National City said Monday that it has secured $7 billion from an investor group to solidify the company’s financial position.

New York private equity firm Corsair Capital invested $985 million, while $6.01 billion came from several large existing institutional shareholders. The equity infusion is expected to thrust the Cleveland bank’s capital ratios above its targeted ratios. For instance, its Tier 1 risk-based capital ratio will increase to 11.4% on a pro forma basis from 6.6% as of March 31.

NatCity manages a network of banks in the states of Ohio, Florida, Illinois, Indiana, Kentucky, Michigan, Missouri, Pennsylvania and Wisconsin, providing commercial and retail banking, mortgage financing and servicing, consumer finance and asset management services.

“This strategic raising of equity capital provides National City with the financial flexibility to continue investing in and growing our core businesses, which are delivering solid results, while addressing the asset quality challenges posed by the disruptions in the credit and housing markets,” said National City chairman, president and chief executive, Peter Raskind, in a statement.

Richard Thornburgh, a vice chairman of Corsair Capital, was appointed to NatCity’s board. In a statement about the firm’s investment said: “National City is an integral contributor to the economic fabric of the markets it serves. Our decision to make a long-term investment in National City reflects our recognition of the company’s important role as a leading provider of core banking services to its many customers, and our confidence in the potential of National City to achieve enhanced value for its customers, stockholders and employees in the future.”

Terms call for NatCity’s investors to purchase 126.2 million shares of common stock at $5 per share and an aggregate of 63,690 shares of convertible preferred stock at a purchase price of $100,000 per share. Additionally, Corsair Capital and certain other investors will receive five-year warrants with a conversion cap of $8.50 per share.

The investment mirrors the recent equity investments made in Wachovia, Washington Mutual and JPMorgan.

NatCity, meanwhile, plans to reduce its common dividend to 1 cent per share from 21 cents a share in order to bolster its capital base.

The Midwest bank also reported its first-quarter 2008 results on Monday, posting a net loss of $171 million, or 27 cents per diluted share, compared to a net loss of $333 million, or 53 cents per diluted share for the fourth quarter of 2007. NatCity reported that its first quarter 2008 loss reflected a provision for $1.4 billion in loan losses.

NatCity reported net interest income of $1.1 billion for the first quarter of 2008, a decline of roughly 4% from the fourth quarter and first quarter of 2007, whereas total deposits amounted to $97.6 billion in the first quarter of 2008, or roughly equal to that of the fourth quarter. In addition, the bank recorded $538 million of net charge-offs for the first quarter of 2008, $275 million of charge-offs in the fourth quarter and $147 million in the first quarter of 2007.

Its average portfolio loans totaled $115.4 billion for the first quarter of 2008, compared with $113.5 billion for the fourth quarter of 2007 and $98.2 billion for the first quarter of 2007. The increase reflects growth in its commercial loan business, transfers of formerly held-for-sale mortgage and home equity loans, and an acquisition, according to NatCity.

Goldman Sachs is serving as financial advisor to NatCity, while Sullivan & Cromwell and Jones Day are acting as its counsel.

RBS Greenwich Capital is serving as financial advisor to Corsair Capital, while Simpson Thacher & Bartlett is providing counsel to the private equity firm.