In this era of consolidation, bankers frequently lapse into the language of the conquistador to describe their strategies. "Buy or be bought" is the mind-set of many managers, whose lives revolve around consolidation timetables.
David A. Daberko, 48, certainly has seen this side of life.
A senior officer of National City Corp., Cleveland, he participated in the spectacular and unsuccessful takeover attempt of rival Ameritrust Corp.
And he is among the many National City executives who sweated out the controversial, long-distance acquisition of Merchants National Corp., Indianapolis.
But these days, Mr. Daberko has a different set of priorities. Recently named president and chief operating officer of $29 billion-asset National City, the executive holds out product development and marketing as keys to the future.
"What's most important is selling more stuff to our customer base," says Mr. Daberko, who within a few years will succeed Edward Brandon as chairman and chief executive, when the latter retires.
"For the next three or four or five years, we've got to work on selling more product to our customers," Mr. Daberko says, "really turning up the product development engine and the marketing engine."
The Hudson, Ohio. native, who holds an MBA from Case Western Reserve University, approaches his job with an analytical intensity. "I believe in instinct, but I like to see some numbers to prove a point," he says.
Mr. Daberko's ascension coincides with National City's revival Having solved credit quality, efficiency, and merger problems, the company has restored the luster to its balance sheet and is solidly profitable Third-quarter income of $103 million equaled an annualized return on assets of 1.42%.
In a recent interview with the American Banker, Mr. Daberko portrayed the banking industry as being in an era of customer reclamation.
He disavowed any ambitions of forming a nationwide banking company, saying his priority is boosting National City's competitive prowess in its midwestern markets.
Q.: What's your take on the state of the banking industry?
DABERKO: Banking has given up share of the financial services market for quite a while. But now that the credit quality problems of the late 1980s are behind us, I think we are beginning to take the actions necessary to regain some of the share we've lost.
Each banking company is trying to regain market share, and each is doing it a little differently, exploring different market niches. We are not going to get a lot of legislative help in leveling the playing field between banks and nondepository competitors. So we've got to do the job ourselves.
We've got to improve our delivery mechanisms and better meet customers' needs, in terms of when services are available, how they are delivered, and how they are designed.
Q.: What about your assessment of National City?
DABERKO: The strengths are many, beginning with our people. They will rise up and deal with an issue. Our capital position is extraordinarily strong. Our back-office systems are totally consolidated.
Credit quality is phenomenal. Market share is strong. And we are in a pretty good [geographical] area.
In terms of weaknesses, we are not meeting enough of our customers' needs. The main area of concern is consumer banking.
I would estimate that our company has lost $2 billion of time deposits over the last couple of years as customers went to mutual funds. We can do that.
We should have all of that business. There is no reason they shouldn't be buying mutual fund products from us.
Our credit card outstandings, at least at the bank level, have declined for several years now. Well, they've declined because our product is not competitive. We need to come up with a competitive product, and, more importantly, we need to market it a lot better than we have.
We are having difficulty getting share in the residential mortgage business.
On the corporate banking side, our people are every bit as knowledgeable as any of the investment bankers. Yet, as corporations have switched to borrowing in the public sector, we've sort of let them go. We ought to be providing corporations access to public markets; we ought to be the conduit.
Q.: You haven't yet mentioned mergers and acquisitions, which often are portrayed as the single most important growth avenue in this soft economy. Are major transactions on the horizon for National City?
DABERKO: We've proved to the market that we know how to do acquisitions. and we really are very good at that. But I don't think we are going to grow a lot by acquisition in the near term.
We really have to work at broadening our customer relationships. That's where the earnings growth is going to come from. We definitely need to continue acquiring [data] processing companies, and there will be more fill-in bank deals.
But I really think that for the next three or four or five years, we've got to work on selling more product to our customers -- really turning up the marketing engine and the product development engine.
Q.: Still, some bankers say they must build national franchises in order to compete with the many national nonbank financial companies. Are there linkages between geographical spread and competitiveness?
DABERKO: I don't have any desire to be a national banking company. I think we can do much better as a powerful, big market share regional. I'm a big believer in market share.
We have nearly 14% of the bank deposits in the tri-state area [Ohio, Kentucky, and Indiana]. You can do a lot more with big market share in one region than you can with small shares of a lot of markets.
Q.: Efficiency increasingly is seen as a key to competitive prowess, and National City is among the many banks that have gone through cost-cutting campaigns. Would interstate branching help in this regard?
DABERKO: It is not that critical to our company. We could make branches out of all of our offices in Ohio is we wanted to, but we are not going to do that.
Still, it would be nice to be able to follow logical markets. In Toledo, Ohio, for example, we really should be able to branch into Michigan, where many Toledo employees live.
Q.: What about further cost cutting? Has the fat been cut?
DABERKO: We've cut the company down to a level that we think is appropriate. I really don't think a further round of cost cuts would be very productive. Instead, we've got to leverage the customer base and this delivery system.
Q.: That circles back to your emphasis on product development and marketing.
DABERKO: Yes, and I think the outlook is pretty good, both for the industry and for National City. We are smarter than the nonbanks, and I believe we can start to regain market share.
