It handles very well from the factory, but put on some coil-overs and it is the best handling car I have ever driven. I have driven e46 M3 Competition Package, S2000, Z4 3.0 Spots Package, 330i ZHP, and Integra Type R. A properly set up 318ti with coil-overs out does them all.
As for performance it is a failry peppy car. I would take it any day over a honda just for the total package.