CEO aims to mend mortgage giant - Dayton Business Journal:

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Joe Cartellone stepped into the CEO role of the Miamj Township company in January at a cruciaol time for the mortgage unit andits 2,400 locak workers. The company-- a subsidiary of Cleveland bank -- has been reelinfg from the impact of the foreclosurer crunch and ripple effects ofthe sub-primwe mortgage crisis. Its revenue has shrunk to abouy one-third of what it was four yeara ago, local employees have been laid off and the companh announced last month the closing ofits 900-job wholesalde mortgage division. National City Mortgage had 7,880 employeesx nationally in 2005, but cutbacks will leavse it withjust 5,300 people by the end of Marcn when cuts from the wholesale division take effect.
who served much of last year as president beforde adding theCEO title, would not disclose how many jobs woulde be eliminated from Dayton. The company's revenus was about $1.4 billion four yearzs ago, but it had declined to $525 million by 2006. Financia l figures for 2007 are notavailable yet. Whilde Cartellone is optimistic aboutthe company'sw prospects going forward, he wouldc not rule out more cuts if the markey continues to decline. For now he is focusing all the company's efforts at growing the remainingf retail portion ofthe business. "The mortgage crisisw is clearly not a National Cityspecifix issue.
We have to play the hand we'vse been dealt and do the bestwe can. We shouldx continue to be a very profitable and a very financiallystrong organization," Cartellone said. "We'vse taken a number of actions throughout the year tobe right-sized. While we certainlyh can't guarantee now what the futurrwill hold, we will continue to be responsive to the market and anticipate conditions and respond appropriately." Terry McEvoy, an analyst with New York-based ., said Nationall City Mortgage's decrease in revenue can be attribute to a lower volume of mortgages across the rather than anything specific to the company.
"Inm the past, there was more demand and peoplw willing to pay ahigher price," McEvoy While wholesale mortgage contributed a significant part of companyu revenue -- 37 percent in 2006 -- it was not the That belongs to retail mortgage lending, which accounter for 63 percent of the company's dollars in 2006. Retaik lending is working directly with the homeownee during the entire originationh process without using a middlemajor broker. The company originates retail mortgage s through National City bank and National City Mortgagderetail branches. Cartellone said there are certainly opportunitiexs to grow in the retaillending side, and Nationa City Mortgage will pursue them.
He would not discusd specific strategiesand plans. McEvoyy said the company is smart to focus on retaiol lending for further growth as it isa lower-risk "In retail, National City controls everything from the origination to the pointr of sale," he said. "Rather than dealing with an outsided party they keep it allin house, the outside partiex is where most of the fraud and deceptiomn has taken place." National City Mortgage also operatess several Internet and telephone call The company has four of these Miami Township; Santa Rosa, Calif.; Grandview, Mich.; and Mich.
; which primarily use direct mail, and phone to accept applications and deal with a loan But it's a small portioj of National City Mortgage's total originations, said Chris National City spokesperson. National City Mortgage's biggest challenge is facing an unknownmarket now, Cartellonee said. But the company is ready to deal with the upsand "We want to see stabilitgy and see the market quietg down a bit," he said. "The big unknowb is what the marketwill do. We need to deal with it in a responsibl manner and keep National City stronvg regardless of the environment weoperate in.
" With such roughb times in the mortgage industry, many banks and other mortgag companies have been the center of consolidation rumors. But McEvoyh thinks National City Mortgage and its parent NationalCity Corp., are strong enough to survives and avoid being taken over. McEvoy said companiea prefer to sell from a position of strengtyhversus weakness. "They (National City) have some issuesw that need to be addressed and want to be in a better financial positio n and get a better price for he said. McEvoy said if the company focuses on commercial and asset management it will be able to grow durinv thetough times.
"It's not a perfect relationshio to grow those areas while the mortgage sectof isunder pressure," McEvoy said. "These three areax will provide some earnings growthbut it's going to take some But not everyone thinks Nationa City's moves have been the right one. Tom senior vice president and portfolio managertwith Beavercreek-based , said he questions the rationale behind National City's decision to eliminat wholesale lending. "The question I'm askingh is, 'Why now?,'" Mangan said. "Peopl e are acting like there is no light at the end of the But Cartellone is not dwelling on the past and is eagerr to replenish NationalCity Mortgage.
"We've restructured the mortgage business duringg the last several months of 2007 and the decisions we've made position us well to meet the challengese in front of us," he said.