand conditions. Crude oil surged above $118 a barrel but declined 58 cents to $116.11 in the early afternoon trading.

Sugar declined 5% or 69 cents to $12.60 a pound.