By Jeff McKinney
The Cincinnati Enquirer
National City Corp.'s top executive says Provident Bank is "under-represented" in the Greater Cincinnati market and that the Cleveland-based company may eventually double the number of Provident's local branches.
National City will open 12 to 24 branches in Southwest Ohio and Northern Kentucky over the next two years, David Daberko, chairman and chief executive, said Thursday after National City reported its earnings.
Loan growth and improved credit quality helped the parent of National City Bank post a record 10 percent rise in first-quarter profits for 2004.
Cleveland-based National City Corp. earned $710 million, or $1.16 a share, up from $643 million, or $1.05 a share, the same year-ago quarter.
National City set aside $83 million for problem loans, down from $171 million in last year's first quarter.
National City shares closed at $33.50 Thursday, up 40 cents.
Provident has 52 branches in Greater Cincinnati. National City agreed in February to buy its parent company for about $2.1 billion, creating the nation's eighth-largest banking company with assets of more than $130 billion.
"They've got the ATMs at UDF stores, which is a good distribution channel," Daberko said. "But we think they're very under-branched, and there are a lot of attractive areas to the north, south, west and east that could use some more locations."
The latest report from the Federal Deposit Insurance Corp. ranks Provident as the region's second-largest bank with deposits of about $9.8 billion and deposit market share of nearly 20.3 percent.
It lists Fifth Third as the region's largest bank with about $13 billion in deposits and market share of 26.3 percent and U.S. Bank as third largest with deposits of $8.7 billion and market share of about 18 percent.
But Daberko said, when excluding commercial deposits, he estimates Provident has consumer deposit market share of 10 percent to 12 percent, placing it behind Fifth Third and U.S. Bank.
"We would like to move them up, and second would be a good place to shoot for at this point," Daberko said.
National City also plans to expand Provident's mortgage, leasing, brokerage and investment banking businesses by training more people on the investment side and increasing staff at branches.
Daberko also said National City had not yet determined what it would do with Provident's sub-prime lending business, a division that Provident has been downsizing the past year as it restructured some businesses to reduce its credit risks.
Daberko also said the Provident/National City merger is expected to get shareholder and regulatory approval by late May, and National City could own Provident by the end of the second quarter.
Provident will lose its name as it is integrated into National City by January.
Severance-related expense will be less than 50 percent of an after-tax charge of $200 million National City expects to take this year to cover the cost of the merger, according to Daberko.
He would not confirm reports that 400 to 800 Provident jobs would be cut but said job losses could be substantially less than the number of positions eliminated because National City will be adding new jobs with the merger. Provident Financial Group Inc., Provident's parent company, employs about 3,200 people.
Daberko said National City was examining all business operations to determine where jobs might be added. He could not say how many jobs would be created as National City expands Provident operations after the merger.
"We're doing everything that we can to keep the number of people who actually lose jobs to a bare minimum," he said.
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