National City Corp., an aggressive acquirer for the past dozen years, now has its sights set on data processing, mortgage, and subprime lending companies.
Chairman and chief executive officer David Daberko said in an interview last week that he is also interested in acquiring a regional brokerage firm, if the price is right. And he said his company will continue to be "opportunistic" about bank acquisitions, but he is "not really optimistic much will happen in the near future."
Mr. Daberko said he doesn't like the prices banks have been commanding recently. So Cleveland-based National City may sit out the consolidation game for the next year.
Its last banking acquisition was $14 billion-asset Integra Financial Corp., Pittsburgh, in May 1996.
Mr. Daberko is intent on adding scale in some of his company's high- growth businesses, including its National Processing Inc. subsidiary, its mortgage company, and its subprime finance business.
Subprime lending is a fast-growth operation for $51 billion-asset National City, and Mr. Daberko said he would like to bulk up through acquisitions of either mortgage lenders or auto finance companies.
National City looked at two subprime companies last month, Mr. Daberko said. Champion Mortgage is slated to be bought by KeyCorp, and Fidelity Acceptance Corp. agreed to be sold to Norwest Corp.
National City has announced three small acquisitions this year by its transaction processing company and an acquisition of a mortgage originator, Commonwealth United Mortgage of Houston.
Mr. Daberko expects to do "several more" nonbank deals before yearend. They could be of any size, he said, adding, "we're not afraid of a scale acquisition" especially in the processing area."
If he could find one at the right price, Mr. Daberko would like to acquire a securities firm in the Midwest, he said.
There are a half-dozen brokerages in Cleveland, Columbus, Indianapolis, Louisville, and Pittsburgh that National City might be interested in acquiring, he said.
Cleveland is home to McDonald & Co., a rumored takeover target since early this year. Mr. Daberko said McDonald "is a wonderful firm," but he cautioned that he wasn't willing to pay the high multiples other such organizations were getting from banks in recently announced deals.
He said National City is not interested in Wall Street firms.
The Cleveland banking company was somewhat ahead of the pack when it acquired Raffensperger, Hughes & Co., an Indianapolis securities firm, in July 1995.
Though the price it paid was never disclosed, Mr. Daberko said it was well below what some firms have fetched in recent deals-four times book and more.
"I'm glad we bought ours at the price we did," he said.
He said he considers retail brokerage "a very nice distribution system on the retail side." National City has 200 brokers, and "that's not enough to cover the market we'd like to cover."
As far as bank acquisitions, Mr. Daberko said he is ready to do a deal, but he said he is a firm believer in not diluting earnings.
"In general, prices are too high in the banking business to make deals work," he said.
As for Integra, National City officials and analysts alike said the merger has gone better than expected.
"It worked very well," said Joseph Duwan, an analyst with Keefe, Bruyette & Woods Inc. "I'd say it was one of the better deals in the crop of 1995."
Mr. Daberko, who touts his company as "one of the best integrators" of acquisitions, said he would be interested in banks with between $5 billion and $30 billion of assets in any of the four states where National City now has branches, or in contiguous states including Michigan and Tennessee.
Mr. Duwan expects National City to expand beyond its markets in Ohio, Indiana, Kentucky, and Pennsylvania. The analyst said logical acquisitions would be $21.6 billion-asset First of America Bank Corp., Kalamazoo, Mich.; $13 billion-asset Old Kent Financial Corp., Grand Rapids, Mich.; or any of the large Tennessee-based banks-$10.4 billion-asset First American Corp. of Nashville; $13 billion-asset First Tennessee National Corp., Memphis; or $15.2 billion-asset Union Planters Corp., Memphis.
In general, Mr. Daberko said, he would like to buy a company whose revenue has not been growing fast.
Rather, he said, he's looking for companies with strong distribution networks that would benefit from National City's product line.