Frederick W. Schantz was named president and chief executive officer of National City Bank of Kentucky in June 1998. Prior to assuming management of the Kentucky market and overseeing Louisville operations, he served as president and chief executive officer of the Southwest region for National City’s Ohio bank from March 1980.

Before joining National City, Schantz was senior vice president for American National Bank and Trust of Chicago from 1974 to 1977.

Schantz actively served the Dayton, Ohio community in numerous leadership roles during his 10 years as the bank’s CEO. Most recently, he served as chairman of the board of trustees of Wright University for two years and chaired the boards of the Dayton Area Health Plan, Greater Dayton Public Television and served as president of the Frank M. Tait Foundation. In February 1992, Schantz was honored with the area’s prestigious Montgomery County Citizen of the Year Award.

Schantz received a bachelor of arts degree in economics from DePauw University.

National City Bank was recently ranked as Kentucky’s top bank based on total assets and branches within the state. What strategy has National City Bank used to achieve the top ranking in Kentucky?

National City Bank purchased some of the largest financial institutions in the state. National City Bank reflects the banks that it acquired. Two banks in Lexington. One in Ashland, and the UBK Banks (which circle Lexington and go on down to London and Corbin, Owensboro, Bowling Green) and of course the First National Bank franchise here in Louisville. I would have to add that these banks have grown substantially under National City Bank’s ownership during the last decade.

What were the total assets of National City Bank in Kentucky at year-end?

Almost $11 billion dollars.

How many branches does National City Bank have in Kentucky and nationwide?

There were 130 Kentucky branches as of December 31, 1998 and 1,000 branches nationwide.

What are National City Bank’s primary areas of operation and in what direction is the bank expanding?

Eastern Pennsylvania, Ohio, Kentucky and Indiana. NCB recently acquired Merchants Bank and First of America; these banks have provided NCB with a number of locations throughout Indiana. There is not going to be much in the way of new branching. Technology is making the bank branch into a buggy whip. There are still plenty of customers who use branches, but the huge investment that a branch requires is hard to justify looking forward 15 years, when customers will be more likely to use the ATM, direct deposit and Internet banking.

What success has National City Bank experienced with online bank services?

Online banking is so small as to be insignificant today. Yet it will be an important component for the future. Our online system has been up and running 18 months.

Do you feel the Internet is the future of banking?

The Internet is just one leg of banking. The computer doesn’t dispense cash so the ATM will continue to be an important access point. National City Bank is doing more and more lending using computers. When our mortgage and loan people go out to interview a borrower they don’t fill out forms, they enter data into a laptop PC.

People used to walk into a bank on Friday and deposit their paycheck. Then, they walked to bank on Friday night after it closed and deposited their check into the ATM. Now, they don’t even get a paycheck. They go to the ATM on Sunday morning at 2 a.m. if they are working some odd shift and they take the cash out. The money is already there (via direct deposit).

What changes do you see in the banking landscape in Kentucky during the next 10 years?

There will be a continued roll-up of smaller markets into bank holding companies that use words like "area"or "regional" as part of their name.

You’ll see some spin-outs -- major banks will sell off some of the smaller markets. You won’t see National City, PNC, Bank One, Fifth Third or Firstar making many more acquisitions in secondary markets. Central Bank in Lexington may be acquired one of these days, depending on the ages of its principal stockholders.

Large banks, including National City Bank, have been reorganizing from geographically oriented to functional lines. How has this improved National City Bank’s operations and profitability?

National City is able to do a better job of focusing on the needs of particular customer groups (e.g.: retail and consumers, automobile and boat dealers, credit card services). By developing regional banking products, National City Bank is able to offer high quality financial services to fit niche markets.

At the same time, National City has delegated lending authority. Take Kentucky, for example. As president of the Kentucky market, I have five presidents who oversee regional operations in Kentucky and Southern Indiana. National City Bank is endeavoring to provide maximum decision-making and lending authority at the local level.

Between 1988 and 1998, NCB’s interest income increased by 42 percent and fees for services increased by 188 percent. Will fee income continue to be the faster growth area for NCB?

Yes, it will be. Fee income is a word that we, as bankers, have to be very careful about. Fee income to you, as an individual, suggests that your fees for banking services are going to go up. I don’t think banking service fees are going to increase significantly. There has been a big increase in fee income over the last 10 years, and that is because National City Bank is providing new services to markets not necessarily within our primary geographical areas of operation -- mortgage loan originations, credit cards, clearing charges, stock brokerage services, etc.

As a member of the board of directors and executive committee of Greater Louisville, Inc., how do you foresee the economic future for Louisville?

The future is bright provided Louisville can recruit the workers that are needed. Historically, Kentucky has not had a high population growth rate. The state’s economy is beginning to attract more people for employment opportunities.

The universities are also a large source of potential immigration. The University of Louisville attracts people and once here, they have a tendency to stay. If you could increase the number of students at the University of Louisville by 10,000, just hypothetically, you could increase Louisville’s future population.

With regard to recruiting for the bank, how is that going? Do you have a manpower shortage or is National City Bank in good shape? How hard is it to get a new branch up and running?

Has NCB been involved in enhancing Louisville’s riverfront facilities?

We contributed money when some of those campaigns took place a number of years ago, but I can’t think of any specific loans that were made.

Would National City Bank make loans in those areas?

The riverfront projects were all public. The ballpark is a public project. Clearance of all unsightly scrap heaps, that was all done by the public. It has been a fabulous project.

Problems in the healthcare industry have caused problems for a Louisville-based company -- Vencor. What affect will Vencor’s future have on Louisville?

Anytime a major employer stumbles that certainly has a negative affect on the community. It is very hard on the pride of the community, just as it was harmful when Columbia HCA moved to Nashville. There have been some layoffs at Vencor; there may be more. But again, there is a shortage of good employees in this market. Most of the people who will be out of a job at Vencor will find a replacement job pretty quickly. People in the community are also disappointed that the Vencor building won’t get built. Another marquee building on Louisville’s downtown horizon would have been nice.

Do you envision any significant disruption of business due to Y2K?

I hope not. We’ve been quizzing our customers, trying to make sure that our customers have been focused. I get a sense that most organizations have been taking Y2K pretty seriously and by the end of the year they will have covered most of the bases. Most banks have been so well-focused on Y2K that I bet there won’t be that many blips. Look for Y2K problems with government. There are parts of the Kentucky government that are way behind in the program. There will be some surprises. There are going to be folks who didn’t take Y2K seriously enough and kept an old system when they should have replaced it. But I just don’t foresee a calamity.

Should Kentuckians be concerned about who owns Kentucky banks?

Many Kentuckians are concerned that their local banks not locally owned any longer. We are absolutely determined that National City Bank will respond to our customers needs and continue to deliver "hometown" banking services.

Ed G. Lane is chief executive of Lane Communications, Inc. and publisher of The Lane Report.