Cleveland-based National City Corp. put the final touches on its new commercial banking structure this week by putting two executives in charge of the middle market.

David A. Daberko, chief executive officer of $84 billion-asset National City, said in an interview that the streamlined, line-of-business structure should lead to higher profits. "We want to build on our strengths there," he said.

National City is not the first bank holding company to reorganize in this way. KeyCorp, also of Cleveland, is carrying out a similar plan and announced promotions this week that reflect the change.

National City elevated William E. MacDonald 3d to senior executive vice president in charge of regional corporate banking. Mr. MacDonald National City's No. 4 executive -- will try to wring more profits out of middle-market businesses in the six states where the company has branches.

The chief executive officers for each state market, who are responsible for corporate lending in their territories and now report to Mr. MacDonald, need to boost revenues by drawing on National City's complete product line and instilling a stronger sales mentality, Mr. Daberko said.

"We believe there is an opportunity to bring things up to best practices," he said.

In his new post Mr. MacDonald will continue to report to vice chairman Vincent A. DiGirolamo.

In a related move, Jeffrey D. Kelly, executive vice president, was given responsibility for all specialty corporate lending, including asset-based lending and loan syndication.

Under Mr. Kelly's leadership, National City hopes to sell more specialty lending products by raising the profile of its asset-based lending, loan syndication, and underwriting services. Mr. Kelly previously headed National City's investment funding and interest rate risk management and will continue to handle those duties along with his new position.

Mr. Kelly will continue to Mr. DiGirolamo.

Mr. Daberko would not reveal profitability targets for the corporate banking groups, saying Mr. MacDonald and Mr. Kelly would set these goals during the company's budgeting.

Clearly, commercial customers have been an important source of revenue for National City in recent quarters. Corporate banking net income was $103.9 million in the first quarter, up 17.6% from the same period in 1998. Profits from the corporate bank declined in the second quarter, however, to $93.4 million, because of a higher loan-loss provision, but corporate banking income still made up 26% of National City's earnings in the period.

Retail banking contributed 38% of the company's second-quarter profits.

Though the line-of-business structure is catching on at some midwestern banks, Diana Yates, a bank analyst at A.G. Edwards & Sons in St. Louis, questions whether the strategy fosters earnings. Some companies that tried similar reorganizations -- such as the old Firstar Corp. of Milwaukee and St. Louis-based Mercantile Bancorp. faltered and were eventually sold, she said. Firstar was bought by Star Banc Corp. of Cincinnati last year, and the new Firstar plans to close its acquisition of Mercantile in September.

It is unclear, however, whether the line-of-business setup can be blamed for the circumstances that precipitated those takeovers.

At the same time, the system changes have not been a real success story, Ms. Yates said. "No one has come back and shown that this structure is more profitable."

Still, National City has historically been a strong performer, and it has approached change conservatively.

"Overall they're very well managed," Ms. Yates said. Maybe the new structure "is not as radical as it may first appear."

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