March 17 (Bloomberg) -- National City Corp., Ohio's biggest bank, fell the most in 24 years in New York trading, while Washington Mutual Inc., the largest U.S. savings and loan, fell to its lowest since 1995 on waning prospects for takeovers.

National City fell as much as 47 percent and sold for $7.52 as of 4:15 p.m., down $5.63 in New York Stock Exchange composite trading. Washington Mutual declined 13 percent to $9.24. It was the second straight session in which they led the list of worst performers in the 24-member KBW Bank Index.

JPMorgan Chase & Co.'s $240 million purchase of Bear Stearns Cos. removed one of the largest potential buyers from the market. Analysts including Richard Bove of Punk Ziegel & Co. have said losses on home loans made Washington Mutual and National City takeover targets. The price for Bear Stearns -- 90 percent less than the firm's market value last week -- cast doubt on the value of other companies tied to mortgage lending.

``Morgan is out of the picture in terms of more deals until the end of the year at the very earliest,'' said Gerard Cassidy, an analyst at RBC Capital Markets, who rates National City ``underperform.'' He attributed Cleveland-based National City's plunge today to ``fear that there are more severe problems in its loan and securities portfolios.''

``Our stock's volatility today is related to the market's reaction to the Bear Stearns acquisition,'' National City spokeswoman Kristen Baird Adams said. David Barr, a spokesman for the Federal Deposit Insurance Corp., the regulator that guarantees accounts up to $100,000, said his agency ``doesn't comment on open and operating institutions.''

Asset Quality

David Hendler, an analyst with CreditSights Inc., said in a report today that Seattle-based Washington Mutual is similarly vulnerable. ``There could be a lack of many buyers in light of the deteriorating credit quality at WaMu and since potential buyers also have their own internal issues to contend with.''

National City, which once ranked among the nation's biggest subprime home lenders, has been raising capital after losing $333 million in the fourth quarter. The bank is seeking a buyer, Dow Jones reported March 13, citing unnamed sources.

``Given the asset quality problems facing National City, we sense buyers could be wary of stepping in until there is greater clarity about the downside loss potential,'' Hendler said.

The fallout spread to Countrywide Financial Corp., the biggest U.S. mortgage lender, which fell 9 percent. Investors have been concerned that Bank of America Corp. may revise or scuttle its pending takeover bid for Calabasas, California-based Countrywide, originally valued at about $4 billion. The stock closed at $4.09, below the price that prevailed before Bank of America made its bid and its lowest level since 1995.

Low Multiples

IndyMac Bancorp, the second-biggest independent mortgage company, dropped 9 percent. The company is based in Pasadena, California.

Banks stuck with the greatest amount of loans on which they don't receive interest may trade as low as 10 percent of book value, or assets minus liabilities, Cassidy said, noting these levels were last seen during the recession of the early 1990s. National City's book value as of Dec. 31 was $21.15 per share, while Washington Mutual's was $24.39. Cassidy said he doesn't follow Washington Mutual.

The average price of the banks in the Standard & Poor's 500 was more than 100 percent of book value at the end of 2007, Goldman Sachs Group Inc. analyst Lori Appelbaum noted in a Jan. 28 report.

Large U.S. banks including Citigroup Inc. and Wachovia Corp. may tumble as much as 50 percent because of more loan losses and writedowns of securities, Oppenheimer & Co. analyst Meredith Whitney said in a Bloomberg TV interview today.

Ratings Cut

``Banks have put on a lot of goodwill, which is going to turn out to be worthless after this credit cycle,'' Whitney said. Goodwill is the difference between the price paid in an acquisition and the fair market value of the purchased assets.

Citigroup, the largest U.S. bank by assets, declined 5.9 percent while Wachovia slipped 3.6 percent. Wachovia is the fourth-biggest U.S. bank.

Moody's Investors Service on March 14 cut Washington Mutual's senior unsecured credit rating to one notch above junk status. The savings and loan has been trying to raise capital while coping with an increase in bad loans, Moody's said.

``WaMu is a sound financial institution,'' spokeswoman Olivia Riley said in a March 14 e-mailed statement. WaMu is the nickname often used for Washington Mutual. In addition to capital markets, funding sources include the Federal Home Loan Bank and deposits from the retail banking unit, she said.

WaMu said in January it expected to boost its reserve for loan losses to $1.8 billion to $2 billion in the first quarter, then make similar increases over the next three quarters.

Moody's cut National City's rating to A3 from A2 on March 13 and said it remains on review for another downgrade. National City's loans linked to the equity in homes will produce ``significant losses that will further weaken National City's capital position,'' Moody's said.

To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net

Last Updated: March 17, 2008 17:27 EDT