By Jeff McKinney
Enquirer staff writer
National City Corp. will absorb up to $100 million in merger-related costs over the next six months to cover its buyout of Provident Financial Group Inc., the bank's top executive said Friday.
The Cleveland-based banking giant also will consider buying more banks in Greater Cincinnati and Northern Kentucky after Provident Bank is converted into National City by February, said David Daberko, chairman and chief executive.
Rising interest rates and less refinancing activity slowed National City's mortgage business and caused it to post an 11 percent drop in second-quarter profits.
National City earned $519 million, or 83 cents a share, down from $586 million, or 94 cents a share, in last year's second quarter. The company's stock closed Friday at $34.87, up 47 cents.
Daberko said National City's traditional banking business remains brisk and consumer lending volumes remain strong. He expects Cincinnati-based Provident to start contributing to National City's profits by second quarter 2005.
He said merger-related costs will reduce National City's profits by less than 10 cents per share and will come out of the bank's third- and fourth-quarter earnings reports.
The merger costs come from National City's $2.1 billion buyout of Provident, completed in early July. The purchase makes National City Ohio's largest bank and the nation's ninth-largest bank with assets of $117 billion and 1,142 branches primarily in the Midwest.
Daberko said the charges will include the cost of eliminating some positions at Provident and integrating its operations. National City will pick up 500,000 customers, $9.9 billion in deposits and 65 branches from Provident, including 52 in Southwest Ohio and Northern Kentucky.
He would not comment on reports that 400 to 800 Provident jobs would be cut but said National City could add more jobs with the merger as it expands its Greater Cincinnati presence. Provident Financial Group, Provident's parent company, employed about 3,200 people.
Daberko also said National City would consider buying more banks in Greater Cincinnati to add more branches, boost market share and make its banking operations more convenient for customers.
National City also has said it plans to build 12 to 15 more branches locally by 2007.
With the gain from the sale this week of National Processing Inc., a debit and credit card processing firm that National City had an 83 percent stock ownership in, the banking giant will have more than $1 billion in extra capital after stock buybacks that could be used to make acquisitions. "We would consider an acquisition (in this market) after the Provident integration is completed," Daberko said.
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