National City (NYSE:NCC) is among the 10 largest banks in the country in terms of market capitalization. That sounds more impressive than it is because market cap trails off quickly after the top five; National City is still primarily a regional player, though it's trying to change all that and reposition certain businesses.

For the third quarter, diluted net income grew nearly 22% to $0.90 per share, while National City paid $0.39 in dividends. Results included enough moving parts to make your head spin, including some hedging gains; a lower tax rate; the sale of First Franklin; and the company's non-prime lending arm, which is experiencing some tough credit trends and was included in continued operations numbers for the quarter. Overall, National City is also seen as moving away from mortgage-related services to more traditional retail and commercial banking in faster-growing states.

In terms of the more traditional banking metrics, net interest income growth fell slightly from last year's third quarter, but non-interest fee income grew 22%, which included some gains from selling First Franklin. Total revenue increased 6%. For an explanation of interest, non-interest income, and other industry metrics detailed below, check out the Fool's closer look at bank stocks.

National City's return on average assets was 1.58% for the quarter -- similar to what other banks have been reporting. Return on average equity was 17.23%, which is one of the highest in the industry and was up from closer to 15% for the first two quarters of the year.

The firm's net interest margin came in at 3.73%, flat from the second quarter and last year's third quarter. The efficiency ratio fell almost three percentage points to 57.33% compared with the second quarter, and fell almost two percentage points from last year. Core deposits were flat compared with last year. Finally, average portfolio loans dropped more than 10% because real estate and home equity loan activity was down as the housing market slows due to higher mortgage rates.

I'll spare you the rest of the minutiae, but for the most part, National City's traditional banking metrics were in line with expectations. In the quarterly conference call, management said it sees the most opportunity in retail and small business banking because it believes it's operating better than any competitor in its markets.

National City primarily operates in the upper Midwest against regional players such as KeyCorp (NYSE:KEY), Comerica (NYSE:CMA), Fifth Third Bancorp (NASDAQ:FITB) and US Bancorp (NYSE:USB). Of course, the giant banks such as Wachovia (NYSE:WB) and JPMorgan Chase (NYSE:JPM) also operate there.

The problem with this market is that it isn't growing as fast as others, such as Florida, Texas, and California -- Sun Belt areas where baby boomers are retiring and others are moving to get out of the cold. Perhaps this explains why the bigger players haven't snapped up National City and KeyCorp in Ohio and why National City has made a couple of acquisitions to gain a foothold in the Florida market, including Harbor Florida Bancshares and Fidelity Bankshares.

Unfortunately, I missed the stock a couple of years ago when it was trading at less than $30 and yielded closer to 5%. Time will tell if growth improves due to the presence in Florida. Plus, I hope the sale of First Franklin and decreased mortgage activities will simplify the financial reports.

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National City, US Bancorp, and JPMorgan are Motley Fool Income Investor picks. Want to get paid to invest? Mathew Emmert and other investors like you can show you how with a free trial to Income Investor.

Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.