Merger with Provident may result in up to 800 job cuts
By PATRICK CROWLEY
4/26/2004

Mortgage-related jobs will be lost when the merger of two Ohio-based banking companies -- National City Corp. of Cleveland and Cincinnati-based Provident Financial Group Inc. -- is completed later this year, a top executive has acknowledged. However, jobs at National City's subprime unit are expected to increase.

Published reports have indicated that from 400 to 800 jobs could be cut as a result of the merger. Neither company has commented publicly on the future employment situation at the merged bank.

But in a recent conference call with stock analysts, National City Chairman and CEO David Daberko said some "head count reduction" that has already taken place within the company will continue "as we go forward" with the $2.1 billion buyout of Cincinnati's second largest banking company.

Daberko did not give specifics on jobs cuts or how those cuts will affect the banking company's mortgage businesses.

In the same conference call Executive Vice President John Gellhausen, the head of National City's consumer finance division, said any mortgage-related job cuts will be in administrative functions.

"The level of (loan) originators has stayed the same or continued to increase," said Gellhausen, who oversees the bank's mortgage units, including National City Mortgage Co. and First Franklin Financial Corp., a subprime lender.

The reduction in workforce has been in "back office functions," Gellhausen said.

As interest rates have dropped competition for loans has increased, Daberko said. Because of that, National City is not anxious to cut loan officers and mortgage originators, he said.

"Origination capacity is out there," Daberko said., "there's just not as much fuel" with interest rates on the rise.

The bank's mortgage business has been strong, "exceeding our original expectations," CFO Jeffrey Kelly said during the conference call.

But National City "does not view this level of activity to be sustainable," Kelly told the analysts.

"The arrival of higher (interest) rates in April cut volume," Kelly said, adding the company has a lot of mortgage "business in the pipeline for the next several months."

Gellhausen said National City wants to "absolutely" expand its mortgage business regionally, particularly through its First Franklin unit.

For instance, on April 20 First Franklin announced the expansion of its Houston office, a move marked in a company press release as "another milestone toward its aggressive expansion strategy."

Employment at the Houston office has grown from 15 in the fall of last year to 60 today while loan originations grew from $31.65 million in February to more than $50.29 million in March, the company said in a written statement.

Nationwide, First Franklin has 33 wholesale branches and originated $20.14 billion in subprime mortgages last year.

National City has also said it wants to add more bank branches -- which would lead to more mortgage loans -- in the Cincinnati area once of the purchase of Provident is completed.

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